<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
NOVEMBER 17, 1994
REGISTRATION NO. 33-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CURTICE-BURNS FOODS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
NEW YORK 16-0845824 2037
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER) (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
AND ITS GUARANTORS
<TABLE>
<S> <C> <C> <C>
PRO-FAC COOPERATIVE, INC. NEW YORK 16-6036816 5148
CURTICE-BURNS EXPRESS, INC. NEW YORK 16-1198316 4213
CURTICE BURNS MEAT SNACKS, INC. DELAWARE 13-3346668 2013
FINGER LAKES PACKAGING COMPANY, INC. NEW YORK 16-1262806 3411
HUSMAN SNACK FOODS COMPANY, INC. OHIO 31-1308171 2096
KENNEDY ENDEAVORS, INCORPORATED WASHINGTON 91-1350382 2096
NALLEY'S CANADA LIMITED CANADA N/A 2032
QUALITY SNAX OF MARYLAND, INC. MARYLAND 52-0911948 5145
SEASONAL EMPLOYERS, INC. NEW YORK 16-1375253 7363
PRO-FAC HOLDING COMPANY OF IOWA, INC. NEW YORK 16-1335217 6799
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION OF (I.R.S EMPLOYER (PRIMARY STANDARD INDUSTRIAL
SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) CLASSIFICATION CODE NUMBER)
</TABLE>
------------------------
<TABLE>
<S> <C>
ROY A. MYERS
CURTICE-BURNS FOODS, INC.
90 LINDEN PLACE 90 LINDEN PLACE
P.O. BOX 681 P.O. BOX 681
ROCHESTER, NEW YORK 14603 ROCHESTER, NEW YORK 14603
(716) 383-1850 (716) 383-1850
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPY TO:
SCOTT F. SMITH, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 841-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING
TO BE REGISTERED REGISTERED(1) PER NOTE(1) PRICE(1)(2)
<S> <C> <C> <C>
12 1/4% Senior Subordinated Notes due 2005............................. $160,000,000 100% $160,000,000
Guarantees of 12 1/4% Senior Subordinated Notes due 2005............... (3) (3) (3)
Total............................................................. $160,000,000 100% $160,000,000
<CAPTION>
TITLE OF EACH CLASS OF SECURITIES AMOUNT OF
TO BE REGISTERED REGISTRATION FEE
<S> <C>
12 1/4% Senior Subordinated Notes due 2005............................. $ 55,173
Guarantees of 12 1/4% Senior Subordinated Notes due 2005............... (3)
Total............................................................. $ 55,173
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Plus accrued interest, if any, from the date of issuance.
(3) No additional consideration will be paid by the recipients of the 12 1/4%
Senior Subordinated Notes due 2005 for the guarantees. Pursuant to Rule
457(n) under the Securities Act of 1933, no separate fee is payable for the
guarantees.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
________________________________________________________________________________
<PAGE>
CURTICE-BURNS FOODS, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM
NUMBER ITEM IN FORM S-4 LOCATION OR CAPTION IN PROSPECTUS
- ------ ---------------------------------------------------------------------- ------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside Front Cover Page of
Prospectus.......................................................... Facing Page; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus............... Inside Front and Outside Back Cover
Pages of Prospectus; Table of
Contents; Available Information
3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information......................................................... Summary; Risk Factors; The Company;
The Exchange Offer; Selected
Historical Consolidated Financial
Data of the Company; Selected
Historical Consolidated Financial
Data of Pro-Fac; Pro Forma
Financial Data of the Company; Pro
Forma Financial Data of Pro-Fac
and the Company
4. Terms of the Transaction.............................................. Summary; The Exchange Offer;
Description of the Notes
5. Pro Forma Financial Information....................................... Pro Forma Financial Data of the
Company; Pro Forma Financial Data
of Pro-Fac and the Company
6. Material Contracts with the Company Being Acquired.................... Not Applicable
7. Additional Information Required for Reoffering by Persons and Parties
Deemed to be Underwriters........................................... Not Applicable
8. Interests of Named Experts and Counsel................................ Not Applicable
9. Disclosure of Commission Position on Indemnification for Securities
Act Liabilities..................................................... Part II -- Indemnification of
Directors and Officers
10. Information with Respect to S-3 Registrants........................... Not Applicable
11. Incorporation of Certain Information by Reference..................... Not Applicable
12. Information with Respect to S-2 or S-3 Registrants.................... Not Applicable
13. Incorporation of Certain Information by Reference..................... Not Applicable
14. Information with Respect to Registrants Other Than S-2 or S-3
Registrants......................................................... Summary; Risk Factors;
Capitalization; Selected
Historical Consolidated Financial
Data of the Company; Selected
Historical Consolidated Financial
Data of Pro-Fac; Management's
Discussion and Analysis of
Financial Condition and Results of
Operations of the Company;
Management's Discussion and
Analysis of Financial Condition
and Results of Operation of
Pro-Fac; Business; Description of
Certain Indebtedness; Description
of the Notes; Financial Statements
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ITEM
NUMBER ITEM IN FORM S-4 LOCATION OR CAPTION IN PROSPECTUS
- ------ ---------------------------------------------------------------------- ------------------------------------
<S> <C> <C>
15. Information with Respect to S-3 Companies............................. Not Applicable
16. Information with Respect to S-2 or S-3 Companies...................... Not Applicable
17. Information with Respect to Companies Other Than S-2 or S-3
Companies........................................................... Not Applicable
18. Information if Proxies, Consents or Authorizations are to be
Solicited........................................................... Not Applicable
19. Information if Proxies, Consents or Authorizations are not to be
Solicited, or in an Exchange Offer.................................. Management; Executive Compensation;
The Acquisition; Certain
Transactions; Security Ownership
of Certain Beneficial Owners and
Management
</TABLE>
ii
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1994
PROSPECTUS
CURTICE-BURNS FOODS, INC.
OFFER TO EXCHANGE ITS
12 1/4% SENIOR SUBORDINATED NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR SUBORDINATED NOTES DUE 2005
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1994, UNLESS EXTENDED.
Curtice-Burns Foods, Inc., a New York corporation (the 'Company'), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus (the 'Prospectus') and the accompanying Letter of Transmittal (the
'Letter of Transmittal'), to exchange (the 'Exchange Offer') its 12 1/4% Senior
Subordinated Notes due 2005 (the 'New Notes') for an equal principal amount of
its outstanding 12 1/4% Senior Subordinated Notes due 2005 (the 'Old Notes,'
and, together with the New Notes, the 'Notes'), of which $160.0 million
aggregate principal amount is outstanding. The terms of the New Notes are
identical in all material respects to the terms of the Old Notes, except for
certain transfer restrictions and registration and other rights relating to the
exchange of the Old Notes for New Notes. The New Notes will evidence the same
debt as the Old Notes and will be issued under the same Indenture (as defined
below) as the Indenture governing the Old Notes. See 'The Exchange Offer' and
'Description of the Notes.'
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on ,
1994, unless extended (the 'Expiration Date'). Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. The Exchange Offer is subject to certain customary conditions. See 'The
Exchange Offer.' Old Notes may be tendered only in integral multiples of $1,000.
Interest on the Notes is payable on February 1 and August 1 of each year,
commencing February 1, 1995. The Notes are redeemable in whole or in part at the
option of the Company at any time on or after February 1, 2000 at the redemption
prices hereinafter set forth. In addition, at any time on or prior to February
1, 1998, the Company may redeem up to $56.0 million aggregate principal amount
of the Notes, provided that after giving effect to such redemption at least
$104.0 million aggregate principal amount remains outstanding, with the proceeds
of certain offerings of Capital Stock (as defined herein) of the Company or the
proceeds of certain Asset Sales (as defined herein).
Upon a Change of Control (as defined herein), each holder of the Notes has
the right to require the Company to purchase all outstanding Notes then held by
it at a purchase price equal to 101% of the aggregate principal amount of the
Notes, plus accrued and unpaid interest to the date of purchase.
The Notes are general unsecured obligations of the Company and are
subordinate in right of payment to the Company's Senior Indebtedness (as defined
herein). The Notes are unconditionally guaranteed on an unsecured senior
subordinated basis by Pro-Fac Cooperative, Inc., a New York cooperative
corporation ('Pro-Fac'), which owns 100% of the capital stock of the Company,
and certain of the Company's subsidiaries. At November 3, 1994, on a pro forma
basis after giving effect to the Transactions, the total Senior Indebtedness of
the Company would have been $255.4 million. The indenture governing the Notes
permits the incurrence of additional Indebtedness (as defined herein) by
Pro-Fac, the Company and its subsidiaries under certain circumstances.
Prior to this offering, there has been no public market for the New Notes.
The Company does not intend to list the New Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. There can
be no assurance that an active market for the New Notes will develop. The
Company has agreed to pay the expenses of the Exchange Offer.
This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. See 'Plan of Distribution.'
-------------------------
SEE 'RISK FACTORS' FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE NOTES.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------
THE DATE OF THIS PROSPECTUS IS , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
FOR NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION STATEMENT
OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH THE STATE
OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A
PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE
SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND
NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY
OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER,
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
AVAILABLE INFORMATION
Pro-Fac is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and the rules and
regulations promulgated thereunder, and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the 'SEC' or
the 'Commission'). The Company has filed with the SEC a Registration Statement
on Form S-4 (together with any amendments thereto, the 'Registration Statement')
under the Securities Act of 1933, as amended (the 'Securities Act'), with
respect to the New Notes being offered by this Prospectus. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain portions of which have been omitted
pursuant to the rules and regulations of the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other document are
not necessarily complete. With respect to each such contract, agreement or other
document filed or incorporated by reference as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description of
the matter involved, and each such statement is qualified in its entirety by
such reference.
Reports and other information filed by Pro-Fac with the SEC, and the
Registration Statement and the exhibits and schedules thereto, may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will
also be available for inspection and copying at the regional offices of the SEC
located at 7 World Trade Center, New York, New York 10048 and at Northwestern
Atrium Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
Upon consummation of the Exchange Offer, the Company will become subject to
the information requirements of the Exchange Act, and in accordance therewith
will be required to file periodic reports and other information with the SEC. In
the event Pro-Fac or the Company is not subject to the reporting requirements of
the Exchange Act at any time following consummation of the Exchange Offer,
Pro-Fac and the Company will be required under the Indenture, dated as of
November 3, 1994, as supplemented by the First Supplemental Indenture, dated
November 3, 1994 (as so supplemented, the 'Indenture'), among the Company,
Pro-Fac, certain subsidiaries of the Company and IBJ Schroder Bank & Trust
Company, as trustee (the 'Trustee'), pursuant to which the Old Notes were, and
the New Notes will be, issued, to continue to file with the SEC, and to furnish
holders of the Notes with (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if Pro-Fac or the Company were required to file such forms,
including a 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' with respect to Pro-Fac or the Company, as the case may
be, and, with respect to the annual information only, a report on the financial
statements therein by Pro-Fac's or the Company's certified independent
accountants, as the case may be, and (ii) all reports that would be required to
be filed with the Commission on Form 8-K if Pro-Fac or the Company were required
to file such reports. In addition, for so long as any of the Old Notes remain
outstanding, each of Pro-Fac and the Company has agreed to make available to any
prospective purchaser of the Old Notes or beneficial owner of the Old Notes in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act.
2
<PAGE>
SUMMARY
The following information is qualified in its entirety by and should be
read in conjunction with the more detailed information and financial statements
appearing elsewhere in this Prospectus. All references in this Prospectus to the
'Company' will include the Company and its subsidiaries. Unless otherwise stated
herein, market share data used throughout this Prospectus was obtained from
industry sources believed by the Company to be reliable. The Company has not
independently verified this market share data and makes no representation as to
its accuracy.
THE COMPANY
GENERAL
Curtice-Burns Foods, Inc. (the 'Company') is a producer and marketer of
processed food products including canned and frozen fruits and vegetables,
canned desserts and condiments, fruit fillings and toppings, canned chilies and
stews, salad dressings, pickles, peanut butter and snack foods. In addition, the
Company manufactures cans which are both utilized by the Company and sold to
third parties. For the fiscal year ended June 25, 1994, on a pro forma basis
after giving effect to the Transactions (as defined herein), the Company would
have had net sales and operating income plus depreciation and amortization of
$749.2 million and $77.0 million (excluding the nonrecurring restructuring gain
of $7.8 million and the $3.5 million charge relating to legal and advisory costs
incurred in connection with the change of control), respectively. See 'Pro Forma
Financial Data of the Company.'
The Company sells products in three principal categories: (i) 'branded'
products, which are sold under the Company's trademarks, (ii) 'private label'
products, which are sold to grocers that in turn use their own brand names on
the products and (iii) 'food service' products, which are sold to food service
institutions, such as restaurants, caterers and bakeries and to schools. In
fiscal 1994, approximately one-half of the Company's net sales were branded and
the remainder were split between private label and food service. The Company's
branded products include 'Comstock,' 'Thank You' and 'Wilderness' fruit fillings
and toppings, 'Nalley' chilies and stews, 'Bernstein's' salad dressings and
'Adams' peanut butter. The Company's private label products include salad
dressings, salsa, fruit fillings and toppings, canned puddings and canned and
frozen vegetables, which are sold to customers such as A&P, Kroger, Safeway,
Topco, Wegman's and Winn-Dixie. The Company's food service products include
salad dressings, pickles, fruit fillings and toppings, canned and frozen
vegetables, canned puddings, cheese sauces and canned and frozen fruit, which
are sold to customers such as Carvel, Disney, Foodservice of America, KFC,
McDonald's and Sysco.
OPERATIONS
The Company operates throughout the United States and in Western Canada
through six operating divisions. Each division (other than the Snack Foods
Group, which has three separate divisional operations) is managed by a division
president and has its own sales, marketing and financial staff.
Comstock Michigan Fruit. The Company's largest division, Comstock Michigan
Fruit ('CMF'), produces products in three principal categories: (i) fruit
fillings and toppings, (ii) aseptically produced products and (iii) canned and
frozen fruits and vegetables. In fiscal 1994, approximately one-third of CMF's
net sales represented branded products, approximately one-third represented
private label products and approximately one-third represented food service
products. CMF's fruit fillings and toppings, sold under the Company's
'Comstock,' 'Thank You' and 'Wilderness' brand names, had a national market
share of approximately 56% in fiscal 1994. CMF's aseptic operations produce
puddings, cheese sauces and dips primarily for sale nationally to food service
outlets. CMF's canned and frozen fruits and vegetables are sold primarily in the
Eastern United States to private label customers. In fiscal 1994, CMF had net
sales and division operating income of $333.4 million and $29.6 million,
respectively.
Nalley's. The Nalley's Fine Foods division ('Nalley's'), which includes
Nalley's Canada Ltd., markets canned meat products such as chilies and stews,
pickles, salad dressings and peanut butter. Nalley's products are primarily
branded, accounting for approximately three-quarters of Nalley's fiscal 1994 net
sales. Several of Nalley's branded products have leading market shares in the
Pacific
3
<PAGE>
Northwest, such as 'Nalley' chili, which had a market share of approximately
57%, and 'Nalley' and 'Farman's' pickles, which together had a market share of
approximately 49%, for the 52-week period ended August 7, 1994. In the Pacific
Northwest, the Company's 'Nalley' and 'Bernstein's' brands of salad dressings
had a combined market share of approximately 17% for the same period. In fiscal
1994, Nalley's had net sales and division operating income of $214.8 million and
$17.6 million, respectively.
Southern Frozen Foods. The Southern Frozen Foods division ('Southern')
specializes in producing and selling a full line of southern vegetables such as
black-eyed peas, okra and leafy greens as well as a line of traditional
vegetables such as corn, peas, squash and green beans. In fiscal 1994, branded
sales represented approximately one-half of total net sales of Southern, food
service sales represented more than a quarter of the total and private label
sales accounted for the remainder. Southern's line of frozen southern
vegetables, which are marketed under the 'McKenzie's' and 'Southern Farms' brand
names, had a leading market share of approximately 26% in the Southeast for the
52-week period ended March 6, 1994. Southern distributes primarily in the
Southeast and South Central portions of the United States. In fiscal 1994,
Southern had net sales and division operating income of $94.3 million and $10.2
million, respectively.
Snack Foods Group. The Company's Snack Foods Group consists of Snyder of
Berlin ('Snyder') and Husman Snack Foods ('Husman'), which produce and
distribute their snack food products primarily in the Mid-Atlantic and Midwest
regions of the country, and Tim's Cascade Chips ('Tim's'), which produces and
distributes kettle-fried chips in the Pacific Northwest. In fiscal 1994, the
Snack Foods Group had net sales and division operating income of $61.2 million
and $2.7 million, respectively.
Brooks Foods. The Company's Brooks Foods division ('Brooks') markets
specialty chili beans, specialty tomato products, barbecue sauce and related
products under the 'Brooks' label. Sales of Brooks products are principally in
the Midwest. In fiscal 1994, Brooks had net sales and division operating income
of $30.0 million and $3.1 million, respectively.
Finger Lakes Packaging. Finger Lakes Packaging ('Finger Lakes')
manufactures various sizes of three-piece sanitary food cans for the Company and
third-party food processors. Approximately two-thirds of the cans manufactured
by Finger Lakes are sold to divisions of the Company, with the remaining
one-third sold to other customers. In fiscal 1994, Finger Lakes had net sales
and operating income (before elimination of intercompany transactions) of $49.9
million and $3.9 million, respectively.
BUSINESS STRATEGY
Achieve Leading Market Shares of Branded Products. The Company believes
that having branded products with strong shares in regional markets provides it
with distinct advantages. Specifically, by achieving a market presence within a
geographic region, the Company believes it is better able to create avenues for
the sale of the Company's other branded products and to assess and meet local
market and consumer needs.
Diversify Through Sales of Branded, Private Label and Food Service
Products. Historically, the Company has focused primarily on its branded
products, many of which have leading market shares in the regions they serve.
However, with the growth of the private label and food service businesses, the
Company has also begun to focus on profitable opportunities in these areas. For
example, Nalley's has been working with grocers on programs for private label
salsa, soups and salad dressings with 'good,' 'better' and 'best' categories.
This concept offers the grocer a three-tiered product selection and provides the
Company with a means to customize products and programs specifically for
consumer desires. The Company is currently reviewing the expansion of the
'good,' 'better' and 'best' program to many other products. In addition, with
the growth of the food service sector, the Company has pursued food service
opportunities for its fruit fillings and toppings, puddings and cheese sauces.
Future food service growth is planned for other products such as breaded
vegetables and salad dressings.
Engage in Selective National Expansion Program. Certain of the Company's
products have achieved significant market shares within specific geographic
regions, and the Company believes substantial opportunities exist to distribute
these products on a national basis. The Company recently began selling its
'Bernstein's' salad dressing, first introduced in California, in Arizona,
Colorado and Upstate New
4
<PAGE>
York. Other products under consideration for national expansion include Mexican
specialty items, such as chili and salsa, other salad dressings and canned
soups.
Continuous Focus on Cost Reduction. Through a corporate wide program of
information management, selected capital expenditures and individual division
initiatives, the Company continuously seeks to reduce costs and improve
efficiency. During fiscal 1993, the Company initiated production consolidation
efforts involving the closing of three plants located in Michigan, Colorado and
New York. Further consolidations are being explored to reduce operational
redundancies. In the area of purchasing, by maximizing market leverage through
collaborative and cooperative purchasing activities throughout the Company,
significant savings have been achieved. As a result of the Company's cost
reduction activities, the Company's operating income margin from ongoing
businesses improved from 6.0% to 6.5% to 6.9% in each of fiscal 1992, 1993 and
1994, respectively.
PRO-FAC
On November 3, 1994 the Company was acquired by Pro-Fac, an agricultural
cooperative formed under New York State law to process and market crops grown by
its members. Only growers of crops marketed through Pro-Fac, or associations of
such growers, can become members of Pro-Fac. A grower becomes a member of
Pro-Fac through the purchase of common stock, which obligates the grower to
supply, and Pro-Fac to purchase, crops. Pro-Fac's approximately 700 members are
growers, or associations of growers, located principally in California, Florida,
Georgia, Illinois, Iowa, Michigan, Nebraska, New York, North Dakota, Oregon,
Pennsylvania and Washington. Crops grown by Pro-Fac members and purchased by
Pro-Fac include fruits (cherries, apples, blueberries, peaches and plums),
vegetables (snap beans, beets, cucumbers, peas, sweet corn, carrots, cabbage,
squash, asparagus, potatoes, dry beans, southern peas, turnip roots and leafy
greens) and popcorn. All of the crops supplied to Pro-Fac by its members are
sold to the Company for processing.
Pro-Fac and the Company were established together in the early 1960s and
before Pro-Fac's recent acquisition of the Company, had a long-standing
contractual relationship under the Integrated Agreement between Pro-Fac and the
Company (the 'Integrated Agreement') and similar predecessor agreements. The
Integrated Agreement, which has been superseded by the Marketing and
Facilitation Agreement, dated as of November 3, 1994, between Pro-Fac and the
Company (the 'Pro-Fac Marketing Agreement'), principally governed four
arrangements between Pro-Fac and the Company: facilities financing, operations
financing, marketing and management. Pro-Fac continues to market its members'
crops and provide other accommodations to the Company, and the Company continues
to provide management services to Pro-Fac, pursuant to the Pro-Fac Marketing
Agreement.
THE ACQUISITION
GENERAL
The proceeds of the Old Notes, together with the proceeds of borrowings
under a new credit facility (the 'New Credit Agreement') with Springfield Bank
for Cooperatives (the 'Bank'), were used to pay the purchase price and related
fees and expenses paid in connection with the acquisition of the Company by
Pro-Fac and to repay the existing bank loans of Pro-Fac and the Company. The
Acquisition was effected through the Agreement and Plan of Merger dated as of
September 27, 1994 among PF Acquisition Corp., a New York corporation ('PFAC'),
Pro-Fac and the Company (the 'Merger Agreement'). Pursuant to the Merger
Agreement, (i) PFAC commenced a tender offer (the 'Tender Offer') for all of the
outstanding shares of Class A and Class B Common Stock, $.99 par value
(collectively, the 'Shares'), of the Company, (ii) on November 3, 1994, PFAC
accepted for payment and paid for Shares validly tendered and not withdrawn at a
price per Share of $19.00 in cash, (iii) substantially simultaneously with the
acceptance of Shares for payment pursuant to the Tender Offer, PFAC merged with
and into the Company, with the Company continuing as the surviving corporation
(the 'Merger'), (iv) any Shares (except Shares owned by Pro-Fac or its
subsidiaries or held by the Company or its subsidiaries (which were cancelled)
or Shares as to which stockholders of the Company may exercise appraisal rights
provided in connection with the Merger) not tendered and accepted for payment
pursuant to the Tender Offer were converted in the Merger into the right to
receive from the
5
<PAGE>
Company $19.00 per Share in cash, and (v) each issued and outstanding share of
the capital stock of PFAC, all of which were owned by Pro-Fac, was converted
into one share of common stock of the Company. As a result of the Merger, the
Company is a wholly-owned subsidiary of Pro-Fac and has assumed all of the
obligations and liabilities of PFAC, including PFAC's obligations and
liabilities under the Old Notes.
The Acquisition, the contribution of certain assets by Pro-Fac to PFAC, the
repurchase or repayment of existing indebtedness of Pro-Fac and the Company, the
offering of the Old Notes (the 'Old Notes Offering') and the execution of, and
initial borrowings under, the New Credit Agreement entered into by Pro-Fac, PFAC
and the Bank are referred to herein collectively as the 'Transactions.'
The Old Notes were sold in a private placement pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. PFAC structured the Old
Notes Offering as a private placement to be followed by an Exchange Offer of New
Notes for Old Notes in order to raise funds on a more expeditious basis than
would have been possible had the initial sale been pursuant to an offering
registered under the Securities Act. Such funds were required in order to
consummate the Acquisition in a timely manner. The purchasers of the Old Notes,
as a condition to such purchase, requested that the Company agree to commence
the Exchange Offer following the Old Notes Offering.
SOURCES AND USES OF FUNDS
The sources and uses of funds necessary to consummate the Transactions were
as follows:
<TABLE>
<CAPTION>
AMOUNT(1)
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Borrowings under New Credit Agreement(2):
Acquisition Facility:
Term Loan........................................................... $ 80.0
Term Loan Facility.................................................. 97.5
Seasonal Facility........................................................ 72.6
Sale of Notes................................................................. 160.0
Capital contribution by Pro-Fac(3)............................................ 134.6
-------
Total sources of funds.............................................. 544.7
-------
-------
USES OF FUNDS:
Purchase of the Company's Class A and Class B Common Stock(4)................. $ 166.8
Repayment of existing debt (other than seasonal debt) and other
obligations(5)............................................................... 276.4
Repayment of existing seasonal debt........................................... 84.1
Fees, discounts and commissions(6)............................................ 17.4
-------
Total uses of funds................................................. $ 544.7
-------
-------
</TABLE>
- ------------
(1) Sources and uses of funds are based on (i) the borrowings of bank debt that
were outstanding under the Company's existing credit facilities on November
3, 1994, the date that the Transactions were consummated (the 'Closing
Date'), (ii) the amounts due from the Company to Pro-Fac that were
outstanding on the Closing Date, (iii) the purchase price paid for the
Company in connection with the Acquisition and (iv) the fees, discounts and
commissions paid on or subsequent to the Closing Date in connection with the
Transactions.
(2) In connection with the Acquisition, PFAC entered into the New Credit
Agreement with the Bank, pursuant to which the Bank agreed to provide loans
to PFAC of up to $200.0 million to finance the Acquisition, to refinance
certain existing indebtedness of Pro-Fac and the Company and to pay fees and
expenses related to the Acquisition (the 'Acquisition Facility'). On
completion of the Merger,
(footnotes continued on next page)
6
<PAGE>
(footnotes continued from previous page)
the obligations of PFAC under the New Credit Agreement became obligations of
the Company. The Acquisition Facility consists of (i) an $80.0 million term
loan (the 'Term Loan'), which is fully drawn, payable in 20 equal
semi-annual installments and (ii) a $120.0 million term loan facility (the
'Term Loan Facility'), approximately $97.5 million of which has been or will
be drawn in connection with the Transactions, payable during the first five
years in annual installments each in an amount equal to the 'annual cash
sweep' for the preceding fiscal year as defined in the New Credit Agreement,
and payable thereafter in ten equal semi-annual installments. Amounts drawn
under the Acquisition Facility include $155.2 million to repay indebtedness
due from the Company to Pro-Fac, which Pro-Fac, in turn, applied to repay an
equal amount of outstanding debt plus accrued and unpaid interest due to the
Bank. The New Credit Agreement also provides the Company with seasonal
financing of up to $86.0 million (the 'Seasonal Facility'), which has an 18
month term, and a $10.0 million letter of credit facility, which has a 12
month term (the 'Letter of Credit Facility'). On the Closing Date, $72.6
million was drawn under the Seasonal Facility to repay outstanding seasonal
debt, together with accrued and unpaid interest and additional capital
investment, due from Pro-Fac to the Bank and outstanding seasonal debt,
together with accrued and unpaid interest and fees, due from the Company to
a syndicate of commercial lenders led by The Chase Manhattan Bank, N.A. The
Company estimates that its peak borrowings under the Seasonal Facility
during fiscal 1995 will not increase significantly over the $72.6 million
drawn on the Closing Date. In fiscal 1994, the Company's borrowings under
its existing seasonal line of credit peaked at approximately $81.0 million
and the average amount outstanding during such year was approximately $51.5
million. See 'Description of Certain Indebtedness -- New Credit Agreement.'
(3) In connection with the Acquisition, Pro-Fac made a $134.6 million capital
contribution to the Company which consisted of the cancellation of $110.0
million of indebtedness and capital lease obligations due to Pro-Fac by the
Company (including the cancellation of certain accounts payable due to
Pro-Fac by the Company, in the amount of $5.1 million) and the cancellation
of $24.6 million of obligations due to Pro-Fac from the Company as a result
of Pro-Fac's transfer to the Company of (i) its investment in the Bank in
the amount of $21.3 million and (ii) certain legal and advisory costs
incurred by Pro-Fac in connection with the Transactions in the amount of
$3.3 million. See 'Certain Transactions -- Equity Ownership in Springfield
Bank for Cooperatives.'
(4) The purchase price for the Shares consists of $165.1 million for the
8,690,005 shares outstanding as of the Closing Date at $19.00 per share plus
$1.7 million representing the aggregate payments being made by the Company
in connection with the cancellation of certain options to purchase shares of
the Company exercisable at a price less than $19.00 per share.
(5) Includes the cancellation of (i) $246.7 million of indebtedness and capital
lease obligations due to Pro-Fac by the Company, (ii) certain accounts
payable due to Pro-Fac by the Company , in the amount of $5.1 million, and
(iii) $24.6 million of obligations due to Pro-Fac by the Company as a result
of the transfer by Pro-Fac to the Company of its (a) $21.3 million
investment in the Bank and (b) $3.3 million of legal and advisory costs
incurred in connection with the Transactions. See 'Certain
Transactions -- Equity Ownership in Springfield Bank for Cooperatives.'
(6) $17.4 million in fees, discounts and commissions were paid on or subsequent
to the Closing Date. This amount excludes amounts paid for similar charges
prior to the Closing Date.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Registration Rights Agreement...... The Old Notes were sold by the Company on November 3, 1994 to institutional
investors. In connection therewith, the Company executed and delivered for
the benefit of the holders of the Old Notes a registration rights agreement
(the 'Registration Rights Agreement') providing, among other things, for
the Exchange Offer.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
The Exchange Offer................. New Notes are being offered in exchange for a like principal amount of Old
Notes. As of the date hereof, $160.0 million aggregate principal amount of
Old Notes are outstanding. The Company will issue the New Notes to holders
promptly following the Expiration Date. See 'Risk Factors -- Consequences
of Failure to Exchange.'
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may
be offered for resale, resold and otherwise transferred by any holder
thereof (other than any such holder which is an 'affiliate' of the Company
or any Guarantor within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the
ordinary course of such holder's business and that such holder is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, the distribution of such
New Notes. Each broker or dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by
such broker or dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See 'Plan of Distribution.'
Expiration Date.................... 5:00 p.m., New York City time, on , 1994, unless the Exchange
Offer is extended, in which case the term 'Expiration Date' means the
latest date and time to which the Exchange Offer is extended.
Conditions to the Exchange Offer... The Exchange Offer is subject to certain customary conditions, which may be
waived by the Company. See 'The Exchange Offer -- Conditions.'
Procedures for Tendering Old
Notes............................ Each holder of Old Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained herein and therein, and mail
or otherwise deliver such Letter of Transmittal, or such facsimile,
together with the Old Notes and any other required documentation to the
exchange agent (the 'Exchange Agent') at the address set forth herein. Old
Notes may be physically delivered, but physical delivery is not required if
a confirmation of a book-entry of such Old Notes to the Exchange Agent's
account at The Depository Trust Company ('DTC' or the 'Depositary') is
delivered in a timely fashion. By executing the Letter of Transmittal, each
holder will represent to the Company that, among other things, the New
Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether
or not such person is the holder, that neither the holder nor any such
other person is engaged in, or intends to engage in, or has an arrangement
or understanding with any person to participate in, the distribution of
such New Notes and that neither the holder nor any such other person is an
'affiliate,' as defined under Rule 405 of the Securities Act, of the
Company or any Guarantor. Each broker or dealer that receives New Notes for
its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker or dealer as a result of market-making activities
or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See 'The
Exchange Offer -- Procedures for Tendering' and 'Plan of Distribution.'
Special Procedures for Beneficial
Owners........................... Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and
instruct such registered holder to tender on
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
such beneficial owner's behalf. If such beneficial owner wishes to tender
on such owner's own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either
make appropriate arrangements to register ownership of the Old Notes in
such owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take
considerable time. See 'The Exchange Offer -- Procedures for Tendering.'
Guaranteed Delivery Procedures..... Holders of Old Notes who wish to tender their Old Notes and whose Old Notes
are not entirely available or who cannot deliver their Old Notes, the
Letter of Transmittal or any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the Expiration Date must tender
their Old Notes according to the guaranteed delivery procedures set forth
in 'The Exchange Offer -- Guaranteed Delivery Procedures.'
Withdrawal Rights.................. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. See 'The Exchange Offer -- Withdrawal of
Tenders.'
Acceptance of Old Notes and
Delivery of New Notes............ The Company will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes issued pursuant to the Exchange
Offer will be delivered promptly following the Expiration Date. See 'The
Exchange Offer -- Terms of the Exchange Offer.'
Exchange Agent..................... IBJ Schroder Bank & Trust Company is serving as Exchange Agent in
connection with the Exchange Offer. See 'The Exchange Offer -- Exchange
Agent.'
</TABLE>
TERMS OF NOTES
The Exchange Offer applies to $160.0 million aggregate principal amount of
Old Notes. The terms of the New Notes are identical in all material respects to
the Old Notes, except for certain transfer restrictions and registration and
other rights relating to the exchange of the Old Notes for New Notes. The New
Notes will evidence the same debt as the Old Notes and will be entitled to the
benefits of the Indenture under which both the Old Notes were, and the New Notes
will be, issued. See 'Description of the Notes.'
<TABLE>
<S> <C>
The New Notes....................... Up to $160,000,000 in aggregate principal amount of 12 1/4% Senior
Subordinated Notes due 2005.
Interest Payment Dates.............. February 1 and August 1, commencing February 1, 1995.
Maturity Date....................... February 1, 2005.
Rank................................ The Notes are general unsecured obligations of the Company and are
subordinate in right of payment to the Company's existing and future Senior
Indebtedness (as defined herein). At November 3, 1994, on a pro forma basis
after giving effect to the Transactions, the total Senior Indebtedness of
the Company would have been $255.4 million.
Guarantees.......................... The Notes are unconditionally guaranteed by Pro-Fac and Curtice-Burns
Express, Inc., Curtice Burns Meat Snacks, Inc., Finger Lakes Packaging
Company, Inc., Husman Snack Foods Company, Inc., Kennedy Endeavors,
Incorporated, Nalley's Canada Limited, Quality Snax of Maryland, Inc.,
Seasonal Employers, Inc. and Pro-Fac Holding Company of Iowa, Inc.
(collectively the 'Subsidiary Guarantors' and together, with Pro-Fac, the
'Guarantors'). The guarantees of Pro-Fac and the Subsidiary Guarantors
(collectively, the 'Guarantees') are unsecured obligations of the
Guarantors and are subordinate in right of payment to the existing and
future Senior Indebtedness of such Guarantors.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Optional Redemption................. The Notes are redeemable in whole or in part at the option of the Company
at any time on or after February 1, 2000 at the redemption prices
hereinafter set forth. In addition, at any time on or prior to February 1,
1998, the Company may redeem up to $56.0 million aggregate principal amount
of the Notes, provided that after giving effect to such redemption at least
$104.0 million aggregate principal amount remains outstanding, with the
proceeds of certain offerings of Capital Stock (as defined herein) of the
Company or the proceeds of certain Asset Sales (as defined herein). The
Notes are not otherwise redeemable at the option of the Company.
Offers to Purchase.................. In the event of a Change of Control (as defined herein), each holder of
Notes has the right to require the Company to purchase all of the Notes
then held by it at a purchase price equal to 101% of the aggregate
principal amount of the Notes, plus accrued and unpaid interest to the date
of purchase. In addition, under certain circumstances, the Company will be
required to offer to purchase Notes with the proceeds of certain Asset
Sales. For more complete information regarding mandatory offers to purchase
the Notes, see 'Description of the Notes.'
Certain Covenants................... The Indenture contains certain covenants that, among other things, limit
the incurrence of additional indebtedness by the Company and its
Subsidiaries (as defined herein); restrict the payment of dividends by the
Company; restrict the repurchase of capital stock or subordinated
indebtedness by the Company and its Subsidiaries; limit the ability of the
Company and its Subsidiaries to enter into sale and leaseback transactions;
limit the creation of certain liens by the Company and the Subsidiaries;
limit the Company's creation of restrictions on the ability of Subsidiaries
to pay dividends or make other payments to the Company; and limit the
ability of the Company or its Subsidiaries to enter into certain
transactions with affiliates or merge, consolidate or transfer
substantially all of their assets. See 'Description of the Notes -- Certain
Covenants.'
Use of Proceeds..................... There will be no proceeds to the Company from any exchange pursuant to the
Exchange Offer.
</TABLE>
RISK FACTORS
See 'Risk Factors' for a discussion of certain factors that investors
should consider before exchanging Old Notes for New Notes in the Exchange Offer.
10
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND
OPERATING DATA OF THE COMPANY
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------
JUNE 25, 1994
----------------------
JUNE 26, 1992 JUNE 26, 1993 ACTUAL PRO FORMA(1)
-------------- -------------- ------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................... $ 896.9 $ 878.6 $ 829.1 $ 749.2
Cost of sales.................. 652.3 632.6 592.6 534.3
------ ------ ------- ------
Gross profit............... 244.6 246.0 236.5 214.9
Selling, administrative and
general...................... 201.4 207.1 186.9 159.3
Amortization of unallocated
excess of purchase cost over
net assets acquired.......... -- -- -- 4.7
Restructuring including net
loss (gain) from division
disposals(2)................. -- 61.0 (7.8) --
Change in control
expenses(3).................. -- -- 3.5 --
(Gain) on assets resulting from
fire claim(4)................ -- -- -- --
------ ------ ------- ------
Operating income (loss).... 43.2 (22.1 ) 53.9 50.9
Total interest expense......... 22.8 19.6 18.2 37.2
------ ------ ------- ------
Pre-tax earnings (loss)
before dividing with Pro-
Fac...................... 20.4 (41.7 ) 35.7 13.7
Pro-Fac share of earnings
(loss)....................... 9.5 (21.8 ) 16.9 6.9
------ ------ ------- ------
Income (loss) before
taxes.................... 10.9 (19.9 ) 18.8 6.8
Provision for taxes............ 4.8 3.9 8.7 3.8
------ ------ ------- ------
Net income (loss).......... $ 6.1 $ (23.8 ) $ 10.1 $ 3.0
------ ------ ------- ------
------ ------ ------- ------
BALANCE SHEET DATA:
Working capital................ $ 101.7 $ 100.4 $ 104.0
Total assets................... 529.7 493.7 446.9
Total debt(5).................. 357.7 316.3 271.6
Shareholders' equity........... 104.5 75.7 80.9
SELECTED OTHER DATA:
Adjusted EBITDA(6)............. $ 73.1 $ 69.4 $ 75.3 $ 77.0
Depreciation and amortization
of fixed assets.............. 24.4 25.4 22.3 19.7
Amortization of
intangibles(7)............... 5.5 5.1 3.4 6.4
Capital expenditures(8)........ 16.2 21.5 19.5 19.5
SELECTED RATIOS:
Adjusted EBITDA/total interest
expense...................... 3.21 x 3.54 x 4.14x 2.07 x
Adjusted EBITDA less capital
expenditures/total interest
expense...................... 2.50 x 2.44 x 3.07x 1.55 x
Total debt/Adjusted EBITDA..... 4.89 x 4.56 x 3.61x 4.46 x
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------
SEPTEMBER 24, 1994
----------------------
SEPTEMBER 25, 1993 ACTUAL PRO FORMA(1)
------------------- ------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................... $ 210.1 $ 176.8 $ 174.5
Cost of sales.................. 153.1 126.8 125.3
------ ------- ------
Gross profit............... 57.0 50.0 49.2
Selling, administrative and
general...................... 46.3 38.0 36.1
Amortization of unallocated
excess of purchase cost over
net assets acquired.......... -- -- 1.2
Restructuring including net
loss (gain) from division
disposals(2)................. -- 8.4 --
Change in control
expenses(3).................. -- 1.8 --
(Gain) on assets resulting from
fire claim(4)................ -- (6.5) --
------ ------- ------
Operating income (loss).... 10.7 8.3 11.9
Total interest expense......... 4.8 5.1 9.9
------ ------- ------
Pre-tax earnings (loss)
before dividing with Pro-
Fac...................... 5.9 3.2 2.0
Pro-Fac share of earnings
(loss)....................... 2.8 1.5 1.0
------ ------- ------
Income (loss) before
taxes.................... 3.1 1.7 1.0
Provision for taxes............ 1.9 1.4 0.6
------ ------- ------
Net income (loss).......... $ 1.2 $ 0.3 $ 0.4
------ ------- ------
------ ------- ------
BALANCE SHEET DATA:
Working capital................ $ 101.8 $ 125.8
Total assets................... 524.4 681.4
Total debt(5).................. 351.1 427.8
Shareholders' equity........... 79.9 134.6
SELECTED OTHER DATA:
Adjusted EBITDA(6)............. $ 17.2 $ 17.5 $ 18.1
Depreciation and amortization
of fixed assets.............. 5.7 4.7 4.6
Amortization of
intangibles(7)............... 0.8 0.8 1.6
Capital expenditures(8)........ 4.5 5.4 5.4
SELECTED RATIOS:
Adjusted EBITDA/total interest
expense...................... 3.58 x 3.43x 1.83 x
Adjusted EBITDA less capital
expenditures/total interest
expense...................... 2.65 x 2.37x 1.28 x
Total debt/Adjusted EBITDA..... 5.5 (9) 5.02 5.91 (9)
</TABLE>
- ------------
(1) For information regarding the pro forma data, see 'Pro Forma Financial Data
of the Company.'
(2) In fiscal 1993, the Company incurred restructuring charges of $61.0 million
(before dividing such charges with Pro-Fac and before taxes), which included
the loss incurred on the sale of the Lucca frozen entree business,
anticipated losses on the sale of the meat snacks and Hiland potato chips
businesses, and other costs anticipated in conjunction with the
restructuring program. Virtually all of this charge was a revaluation of
assets rather than cash expense. During fiscal 1994, the Company sold the
oats operations of National Oats realizing a gain of $10.9 million (before
dividing such gain with Pro-Fac and before taxes), which was offset by a
charge of $3.1 million (before dividing such charge with Pro-Fac and before
taxes) to adjust previous estimates recorded regarding these restructuring
activities. During the first quarter of fiscal 1995, the Company incurred a
restructuring
(footnotes continued on next page)
11
<PAGE>
(footnotes continued from previous page)
charge of $8.4 million (before dividing such charge with Pro-Fac and before
taxes) to reflect the estimated impact of the potential sale of certain
assets of the Nalley's U.S. Chips and Snacks operation and other expenses
relating to the disposal of this operation.
(3) In fiscal 1994 and the first quarter of fiscal 1995 the Company expensed
$3.5 million and $1.8 million, respectively, in each case before dividing
such charges with Pro-Fac and before taxes, for legal, accounting,
investment banking and other expenses in connection with the change of
control issue. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company.'
(4) In the first quarter of fiscal 1995, the Company realized a gain of $6.5
million (before dividing such gain with Pro-Fac and before taxes)
representing the insurance proceeds for the replacement value in excess of
the depreciated value of the building and equipment destroyed by fire on
July 7, 1994 at the Southern division.
(5) Total debt is defined as the sum of (i) current and long-term debt due to
Pro-Fac, (ii) current and long-term debt due to others, including notes
payable and borrowings under the Seasonal Facility, if any, (iii) current
and long-term capital lease obligations, (iv) other amounts due to Pro-Fac
and (v) the finance receivable relating to intangibles owed to Pro-Fac,
which was $53.4 million, $26.5 million, $24.9 million and $24.5 million at
June 26, 1992, June 26, 1993, June 25, 1994 and September 24, 1994,
respectively, and would have been zero at September 24, 1994 on a pro forma
basis, after giving effect to the Transactions.
(6) Adjusted EBITDA is defined as the sum of (i) pre-tax earnings (loss) before
dividing with Pro-Fac, (ii) total interest expense, (iii) depreciation and
amortization of fixed assets and (iv) amortization of intangibles. Adjusted
EBITDA excludes the nonrecurring restructuring charge of $61.0 million in
fiscal 1993, the nonrecurring restructuring gain of $7.8 million in fiscal
1994, the nonrecurring restructuring charge of $8.4 million and the
nonrecurring gain on assets resulting from the fire claim of $6.5 million in
the first quarter of fiscal 1995 and the $3.5 million and $1.8 million
charges in fiscal 1994 and the first quarter of fiscal 1995, respectively,
relating to legal and advisory costs incurred in connection with the change
of control. Adjusted EBITDA is presented not as an alternative measure of
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles), but rather to provide
additional information related to the debt servicing ability of the Company.
(7) Amortization of intangibles is defined as the sum of amortization of
goodwill and intangibles, including the amount of the finance receivable
relating to goodwill recognized by Pro-Fac. Through the provisions of the
earnings split, amortization of intangibles has been recognized equally
between the Company and Pro-Fac in the amounts of $2.8 million, $2.6
million, $1.7 million, $0.4 million and $0.4 million for fiscal 1992, 1993
and 1994, the first quarter of fiscal 1994 and the first quarter of fiscal
1995, respectively.
(8) Includes capital expenditures of the Company of $0.6 million, $8.4 million,
$9.5 million, $4.5 million and $4.5 million for fiscal 1992, 1993 and 1994,
the first quarter of fiscal 1994 and the first quarter of fiscal 1995,
respectively, and capital expenditures of Pro-Fac of $15.6 million, $13.1
million, $10.0 million, $0.0 million and $0.9 million for fiscal 1992, 1993
and 1994, the first quarter of fiscal 1994 and the first quarter of fiscal
1995, respectively. Historically, under the Integrated Agreement, the
Company financed its purchase of assets through Pro-Fac.
(9) Adjusted EBITDA for the three months ended September 25, 1993 and September
24, 1994 has been annualized in computing this ratio and therefore does not
take into account seasonal factors that affect Adjusted EBITDA.
12
<PAGE>
RISK FACTORS
Holders of the Old Notes should consider carefully the specific risk
factors set forth below as well as the other information contained in this
Prospectus before deciding to tender their Old Notes in the Exchange Offer.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged, and such leverage may increase as a result
of future borrowings to fund capital expenditures, working capital needs or for
other general corporate purposes. At November 3, 1994, on a pro forma basis,
after giving effect to the Transactions, the Company would have had total
indebtedness of $421.9 million and shareholders' equity of $134.6 million, and
the Company's ratio of total debt to total shareholders' equity would have been
3.1 to 1.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain financing in the future for working capital, capital
expenditures and general corporate purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal of and interest on its indebtedness; and (iii) a high
degree of leverage may make the Company more vulnerable to economic downturns
and may limit its ability to withstand competitive pressures.
Based on current operations, the Company expects that it will be able to
service the interest and principal obligations on its indebtedness as well as
its working capital needs and to fund its capital expenditures and other
operating expenses out of cash flow from operations and available borrowings
under the New Credit Agreement. However, the Company may be unable to pay
principal when due on the Notes unless it is able to refinance the Notes. The
Company's future operating performance as well as its ability to service or
refinance the Notes and to extend or refinance the New Credit Agreement will be
subject to future economic conditions and to financial, business and other
factors, many of which are beyond the Company's control. There can be no
assurance that the Company's future operating performance and borrowing
availability under the New Credit Agreement will be sufficient to service its
indebtedness or that the Company will be able to repay or refinance the Notes in
whole or in part.
For additional information on the Company's indebtedness, see
'Capitalization,' 'Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company -- Liquidity and Capital Resources,'
'Description of Certain Indebtedness -- New Credit Agreement' and 'Description
of the Notes.'
RELATIONSHIP WITH PRO-FAC; POTENTIAL CONFLICT OF INTEREST
Pro-Fac is an agricultural cooperative of over 700 members formed for the
purpose of developing and maintaining markets for its members' crops. The
principal reason for the purchase by Pro-Fac of the Company was to provide a
market for its members' crops, although the members are also seeking a favorable
return on their equity investment in Pro-Fac and the Company. The members'
interest in marketing their crops will at times conflict with the interest of
the Company in maximizing profits. This conflict may have an adverse effect on
the Company's ability to pay interest and principal on the Notes.
The Company has entered into the Pro-Fac Marketing Agreement with Pro-Fac
for the purchase of crops grown by Pro-Fac's members. The Pro-Fac Marketing
Agreement is the successor to the Integrated Agreement and other predecessor
marketing agreements between the Company and Pro-Fac, which have been
continuously in effect since the formation of these companies in the early
1960s. Under the Pro-Fac Marketing Agreement, the Company purchases crops from
Pro-Fac at the Commercial Market Value of those crops, which is generally
defined as the weighted average of the prices paid by 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 market areas.
Although Commercial Market Value is intended to be no more than the fair market
value of the crops purchased by the Company, it may be more or less than the
price the Company would pay in the open market in the absence of the Pro-Fac
Marketing Agreement. Under the predecessor agreements to the Pro-Fac Marketing
Agreement, the Company paid Pro-Fac $64.2 million, $59.8 million and $59.2
million as Commercial Market Value for crops purchased from Pro-Fac in fiscal
1992, 1993 and 1994, respectively.
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The crops purchased by the Company from Pro-Fac represented approximately 65%,
60% and 65% of all raw agricultural crops purchased by the Company in fiscal
1992, 1993 and 1994, respectively.
Commercial Market Value for each crop has in the past been and will
continue to be determined by a joint committee of the Boards of Directors of
Pro-Fac and the Company. The joint committee will be comprised of the Chief
Executive Officer of the Company and an equal number of Pro-Fac directors and
Disinterested Directors (as defined herein). The Pro-Fac Marketing Agreement
requires a majority of the Disinterested Directors to approve the recommendation
of the joint committee. The volume and type of crops to be purchased by the
Company under the Pro-Fac Marketing Agreement are determined pursuant to its
annual profit plan, which requires the approval of a majority of the
Disinterested Directors.
In addition to the arrangements between Pro-Fac and the Company governed by
the Pro-Fac Marketing Agreement, as owner of the Company and through its
representatives on the Company's Board of Directors, Pro-Fac has significant
influence over the operations of the Company, including, without limitation, the
acquisition and disposition of assets and the making of capital expenditures.
However, Pro-Fac has established a management structure for the Company
providing for a Board of Directors of the Company consisting of one management
director, Pro-Fac Directors (as defined herein) and Disinterested Directors. The
Indenture provides that there will be a Change of Control if, for a period of
120 consecutive days, the number of Disinterested Directors on the Board of
Directors of the Company is less than the greater of (i) two and (ii) the number
of directors of the Company who are Pro-Fac Directors. See 'Description of the
Notes -- Repurchase at the Option of the Holders.' The initial management
director is Roy A. Myers, who is the new Chief Executive Officer of the Company.
See 'Management -- Directors and Executive Officers of the Company.' There can
be no assurance that the management and Board structure will eliminate the
conflict of interest described above.
For additional information on the Pro-Fac Marketing Agreement, see 'Certain
Transactions -- Pro-Fac Marketing Agreement.'
GENERAL RISKS OF THE FOOD INDUSTRY; COMPETITION
Food processors are subject to the risks of adverse changes in general
economic conditions; evolving consumer preferences and nutritional and
health-related concerns; changes in food distribution channels and increasing
buying power of large supermarket chains and other retail outlets that tend to
resist price increases; federal, state and local food processing controls;
consumer product liability claims; and risks of product tampering.
All products of the Company, particularly branded products, compete with
those of national and major regional food processors under highly competitive
conditions. Many of these manufacturers have substantially greater resources
than the Company. There can be no assurance that the Company will be able to
continue to compete successfully or that competition will not have a material
adverse effect on the Company's business or financial results in the future.
SEASONALITY; RAW MATERIALS
The Company's sales are not highly seasonal, although some products have
higher sales volumes in the cool weather months (such as canned fruits and
vegetables, chilies and fruit fillings and toppings) and others have higher
sales volumes in the warm weather months (such as potato chips and condiments).
Because many of the raw materials processed by the Company are agricultural
crops, production of products using these crops is predominantly seasonal. As a
result, the Company needs access to working capital financing to meet its
production requirements during these periods. In fiscal 1994, the Company's
borrowings under its seasonal line peaked at approximately $81.0 million and the
average amount outstanding during such year was approximately $51.5 million.
Although management believes that the availability under the New Credit
Agreement together with cash generated from operations will be adequate to
provide for its cash requirements, there can be no assurance that such increased
availability together with cash generated by operations will continue to be
adequate in the future. See
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'Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company -- Liquidity and Capital Resources.'
The canned and frozen vegetable portion of the Company's 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 in a given year. This oversupply
typically will result in depressed selling prices and reduced profitability to
the Company on the inventory produced from that year's crops. Excessive rain or
drought conditions can produce low crop yields and a shortage situation. This
shortage typically will result in higher selling prices and increased
profitability to the Company. While the national supply situation controls the
pricing, the supply can differ regionally because of variations in weather. The
1993 floods in the Midwest and the drought in the South increased prices of
vegetable products, even though the crops in the Company's growing areas were at
normal levels.
Except for cans manufactured by its subsidiary, Finger Lakes, the Company
purchases all of its requirements for nonagricultural products, including
containers, on the open market. Although the Company has not experienced any
difficulty in obtaining adequate supplies of such items, occasional periods of
short supply of certain raw materials may occur.
ENVIRONMENTAL
The disposal of solid and liquid waste material resulting from the
preparation and processing of foods and the emission of odors inherent in the
heating of foods during preparation are subject to various federal, state, and
local laws and regulations relating to the protection of the environment. Such
laws and regulations have had an important effect on the food processing
industry as a whole, requiring substantially all firms in the industry to incur
material expenditures for modification of existing processing facilities and for
construction of new waste treatment facilities. See 'Business -- Environmental
Matters.'
The Company cannot predict what environmental legislation or regulations
will be enacted in the future, how existing or future laws or regulations will
be administered or interpreted or what environmental conditions may be found to
exist. Enactment of more stringent laws or regulations or more strict
interpretation of existing laws and regulations may require additional
expenditures by the Company, some of which could be material.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The New Credit Agreement and the Indenture contain covenants imposing
certain operating and financial restrictions on the Company. These covenants,
among other things, limit the incurrence or maintenance of additional
indebtedness by the Company and its Subsidiaries and the incurrence or
maintenance of liens, restrict the payment by the Company of dividends or other
distributions, the redemption of capital stock of the Company and its
Subsidiaries and the making of other restricted payments, and restrict
transactions with affiliates, the sale or disposal of assets, and the merger,
consolidation or sale of all or substantially all of the assets of the Company.
In addition, under its guarantee of the indebtedness under the New Credit
Agreement (the 'Pro-Fac Bank Guarantee'), Pro-Fac is required to maintain
specified financial ratios and levels, including those relating to minimum
interest and fixed charge coverage, net worth and maximum leverage, and Pro-Fac
is subject to certain other restrictions.
The ability of the Company to comply with certain provisions in the New
Credit Agreement and the Indenture and of Pro-Fac to comply with the Pro-Fac
Bank Guarantee will depend on their future performance, which will, in part, be
subject to prevailing economic, financial and business factors beyond the
control of the Company and Pro-Fac. Although each of the Company and Pro-Fac
expects that it will be able to comply with such provisions, there can be no
assurance that it will be able to do so.
The failure of the Company to comply with certain provisions in the
Indenture or the New Credit Agreement or of Pro-Fac to comply with certain
provisions of the Pro-Fac Bank Guarantee would result in a default under the New
Credit Agreement and the Pro-Fac Bank Guarantee. Upon the
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occurrence of a default under the New Credit Agreement or the Pro-Fac Bank
Guarantee, the Bank could terminate its loan commitments, including its
commitment under the Seasonal Facility. Because the Company is highly dependent
on the Bank for liquidity, the termination of the Seasonal Facility could
significantly impair the operations of the Company. In addition, upon the
occurrence of a default under the New Credit Agreement or the Pro-Fac Bank
Guarantee, the Bank could accelerate its outstanding loans, foreclose upon its
collateral or exercise any other right or remedy available under the New Credit
Agreement or the Pro-Fac Bank Guarantee, or in lieu thereof, the Bank could
waive such default or, with the consent of Pro-Fac, the Company and the
Subsidiary Guarantors, as the case may be, amend the terms and provisions of the
New Credit Agreement or the Pro-Fac Bank Guarantee. The occurrence of a default
under the New Credit Agreement or the Pro-Fac Bank Guarantee could have a
material adverse effect on Pro-Fac and the Company and its Subsidiaries. See
'Description of Certain Indebtedness -- New Credit Agreement' and 'Description
of the Notes.'
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness in connection with the issuance of the
Notes and the guarantees by Pro-Fac and the Subsidiary Guarantors of such
indebtedness in the event of bankruptcy or a lawsuit on behalf of unpaid
creditors of the Company, Pro-Fac or any of the Subsidiary Guarantors. If a
court were to find in a lawsuit by an unpaid creditor or representative of
unpaid creditors, such as a trustee in bankruptcy, or the Company, Pro-Fac or
any of the Subsidiary Guarantors as a debtor in possession, that the Company,
Pro-Fac or such Subsidiary Guarantor did not receive fair consideration or
reasonably equivalent value for incurring such indebtedness or obligation
(including any guarantee thereof) and, at the time of such incurrence, the
Company, Pro-Fac or such Subsidiary Guarantor (i) was insolvent, (ii) was
rendered insolvent by reason of such incurrence or the aggregate payment of
$544.7 million in connection with the Transactions, (iii) was engaged in a
business or transaction for which the assets remaining in the Company, Pro-Fac
or such Subsidiary Guarantor, as the case may be, constituted unreasonably small
capital, or (iv) intended to incur or believed it would incur debts beyond its
ability to pay such debts as they mature, such court, subject to applicable
statutes of limitation, could determine to invalidate, in whole or in part, such
indebtedness and obligations as fraudulent conveyances or subordinate such
indebtedness and obligations to existing or future creditors of the Company,
Pro-Fac or such Subsidiary Guarantor, as the case may be. If a court were to
find that the Company, Pro-Fac or any Subsidiary Guarantor satisfied the
measures of insolvency or capital inadequacy described in (i) through (iv)
above, such court could avoid any distribution by such entity in respect of such
indebtedness (including, without limitation, any payment of principal or
interest) and order that it be returned to the Company, Pro-Fac or such
Subsidiary Guarantor, as the case may be, or to a fund for the benefit of the
creditors of such entity. Further, if a court were to find that, at the time
Pro-Fac, the Company or any Subsidiary Guarantor granted security interests for
the benefit of the Bank, Pro-Fac, the Company or such Subsidiary Guarantor did
not receive fair consideration or reasonably equivalent value for the grant of
such security interests and came within any of the foregoing clauses (i) through
(iv), a creditor or representative of creditors could seek to avoid the grant of
such security interests. This could result in an event of default with respect
to the New Credit Agreement which, under the terms thereof (subject to
applicable law), would allow the Bank to accelerate such debt.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction being applied. Generally, however, the Company,
Pro-Fac or any of the Subsidiary Guarantors would be considered insolvent at a
particular time if the sum of its debts was then greater than all of its
property at a fair valuation or if the present fair saleable value of its assets
was then less than the amount that would be required to pay its probable
liabilities on its existing debts as they became absolute and matured. On the
basis of the financial information, the recent operating history as discussed in
'Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company' and other factors, Pro-Fac believes that, after
giving effect to the issuance of the Notes, none of the Company, Pro-Fac or any
of the Subsidiary Guarantors has been rendered insolvent, each such entity has
sufficient capital for the businesses in which it is engaged and it will be able
to pay its debts as they mature. There can be no assurance, however, as to what
standard a court would apply in making any such determinations.
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SUBORDINATION OF THE NOTES; GUARANTEES
The Notes are general unsecured obligations of the Company and are
subordinate to all Senior Indebtedness of the Company, including all obligations
under the New Credit Agreement. The Company's obligations under the New Credit
Agreement are secured by all of the assets of the Company. The Guarantees are
general unsecured obligations of Pro-Fac and the Subsidiary Guarantors and
subordinate to all Senior Indebtedness of Pro-Fac and the Subsidiary Guarantors,
as the case may be, including all obligations pursuant to the Pro-Fac Bank
Guarantee and the guarantees by the Subsidiary Guarantors of the Company's
obligations under the New Credit Agreement (the 'Subsidiaries' Bank Guarantee').
The obligations of Pro-Fac and the Subsidiary Guarantors under the Pro-Fac Bank
Guarantee and the Subsidiaries' Bank Guarantee are secured by all of the assets
of Pro-Fac and the Subsidiary Guarantors, as the case may be. As of November 3,
1994, on a pro forma basis after giving effect to the Transactions, each of the
Company and Pro-Fac (after the elimination in consolidation of intercompany
obligations of $6.5 million) would have had $255.4 million of Senior
Indebtedness. In the event of a bankruptcy, liquidation or reorganization of the
Company, Pro-Fac or any of the Subsidiary Guarantors or in the event that any
default in payment of any debt constituting Senior Indebtedness occurs, holders
of Senior Indebtedness are entitled to payment in full from the proceeds of all
assets of the Company, Pro-Fac or the Subsidiary Guarantors, as the case may be,
prior to any payment of such proceeds to holders of Notes, and the Bank will
have certain rights as a secured creditor of the Company. In addition, upon the
occurrence of certain events of default under the New Credit Agreement, the
Company will be prohibited from making any payments in respect of the Notes
under certain circumstances. See 'Description of the Notes' and 'Description of
Certain Indebtedness -- New Credit Agreement.'
Pro-Fac has no independent operations and no significant assets other than
the capital stock of the Company, and is dependent upon the receipt of payments
under the Pro-Fac Marketing Agreement, dividends or other distributions from the
Company to fund its obligations, including its obligations under its Guarantee.
The assets and operations of the Subsidiary Guarantors do not constitute a
substantial portion of the assets and operations of the Company as a whole. In
the event that the Company is not able to make interest or principal payments on
the Notes, it is unlikely that Pro-Fac or the Subsidiary Guarantors would be
able to meet their obligations under the Guarantees.
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of any Change of Control
(as defined herein), the Company will be required to make an offer (a 'Change of
Control Offer') to purchase all or any part of a holder's Notes at 101% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of purchase. Any Change of Control, and any repurchase of the Notes
required under the Indenture upon a Change of Control, would constitute an event
of default under the New Credit Agreement, with the result that the obligations
of the Company thereunder could be declared due and payable. Any acceleration of
the Company's obligations under the New Credit Agreement would make it unlikely
that the Company would be able to purchase the Notes pursuant to the Change of
Control Offer.
LACK OF PUBLIC MARKET
The New Notes are being offered exclusively to the holders of the Old
Notes. The Old Notes were issued to a limited number of institutional investors
on November 3, 1994. There is currently no established market for the New Notes,
and there can be no assurance as to the liquidity of the trading markets for the
New Notes or that an active trading market for the New Notes will develop or be
sustained. If any such markets were to develop, the New Notes may trade at
prices that may be higher or lower than their principal amount, depending on
many factors, including prevailing interest rates and the markets for similar
securities. The Company does not intend to list the New Notes on any national
securities exchange or to apply for the quotation thereof on any automated
quotation system. Dillon, Read & Co. Inc. has advised Pro-Fac that it currently
intends to make a market in the Old Notes until the Expiration Date, and
thereafter it intends to make a market in the New Notes. However, Dillon, Read &
Co. Inc. is not obligated to do so, and any market making with respect to the
Notes may be
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discontinued at any time without notice. In addition, such market activity may
be limited during the pendency of the Exchange Offer.
To the extent Old Notes are tendered and accepted in the exchange, the
principal amount of outstanding Old Notes will decrease with a resulting
decrease in the liquidity in the market therefor. Following the consummation of
the Exchange Offer, holders of Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes will be adversely affected.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold or otherwise transferred by Holders thereof (other than any such
holder which is an 'affiliate' of any issuer within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement with any person to participate in the distribution
of such Notes. Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that, by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an 'underwriter' within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
'Plan of Distribution.' However, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
To the extent that Old Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Old Notes will be
adversely affected.
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THE COMPANY
GENERAL
The Company is a producer and marketer of processed food products including
canned and frozen fruits and vegetables, canned desserts and condiments, fruit
fillings and toppings, canned chilies and stews, salad dressings, pickles,
peanut butter and snack foods. In addition, the Company manufactures cans which
are both utilized by the Company and sold to third parties. In fiscal 1994, on a
pro forma basis after giving effect to the Transactions, the Company would have
had net sales and operating income plus depreciation and amortization of $749.2
million and $77.0 million (excluding the nonrecurring restructuring gain of $7.8
million and the $3.5 million charge relating to legal and advisory costs
incurred in connection with the change of control), respectively. See 'Pro Forma
Financial Data of the Company.'
The Company sells products in three principal categories: (i) 'branded'
products, which are sold under the Company's trademarks, (ii) 'private label'
products, which are sold to grocers that in turn use their own brand names on
the products and (iii) 'food service' products, which are sold to food service
institutions such as restaurants, caterers and bakeries and to schools. In
fiscal 1994, approximately one-half of the Company's net sales were branded and
the remainder were split between private label and food service. The Company's
branded products include 'Comstock,' 'Thank You' and 'Wilderness' fruit fillings
and toppings, 'Nalley' chilies and stews, 'Bernstein's' salad dressings and
'Adams' peanut butter. The Company's private label products include salad
dressings, salsa, fruit fillings and toppings, canned puddings and canned and
frozen vegetables, which are sold to customers such as A&P, Kroger, Safeway,
Topco, Wegman's and Winn-Dixie. The Company's food service products include
salad dressings, pickles, fruit fillings and toppings, canned and frozen
vegetables, canned puddings, cheese sauces and canned and frozen fruit, which
are sold to customers such as Carvel, Disney, Foodservice of America, KFC,
McDonald's and Sysco.
OPERATIONS
The Company operates throughout the United States and in Western Canada
through six operating divisions. Each division (other than the Snack Foods
Group, which has three separate divisional operations) is managed by a division
president and has its own sales, marketing and financial staff.
Comstock Michigan Fruit. The Company's largest division, CMF, produces
products in three principal categories: (i) fruit fillings and toppings, (ii)
aseptically produced products and (iii) canned and frozen fruits and vegetables.
In fiscal 1994, approximately one-third of CMF's net sales represented branded
products, approximately one-third represented private label products and
approximately one-third represented food service products. CMF's fruit fillings
and toppings, sold under the Company's 'Comstock,' 'Thank You' and 'Wilderness'
brand names, had a national market share of approximately 56% in fiscal 1994.
CMF's aseptic operations produce puddings, cheese sauces and dips primarily for
sale nationally to food service outlets. CMF's canned and frozen fruits and
vegetables are sold primarily in the Eastern United States to private label
customers. In fiscal 1994, CMF had net sales and division operating income of
$333.4 million and $29.6 million, respectively.
Nalley's. Nalley's, which includes Nalley's Canada Ltd., markets canned
meat products such as chilies and stews, pickles, salad dressings and peanut
butter. Nalley's products are primarily branded, accounting for approximately
three-quarters of Nalley's fiscal 1994 net sales. Several of Nalley's branded
products have leading market shares in the Pacific Northwest, such as 'Nalley'
chili, which had a market share of approximately 57%, and 'Nalley' and
'Farman's' pickles, which together had a market share of approximately 49%, for
the 52-week period ended August 7, 1994. In the Pacific Northwest, the Company's
'Nalley' and 'Bernstein's' brands of salad dressings had a combined market share
of approximately 17% for the same period. In fiscal 1994, Nalley's had net sales
and division operating income of $214.8 million and $17.6 million, respectively.
Southern Frozen Foods. Southern specializes in producing and selling a full
line of southern vegetables such as black-eyed peas, okra and leafy greens as
well as a line of traditional vegetables such as corn, peas, squash and green
beans. In fiscal 1994, branded sales represented approximately one-half of total
net sales of Southern, food service sales represented more than a quarter of the
total and
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private label sales accounted for the remainder. Southern's line of frozen
southern vegetables, which are marketed under the 'McKenzie's' and 'Southern
Farms' brand names, had a leading market share of approximately 26% in the
Southeast for the 52-week period ended March 6, 1994. Southern distributes
primarily in the Southeast and South Central portions of the United States. In
fiscal 1994, Southern had net sales and division operating income of $94.3
million and $10.2 million, respectively.
Snack Foods Group. The Company's Snack Foods Group consists of Snyder and
Husman, which produce and distribute their snack food products primarily in the
Mid-Atlantic and Midwest regions of the country, and Tim's, which produces and
distributes kettle-fried chips in the Pacific Northwest. In fiscal 1994, the
Snack Foods Group had net sales and division operating income of $61.2 million
and $2.7 million, respectively.
Brooks Foods. The Company's Brooks division markets specialty chili beans,
specialty tomato products, barbecue sauce and related products under the
'Brooks' label. Sales of Brooks products are principally in the Midwest. In
fiscal 1994, Brooks had net sales and division operating income of $30.0 million
and $3.1 million, respectively.
Finger Lakes Packaging. Finger Lakes manufactures various sizes of
three-piece sanitary food cans for the Company, and third-party food processors.
Approximately two-thirds of the cans manufactured by Finger Lakes are sold to
divisions of the Company, with the remaining one-third sold to other customers.
In fiscal 1994, Finger Lakes had net sales and operating income (before
elimination of intercompany transactions) of $49.9 million and $3.9 million,
respectively.
BUSINESS STRATEGY
Achieve Leading Market Shares of Branded Products. The Company believes
that having branded products with strong shares in regional markets provides it
with distinct advantages. Specifically, by achieving a market presence within a
geographic region, the Company believes it is better able to create avenues for
the sale of the Company's other branded products and to assess and meet local
market and consumer needs.
Diversify Through Sales of Branded, Private Label and Food Service
Products. Historically, the Company has focused primarily on its branded
products, many of which have leading market shares in the regions they serve.
However, with the growth of the private label and food service businesses, the
Company has also begun to focus on profitable opportunities in these areas. For
example, Nalley's has been working with grocers on programs for private label
salsa, soups and salad dressings with 'good,' 'better' and 'best' categories.
This concept offers the grocer a three-tiered product selection and provides the
Company with a means to customize products and programs specifically for
consumer desires. The Company is currently reviewing the expansion of the
'good,' 'better' and 'best' program to many other products. In addition, with
the growth of the food service sector, the Company has pursued food service
opportunities for its fruit fillings and toppings, puddings and cheese sauces.
Future food service growth is planned for other products such as breaded
vegetables and salad dressings.
Engage in Selective National Expansion Program. Certain of the Company's
products have achieved significant market shares within specific geographic
regions, and the Company believes substantial opportunities exist to distribute
these products on a national basis. The Company recently began selling its
'Bernstein's' salad dressing, first introduced in California, in Arizona,
Colorado and Upstate New York. Other products under consideration for national
expansion include Mexican specialty items, such as chili and salsa, other salad
dressings and canned soups.
Continuous Focus on Cost Reduction. Through a corporate wide program of
information management, selected capital expenditures and individual division
initiatives, the Company continuously seeks to reduce costs and improve
efficiency. During fiscal 1993, the Company initiated production consolidation
efforts involving the closing of three plants located in Michigan, Colorado and
New York. Further consolidations are being explored to reduce operational
redundancies. In the area of purchasing, by maximizing market leverage through
collaborative and cooperative purchasing activities throughout the Company,
significant savings have been achieved. As a result of the Company's cost
reduction activities, the Company's operating income margin from ongoing
businesses improved from 6.0% to 6.5% to 6.9% in each of fiscal 1992, 1993 and
1994, respectively.
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The Company's principal executive offices are located at 90 Linden Place,
P.O. Box 681, Rochester, New York 14603 and its telephone number is (716)
383-1850.
PRO-FAC COOPERATIVE, INC.
On November 3, 1994 the Company was acquired by Pro-Fac, an agricultural
cooperative formed under New York State law to process and market crops grown by
its members. Only growers of crops marketed through Pro-Fac, or associations of
such growers, can become members of Pro-Fac. A grower becomes a member of
Pro-Fac through the purchase of common stock, which obligates the grower to
supply, and Pro-Fac to purchase, crops. Pro-Fac's approximately 700 members are
growers, or associations of growers, located principally in California, Florida,
Georgia, Illinois, Iowa, Michigan, Nebraska, New York, North Dakota, Oregon,
Pennsylvania and Washington. Crops grown by Pro-Fac members and purchased by
Pro-Fac include fruits (cherries, apples, blueberries, peaches and plums),
vegetables (snap beans, beets, cucumbers, peas, sweet corn, carrots, cabbage,
squash, asparagus, potatoes, dry beans, southern peas, turnip roots and leafy
greens) and popcorn. All of the crops supplied to Pro-Fac by its members are
sold to the Company for processing.
Pro-Fac and the Company were established together in the early 1960s and
before Pro-Fac's recent acquisition of the Company, had a long-standing
contractual relationship under the Integrated Agreement, and similar predecessor
agreements. The Integrated Agreement, which has been superseded by the Pro-Fac
Marketing Agreement, principally governed four arrangements between Pro-Fac and
the Company: facilities financing, operations financing, marketing and
management. Pro-Fac continues to market its members' crops and provide other
accommodations to the Company, and the Company continues to provide management
services to Pro-Fac, pursuant to the Pro-Fac Marketing Agreement. See 'Certain
Transactions -- Pro-Fac Marketing Agreement.'
Pro-Fac's principal executive offices are located at 90 Linden Place, P.O.
Box 682, Rochester, New York 14603 and its telephone number is (716) 383-1850.
THE ACQUISITION
The proceeds of the Old Notes, together with the proceeds of borrowings
under the New Credit Agreement, were used to pay the purchase price and related
fees and expenses paid by Pro-Fac in connection with the Acquisition and to
repay the existing bank loans of Pro-Fac and the Company. The Acquisition was
effected through the Merger Agreement. Pursuant to the Merger Agreement, (i)
PFAC commenced the Tender Offer, (ii) on November 3, 1994, PFAC accepted for
payment and paid for Shares validly tendered and not withdrawn at a price per
Share of $19.00 in cash, (iii) simultaneously with the acceptance of Shares for
payment pursuant to the Tender Offer, the Merger occurred, (iv) any Shares
(except Shares owned by Pro-Fac or its subsidiaries or the Company or its
subsidiaries (which was cancelled) or Shares as to which stockholders of the
Company may exercise their appraisal rights provided in connection with the
Merger) not tendered and accepted for payment pursuant to the Tender Offer were
converted into the right to receive from the Company $19.00 per Share in cash,
and (v) each issued and outstanding share of the capital stock of PFAC, all of
which were owned by Pro-Fac, was converted into one share of common stock of the
Company. As a result of the Merger, the Company is a wholly-owned subsidiary of
Pro-Fac and has assumed all of the obligations and liabilities of PFAC,
including PFAC's obligations and liabilities under the Old Notes.
The Old Notes were sold in a private placement pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. PFAC structured the Old
Notes Offering as a private placement to be followed by an Exchange Offer of New
Notes for Old Notes in order to raise funds on a more expeditious basis than
would have been possible had the initial sale been pursuant to an offering
registered under the Securities Act. Such funds were required in order to
consummate the Acquisition in a timely manner. The purchasers of the Old Notes,
as a condition to such purchase, requested that the Company agree to commence
the Exchange Offer following the Old Notes Offering.
21
<PAGE>
FINANCING THE ACQUISITION
SOURCES AND USES OF FUNDS
The sources and uses of funds necessary to consummate the Transactions were
as follows:
<TABLE>
<CAPTION>
AMOUNT(1)
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Borrowings under New Credit Agreement(2):
Acquisition Facility:
Term Loan........................................................... $ 80.0
Term Loan Facility.................................................. 97.5
Seasonal Facility........................................................ 72.6
Sale of Notes................................................................. 160.0
Capital contribution by Pro-Fac(3)............................................ 134.6
-------
Total sources of funds.............................................. $ 544.7
-------
-------
USES OF FUNDS:
Purchase of the Company's Class A and Class B Common Stock(4)................. $ 166.8
Repayment of existing debt (other than seasonal debt) and other
obligations(5)............................................................... 276.4
Repayment of existing seasonal debt........................................... 84.1
Fees, discounts and commissions(6)............................................ 17.4
-------
Total uses of funds................................................. $ 544.7
-------
-------
</TABLE>
- ------------
(1) Sources and uses of funds are based on (i) the borrowings of bank debt that
were outstanding under the Company's existing credit facilities on the
Closing Date, (ii) the amounts due from the Company to Pro-Fac that were
outstanding on the Closing Date, (iii) the purchase price paid for the
Company in connection with the Acquisition and (iv) the fees, discounts and
commissions paid on or subsequent to the Closing Date in connection with the
Transactions.
(2) In connection with the Acquisition, PFAC entered into the New Credit
Agreement with the Bank, pursuant to which the Bank agreed to provide loans
to PFAC of up to $200.0 million pursuant to the Acquisition Facility. On
completion of the Merger, the obligations of PFAC under the New Credit
Agreement became obligations of the Company. The Acquisition Facility
consists of (i) the $80.0 million Term Loan, which is fully drawn and (ii)
the $120.0 million Term Loan Facility, approximately $97.5 million of which
has been or will be drawn in connection with the Transactions. Amounts drawn
under the Acquisition Facility include $155.2 million to repay indebtedness
due from the Company to Pro-Fac, which Pro-Fac, in turn, applied to repay an
equal amount of outstanding debt plus accrued and unpaid interest due to the
Bank. The New Credit Agreement also provides the Company with the Seasonal
Facility of up to $86.0 million and a $10.0 million Letter of Credit
Facility. On the Closing Date, $72.6 million was drawn under the Seasonal
Facility to repay outstanding seasonal debt, together with accrued and
unpaid interest and additional capital investment, due from Pro-Fac to the
Bank and outstanding seasonal debt, together with accrued and unpaid
interest and fees, due from the Company to a syndicate of commercial lenders
led by The Chase Manhattan Bank, N.A. The Company estimates that its peak
borrowings under the Seasonal Facility during fiscal 1995 will not increase
significantly over the $72.6 million drawn on the Closing Date. In fiscal
1994, the Company's borrowings under its existing seasonal line of credit
peaked at approximately $81.0 million and the average amount outstanding
during such year was approximately $51.5 million. See 'Description of
Certain Indebtedness -- New Credit Agreement.'
(3) In connection with the Acquisition, Pro-Fac made a $134.6 million capital
contribution to the Company which consisted of the cancellation of $110.0
million of indebtedness and capital lease obligations due to Pro-Fac by the
Company (including the cancellation of certain accounts payable due to
Pro-Fac by the Company, in the amount of $5.1 million) and the cancellation
of $24.6 million
(footnotes continued on next page)
22
<PAGE>
(footnotes continued from previous page)
of obligations due to Pro-Fac from the Company as a result of Pro-Fac's
transfer to the Company of (i) its investment in the Bank in the amount of
$21.3 million and (ii) certain legal and advisory costs incurred by Pro-Fac
in connection with the Transactions in the amount of $3.3 million. See
'Certain Transactions -- Equity Ownership in Springfield Bank for
Cooperatives.'
(4) The purchase price for the Shares consists of $165.1 million for the
8,690,005 shares currently outstanding as of the Closing Date at $19.00 per
share plus $1.7 million representing the aggregate payments being made by
the Company in connection with the cancellation of certain options to
purchase shares of the Company exercisable at a price less than $19.00 per
share.
(5) Includes the cancellation of (i) $246.7 million of indebtedness and capital
lease obligations due to Pro-Fac by the Company, (ii) certain accounts
payable due to Pro-Fac by the Company, in the amount of $5.1 million, and
(iii) $24.6 million of obligations due to Pro-Fac by the Company as a result
of the transfer by Pro-Fac to the Company of its (a) $21.3 million
investment in the Bank and (b) $3.3 million of legal and advisory costs
incurred in connection with the Transactions. See 'Certain
Transactions -- Equity Ownership in Springfield Bank for Cooperatives.'
(6) $17.4 million in fees, discounts and commissions were paid on or subsequent
to the Closing Date. This amount excludes amounts paid for similar charges
prior to the Closing Date.
USE OF PROCEEDS
There will be no proceeds to the Company from any exchange pursuant to the
Exchange Offer.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on November 3, 1994 to institutional
investors (the 'Initial Investors'). In connection therewith, the Company and
the Initial Investors entered into the Registration Rights Agreement, which
requires that, as soon as practicable within 45 days following the issuance of
the Old Notes, the Company file with the Commission a Registration Statement
(the 'Exchange Offer Registration Statement,' of which this Prospectus is a
part) under the Securities Act with respect to an issue of new notes of the
Company identical in all material respects to the Old Notes, use its best
efforts to cause such Exchange Offer Registration Statement to become effective
under the Securities Act and, upon the effectiveness of that Exchange Offer
Registration Statement, offer to the holders of the Old Notes the opportunity to
exchange their Old Notes for a like principal amount of New Notes, to be issued
without a restrictive legend and which might be reoffered and resold by the
holder without restrictions or limitations under the Securities Act. A copy of
the Registration Rights Agreement has been filed as an exhibit to the Exchange
Offer Registration Statement.
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any holder of such New Notes
(other than any such holder which is an 'affiliate' of the Company or any
Guarantor within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and such holder is not engaged in, and does not intend
to engage in, and has no arrangement or understanding with any person to
participate in, the distribution of such New Notes. Any holder who tenders in
the Exchange Offer for the purpose of participating in a distribution of the New
Notes cannot rely on the staff position enunciated in the no-action letters
issued to third parties referred to above and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer
23
<PAGE>
will not be deemed to admit that it is an 'underwriter' within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. By acceptance of this Exchange Offer,
each broker-dealer that receives New Notes pursuant to the Exchange Offer agrees
to notify the Company prior to using this Prospectus in connection with the sale
or transfer of New Notes. See 'Plan of Distribution.'
As a result of the filing and the effectiveness of the Exchange Offer
Registration Statement and the consummation of the Exchange Offer, the Company's
obligation to make certain semi-annual payments with respect to the Old Notes
will be terminated. The Old Notes were issued to a small number of institutional
investors on November 3, 1994 and there is no public market for them at present.
To the extent Old Notes are tendered and accepted in the exchange, the principal
amount of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, holders of Old Notes will continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the market for the Old Notes could be
adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date (as defined below). An aggregate of $160.0 million principal
amount of the Old Notes is outstanding. The Company will issue $1,000 principal
amount at maturity of New Notes in exchange for each $1,000 principal amount at
maturity of outstanding Old Notes accepted in the Exchange Offer. Holders may
tender some or all of their Old Notes pursuant to the Exchange Offer. However,
Old Notes may be tendered only in integral multiples of $1,000.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that the New Notes will
have been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of the Indenture under which
the Old Notes were, and the New Notes will be, issued.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
' -- Fees and Expenses.'
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'Expiration Date' shall mean 5:00 p.m., New York City time, on
, 1994, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term 'Expiration Date' shall mean the latest
date and time to which the Exchange Offer is extended.
24
<PAGE>
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth below under 'Conditions' shall not have been satisfied, to
terminate the Exchange Offer, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by a public
announcement thereof. If the Exchange Offer is amended in a manner determined by
the Company to constitute a material change, the Company will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered holders, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (or a confirmation of an appropriate book-entry transfer into the Exchange
Agent's account at DTC as described below) and any other required documents, to
the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date. To be tendered effectively, the Old Notes (or a timely confirmation of a
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC
as described below), Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth below under 'Exchange
Agent' prior to 5:00 p.m., New York City time, on the Expiration Date.
The tender by a holder will constitute an agreement between such holder and
the Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
The Exchange Agent will establish an account with respect to the Old Notes
at DTC within two business days after the date of this Prospectus, and any
financial institution which is a participant in DTC may make book-entry delivery
of the Old Notes by causing DTC to transfer such Old Notes into the Exchange
Agent's account in accordance with DTC's procedure for such transfer. Although
delivery of Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must in any case be
transmitted to and received by the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date at one of its addresses set forth below under
'Exchange Agent', or the guaranteed delivery procedure described below must be
complied with. Delivery of documents to DTC in accordance with its procedures
does not constitute delivery to the Exchange Agent. All references in this
Prospectus to deposit or delivery of Old Notes shall be deemed to include DTC's
book-entry delivery method.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent, including delivery through DTC,
is at the election and risk of the holder. Instead of delivery by mail, it is
recommended that Holders use an overnight or hand delivery service. If Old Notes
are sent by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure delivery to the Exchange Agent before the Expiration Date. No Letter of
Transmittal or Old Notes should be sent to the Company.
25
<PAGE>
Holders may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such holders.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled 'Special Registration
Instructions' or 'Special Delivery Instructions' on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an 'eligible guarantor institution' within
the meaning of Rule 17Ad-15 under the Exchange Act (an 'Eligible Institution').
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders
(or, in the case of Old Notes delivered by book-entry transfer within DTC, will
be credited to the account maintained within DTC by the participant in DTC which
delivered such shares), unless otherwise provided in the Letter of Transmittal,
as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth below under 'Conditions,' to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the holder, that each of the holder and any such
other person is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, the distribution
of such New Notes and that neither the
26
<PAGE>
holder nor any such other person is an 'affiliate,' as defined under Rule 405 of
the Securities Act, of the Company or any Guarantor. Each broker or dealer that
receives New Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker or dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See 'Plan of
Distribution.'
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes (or a
confirmation of book-entry transfer of Old Notes into the Exchange Agent's
account at DTC), the Letter of Transmittal or any other required documents to
the Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of such Old Notes and the
principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five (5) New York Stock
Exchange, Inc. trading days after the Expiration Date, a duly executed
Letter of Transmittal (or facsimile thereof) together with the Old Notes
(or a confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at DTC), and any other documents required by the
Letter of Transmittal and the instructions thereto, will be deposited by
such Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), and all tendered Old Notes in proper form for transfer
(or a confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at DTC) and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five (5)
New York Stock Exchange, Inc. trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the 'Depositor'),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee with
respect to the Old Notes register the transfer of such Old Notes into the name
of the person withdrawing the tender and (iv) specify the name in which any such
Old Notes are to be registered, if different from that of the Depositor. If the
Old Notes have been delivered pursuant to the book-entry procedure set forth
above under ' -- Procedures for Tendering', any notice of withdrawal must
specify the name and number of the participant's account at DTC to be credited
with the withdrawn Old Notes. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company in its sole discretion, which determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Properly withdrawn Old Notes may be retendered by following one of
the procedures described above under '-- Procedures for Tendering' at any time
prior to the Expiration Date.
27
<PAGE>
Any Old Notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned as soon as practicable to the holder thereof without cost
to such holder.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company, or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgement of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company; or
(c) any law, statute, rule or regulation is proposed, adopted or
enacted, which, in the sole judgement of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company; or
(d) any governmental approval has not been obtained, which approval
the Company shall in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders (or, in the case of Old Notes
delivered by book-entry transfer within DTC, credit such Old Notes to the
account maintained within DTC by the participant in DTC which delivered such
shares), (ii) extend the Exchange Offer and retain all Old Notes tendered prior
to the expiration of the Exchange Offer, subject, however, to the rights of
holders to withdraw such Old Notes (see 'Withdrawal of Tenders' above) or (iii)
waive such unsatisfied conditions with respect to the Exchange Offer and accept
all properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the waiver and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
28
<PAGE>
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile By Hand or Overnight Delivery:
P.O. Box 84 Transmission (for One State Street
Bowling Green Station eligible financial New York, New York 10004
New York, New York 10274-0084 institutions only): Attn: Securities Processing
Attn: Reorganization (212) 858-2611 Window, Subcellar One
Operations
Department
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by facsimile, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for services and will reimburse it
for its reasonable out-of-pocket expenses in connection therewith and will pay
the reasonable fees and expenses of one firm acting as counsel for the holders
of Old Notes should such holders deem it advisable to appoint such counsel.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, New Notes or Old Notes
for principal amounts not tendered or accepted for exchange are to be
registered, or are to be issued in the name of, or delivered to, any person
other than the registered holder, or if tendered Old Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
considerations applicable to the exchange of Old Notes for New Notes and the
ownership and disposition of the New Notes by holders who acquire the New Notes.
This discussion is based on laws, regulations, rulings and decisions now in
effect, all of which are subject to change, possibly retroactively. The
discussion is not based on the opinion of tax counsel or any other tax expert
nor does it cover all aspects of federal income taxation that may be relevant to
holders, in light of their specific circumstances, particularly holders subject
to special treatment under the federal income tax laws (such as insurance
companies, financial institutions, tax exempt organizations, foreign persons,
and taxpayers subject to the alternative minimum tax). It also does not address
state, local, foreign or other tax laws. The description assumes that holders of
the New Notes will hold the New Notes as 'capital assets' (generally, property
held for investment purposes) under the Internal Revenue Code of 1986, as
amended (the 'Code'). EACH HOLDER SHOULD CONSULT HIS TAX ADVISOR IN DETERMINING
THE FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR
HOLDER
29
<PAGE>
OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE OWNERSHIP AND DISPOSITION OF
THE NEW NOTES.
EXCHANGE OF NOTES
There will be no federal income tax consequences to holders exchanging Old
Notes for New Notes pursuant to the Exchange Offer and such a holder will have
the same adjusted basis and holding period in the New Notes as it had in the Old
Notes immediately before the exchange.
UNITED STATES TAXATION OF UNITED STATES HOLDERS
As used herein, the term 'United States Holder' means a holder of a New
Note that is, for United States federal income tax purposes, (a) a citizen or
resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof or (c) an estate or trust the income of which is
subject to United States federal income taxation regardless of source.
PAYMENT OF INTEREST ON NEW NOTES
Interest paid or payable on the New Notes will be taxable to a United
States Holder as ordinary interest income, generally as received or accrued, in
accordance with such holder's method of accounting for federal income tax
purposes.
DISPOSITION OF NEW NOTES
In general, the holder of a New Note will recognize gain or loss upon the
sale, redemption, retirement or other disposition of the New Note measured by
the difference between the amount of cash and the fair market value of property
received (except to the extent attributable to accrued interest, which
constitutes ordinary income), and the holder's tax basis in the New Note.
Subject to the market discount rules discussed below, the gain or loss on the
sale or other disposition of the New Note should be long-term capital gain or
loss, provided the holder has a holding period for the New Note (which would
include the holding period of the Old Note) of more than one year.
MARKET DISCOUNT ON RESALE
Holders, other than the Initial Investors, should be aware that the resale
of the New Notes may be affected by the market discount provisions of the Code.
These rules generally provide that, if a subsequent holder of a Note purchases
it at a market discount in excess of a statutorily defined de minimis amount,
and thereafter recognizes gain upon a disposition (including a partial
redemption) of the Note, the lesser of such gain or the portion of the market
discount that accrued while the Note was held by such holder will be treated as
ordinary interest income at the time of the disposition. The rules also provide
that a holder that acquires a Note at a market discount may be required to defer
a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry such Note until the
holder disposes of such Note in a taxable transaction. If a holder of a Note
elects to include market discount income currently, neither of the foregoing
rules would apply.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, a United States Holder of a New Note may be subject to backup
withholding at the rate of 31% with respect to interest and principal paid on a
New Note, unless the holder (a) is an entity (including corporations, tax-exempt
organizations and certain qualified nominees) which is exempt from withholding
and, when required, demonstrates this fact, or (b) provides the payor with its
Taxpayer Identification Number ('TIN') (which for an individual would be the
holder's Social Security number), certifies that the TIN provided to the payor
is correct and that the holder has not been notified by the Internal Revenue
Service ('IRS') that it is subject to backup withholding due to underreporting
of interest or dividends, and otherwise complies with applicable requirements of
the backup withholding rules. In addition, such payments of principal and
interest to United States Holders that are not
30
<PAGE>
corporations, tax-exempt organizations or qualified nominees will generally be
subject to information reporting requirements. A holder of a New Note who does
not provide the payor with his correct TIN may be subject to penalties imposed
by the IRS.
The payor will report to holders of the New Notes and the IRS the amount of
any 'reportable payments' (including any interest paid) and any amount withheld
with respect to the New Notes during the calendar year.
The amount of any backup withholding from a payment to a holder will be
allowed as a credit against such holder's federal income tax liability and may
entitle such holder to a refund, provided that the required information is
furnished to the IRS.
UNITED STATES TAXATION OF FOREIGN HOLDERS
PAYMENT OF INTEREST ON NOTES
In general, payments of interest received by any holder that is not a
United States Holder (a 'Foreign Holder') will not be subject to United States
federal withholding tax, provided that (a)(i) the holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (ii) the holder is not a controlled
foreign corporation that is related to the Company actually or constructively
through stock ownership and (iii) either (x) the beneficial owner of the New
Note, under penalties of perjury, provides the Company or its agent with the
beneficial owner's name and address and certifies that it is not a United States
Holder on IRS Form W-8 (or a suitable substitute form) or (y) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a 'financial
institution') holds the New Note and certifies to the Company or its agent under
penalties of perjury that such a Form W-8 (or suitable substitute) has been
received by it from the beneficial owner or qualifying intermediary and
furnishes the payor a copy thereof, (b) the Foreign Holder is subject to United
States federal income tax with respect to the New Note on a net basis because
payments received with respect to the New Note are effectively connected with a
United States trade or business of the Foreign Holder (in which case the Foreign
Holder may also be subject to 'branch profits tax' under section 884 of the
Code) and provides the Company with a properly executed IRS Form 4224 or (c) the
Foreign Holder is entitled to the benefits of an income tax treaty under which
the interest is exempt from United States withholding tax, and the Foreign
Holder or such holder's agent provides the Company with a properly executed IRS
Form 1001 claiming the exemption. Payments of interest not exempt from United
States withholding tax as described above will be subject to such withholding
tax at the rate of 30% (subject to reduction under an applicable income tax
treaty).
DISPOSITION OF NEW NOTES
A Foreign Holder generally will not be subject to United States federal
income tax (and generally no tax will be withheld) with respect to gain realized
on the sale, redemption, retirement or other disposition of New Notes unless (i)
the gain is effectively connected with a United States trade or business
conducted by the Foreign Holder or (ii) the Foreign Holder is an individual who
is present in the United States for a period or periods aggregating 183 or more
days in the taxable year of the disposition and certain other conditions are
met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current Treasury regulations, backup withholding and information
reporting do not apply to payments made by the Company or a paying agent to
Foreign Holders if the certification described under ' -- United States Taxation
of Foreign Holders -- Payment of Interest on Notes' above is received, provided
that the payor does not have actual knowledge that the holder is a United States
Holder. If any payments of principal and interest are made to the beneficial
owner of a New Note by or through the foreign office of a foreign custodian,
foreign nominee or other foreign agent of such beneficial owner, or if the
foreign office of a foreign 'broker' (as defined in applicable United States
Treasury regulations) pays the proceeds of the sale of a New Note or a coupon to
the seller thereof,
31
<PAGE>
backup withholding and information reporting will not apply. Information
reporting requirements (but not backup withholding) will apply, however, to a
payment by a foreign office of a broker that is a United States person, that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, or that is a 'controlled foreign
corporation' (generally, a foreign corporation controlled by United States
shareholders) with respect to the United States, unless the broker has
documentary evidence in its records that the holder is a Foreign Holder and
certain other conditions are met, or the holder otherwise establishes an
exemption. Payment by a United States office of a broker is subject to both
backup withholding at a rate of 31% and information reporting unless the holder
certifies under penalties of perjury that it is a Foreign Holder or otherwise
establishes an exemption. A Foreign Holder may obtain a refund or a credit
against such holder's United States federal income tax liability of any amounts
withheld under the backup withholding rules, provided the required information
is furnished to the IRS.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes
on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by the Company. The expenses of the Exchange Offer
will be amortized over the term of the New Notes.
CAPITALIZATION
The following table sets forth the historical consolidated capitalization
of the Company as of September 24, 1994 and the pro forma consolidated
capitalization of the Company as adjusted to give effect to the Transactions,
including the sale of the Old Notes as if they had occurred as of September 24,
1994. This presentation should be read in conjunction with the Consolidated
Financial Statements and the other information contained in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 24, 1994
-------------------------
PRO FORMA
FOR THE
ACTUAL TRANSACTIONS(1)
------ ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Existing seasonal debt(2)............................................................... $ 90.0 $--
Long-term debt, including current portion:
Existing long-term debt(3)......................................................... 257.5 6.5
Acquisition Facility:
Term Loan(4).................................................................. -- 80.0
Term Loan Facility(4)......................................................... -- 97.5
Seasonal Facility(4)............................................................... -- 78.5
Old Notes.......................................................................... -- 160.0
Other long-term debt(5)............................................................ 3.6 5.3
------ -------
Total debt(6)................................................................. 351.1 427.8
Shareholders' equity.................................................................... 79.9 134.6
------ -------
Total capitalization.......................................................... $431.0 562.4
------ -------
------ -------
Total debt/total capitalization......................................................... 81.5% 76.1%
Total debt/pro forma Adjusted EBITDA(7)................................................. 4.85x 5.91x
</TABLE>
- ------------
(1) For information regarding the pro forma data, see 'Pro Forma Financial Data
of the Company.'
(2) Includes $40.0 million of notes payable and $50.0 million of seasonal debt
due to Pro-Fac.
(3) Includes accounts payable, capital lease obligations and debt due to Pro-Fac
as calculated by the Company at September 24, 1994 and, therefore, excludes
$2.6 million of disputed legal and advisory costs incurred by the Company in
fiscal 1994 and allocated to Pro-Fac. Also includes the finance receivable
relating to intangibles owed to Pro-Fac, which was $24.5 million at
September 24, 1994.
(footnotes continued on next page)
32
<PAGE>
(footnotes continued from previous page)
(4) In connection with the Acquisition, PFAC and Pro-Fac entered into the New
Credit Agreement with the Bank, pursuant to which the Bank has provided
loans pursuant to the Acquisition Facility. On completion of the Merger, the
obligations of PFAC under the New Credit Agreement became obligations of the
Company. The Acquisition Facility consists of (i) the $80.0 million Term
Loan, all of which was drawn in connection with the Transactions and (ii)
the $120.0 million Term Loan Facility, $97.5 million of which has been or
will be drawn in connection with the Transactions. See 'The Acquisition.'
Amounts drawn under the Acquisition Facility include $155.2 million to repay
indebtedness due from the Company to Pro-Fac, which Pro-Fac, in turn,
applied to repay an equal amount of outstanding debt due to the Bank plus
accrued and unpaid interest. The New Credit Agreement also provides the
Company with the Seasonal Facility of up to $86.0 million and a $10.0
million Letter of Credit Facility. As of September 24, 1994, on a pro forma
basis after giving effect to the Transactions, there would have been $78.5
million of borrowings under the Seasonal Facility. On the Closing Date,
$72.6 million was drawn under the Seasonal Facility to repay outstanding
seasonal debt. The Company estimates that its peak borrowings under the
Seasonal Facility during fiscal 1995 will not increase significantly over
the $72.6 million drawn on the Closing Date. In fiscal 1994, the Company's
borrowings under its existing seasonal line of credit peaked at
approximately $81.0 million and the average amount outstanding during such
year was approximately $51.5 million. See 'Description of Certain
Indebtedness -- New Credit Agreement.'
(5) The increase in other debt reflects (i) employee severance and retirement
benefits for certain employees incurred in conjunction with the Merger in
the amount of $0.7 million and (ii) the reclassification of previously
accrued retirement benefits totalling $1.0 million.
(6) Total debt is defined as the sum of (i) current and long-term debt due to
Pro-Fac, (ii) current and long-term debt due to others, including notes
payable and borrowings under the Seasonal Facility, if any, (iii) current
and long-term capital lease obligations, (iv) other amounts due to Pro-Fac
and (v) the finance receivable relating to intangibles owed to Pro-Fac which
was $24.5 million on September 24, 1994.
(7) Total debt divided by pro forma first quarter fiscal 1995 Adjusted EBITDA of
$18.1 million (presented on an annualized basis). Adjusted EBITDA for the
three months ended September 24, 1994 has been annualized in computing this
ratio and therefore does not take into account seasonal factors that affect
Adjusted EBITDA.
33
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following table sets forth selected historical consolidated financial
data of the Company for the periods indicated. The information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes thereto appearing elsewhere herein and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company.'
The selected historical consolidated financial data for each of the years
ended June 26, 1992, June 26, 1993 and June 25, 1994 and as of June 26, 1993 and
June 25, 1994 have been derived from the Company's audited consolidated
financial statements included elsewhere herein. The selected historical
consolidated financial data for each of the years ended June 29, 1990 and June
28, 1991 and as of June 29, 1990, June 28, 1991 and June 26, 1992 have been
derived from the Company's audited consolidated financial statements not
included herein. The financial data for the three months ended September 25,
1993 and September 24, 1994 and as of September 24, 1994 are unaudited, but in
the opinion of the Company reflect all adjustments necessary for a fair
presentation of such data. The data for the three months ended September 24,
1994 are not necessarily indicative of results of operations for fiscal 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------------
JUNE 25, 1994
JUNE JUNE JUNE JUNE ------------------
29, 28, 26, 26, PRO
1990 1991 1992 1993 ACTUAL FORMA(1)
------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................. $926.9 $933.1 $896.9 $878.6 $ 829.1 $749.2
Cost of sales.............................. 658.5 673.3 652.3 632.6 592.6 534.3
------- ------- ------- ------- ------- -------
Gross profit........................... 268.4 259.8 244.6 246.0 236.5 214.9
Selling, administrative and general........ 218.4 220.9 201.4 207.1 186.9 159.3
Amortization of unallocated excess of
purchase price over net assets
acquired................................. -- -- -- -- -- 4.7
Restructuring including net loss (gain)
from division disposals(2)............... -- -- -- 61.0 (7.8) --
Change in control expenses(3).............. -- -- -- -- 3.5 --
(Gain) on assets resulting from fire
claim(4)................................. -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Operating income (loss)................ 50.0 38.9 43.2 (22.1 ) 53.9 50.9
Total interest expense..................... 26.0 26.1 22.8 19.6 18.2 37.2
------- ------- ------- ------- ------- -------
Pre-tax earnings (loss) before dividing
with Pro-Fac......................... 24.0 12.8 20.4 (41.7 ) 35.7 13.7
Pro-Fac share of earnings (loss)........... 11.5 5.9 9.5 (21.8 ) 16.9 6.9
------- ------- ------- ------- ------- -------
Income (loss) before taxes and
cumulative effect of an accounting
change............................... 12.5 6.9 10.9 (19.9 ) 18.8 6.8
Provision for taxes........................ 5.2 3.2 4.8 3.9 8.7 3.8
------- ------- ------- ------- ------- -------
Net income (loss) before cumulative
effect of an accounting change....... 7.3 3.7 6.1 (23.8 ) 10.1 3.0
Cumulative effect of an accounting
change................................... 4.3 -- -- -- -- --
------- ------- ------- ------- ------- -------
Net income (loss)...................... $ 11.6 $ 3.7 $ 6.1 $(23.8 ) $ 10.1 $ 3.0
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Ratio of earnings to fixed charges(5)...... 1.47x 1.26x 1.46x -- (6) 1.98x 1.14x
BALANCE SHEET DATA:
Working capital............................ $121.4 $106.8 $101.7 $100.4 $ 104.0
Total assets............................... 567.1 557.9 529.7 493.7 446.9
Total debt(7).............................. 396.7 387.4 357.7 316.3 271.6
Shareholders' equity....................... 102.5 107.3 104.5 75.7 80.9
SELECTED OTHER DATA:
Adjusted EBITDA(8)......................... $ 76.8 $ 69.1 $ 73.1 $ 69.4 $ 75.3 $77.0
Depreciation and amortization of fixed
assets................................... 22.2 24.4 24.4 25.4 22.3 19.7
Amortization of intangibles(9)............. 4.6 5.8 5.5 5.1 3.4 6.4
Capital expenditures(10)................... 40.0 24.9 16.2 21.5 19.5 19.5
SELECTED RATIOS:
Adjusted EBITDA/total interest expense..... 2.95x 2.65x 3.21x 3.54x 4.14x 2.07x
Adjusted EBITDA less capital
expenditures/total interest expense...... 1.42x 1.69x 2.50x 2.44x 3.07x 1.55x
Total debt/Adjusted EBITDA................. 5.17x 5.61x 4.89x 4.56x 3.61x 4.46x
<CAPTION>
THREE MONTHS ENDED
----------------------------------
SEPTEMBER 24, 1994
------------------
SEPTEMBER 25, PRO
1993 ACTUAL FORMA(1)
------------- ------- -------
(DOLLARS IN MILIONS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................. $ 210.1 $176.8 $174.5
Cost of sales.............................. 153.1 126.8 125.3
------ ------- -------
Gross profit........................... 57.0 50.0 49.2
Selling, administrative and general........ 46.3 38.0 36.1
Amortization of unallocated excess of
purchase price over net assets
acquired................................. -- -- 1.2
Restructuring including net loss (gain)
from division disposals(2)............... -- 8.4 --
Change in control expenses(3).............. -- 1.8 --
(Gain) on assets resulting from fire
claim(4)................................. -- (6.5 ) --
------ ------- -------
Operating income (loss)................ 10.7 8.3 11.9
Total interest expense..................... 4.8 5.1 9.9
------ ------- -------
Pre-tax earnings (loss) before dividing
with Pro-Fac......................... 5.9 3.2 2.0
Pro-Fac share of earnings (loss)........... 2.8 1.5 1.0
------ ------- -------
Income (loss) before taxes and
cumulative effect of an accounting
change............................... 3.1 1.7 1.0
Provision for taxes........................ 1.9 1.4 0.6
------ ------- -------
Net income (loss) before cumulative
effect of an accounting change....... 1.2 0.3 0.4
Cumulative effect of an accounting
change................................... -- -- --
------ ------- -------
Net income (loss)...................... $ 1.2 $ 0.3 $ 0.4
------ ------- -------
------ ------- -------
Ratio of earnings to fixed charges(5)...... 1.62x 1.32x 1.10x
BALANCE SHEET DATA:
Working capital............................ $101.8 $125.8
Total assets............................... 524.4 681.4
Total debt(7).............................. 351.1 427.8
Shareholders' equity....................... 79.9 134.6
SELECTED OTHER DATA:
Adjusted EBITDA(8)......................... $ 17.2 $ 17.5 $18.1
Depreciation and amortization of fixed
assets................................... 5.7 4.7 4.6
Amortization of intangibles(9)............. 0.8 0.8 1.6
Capital expenditures(10)................... 4.5 5.4 5.4
SELECTED RATIOS:
Adjusted EBITDA/total interest expense..... 3.58x 3.43x 1.83x
Adjusted EBITDA less capital
expenditures/total interest expense...... 2.65x 2.37x 1.28x
Total debt/Adjusted EBITDA................. 5.56x (11) 5.02x (11) 5.91x (11)
</TABLE>
(footnotes on next page)
34
<PAGE>
(footnotes from previous page)
(1) For information regarding the pro forma data, see 'Pro Forma Financial Data
of the Company.'
(2) In fiscal 1993, the Company incurred restructuring charges of $61.0 million
(before dividing such charges with Pro-Fac and before taxes), which included
the loss incurred on the sale of the Lucca frozen entree business,
anticipated losses on the sale of the meat snacks and Hiland potato chips
businesses, and other costs anticipated in conjunction with the
restructuring program. Virtually all of this charge was a revaluation of
assets, rather than cash expense. During fiscal 1994, the Company sold the
oats operations of National Oats realizing a gain of $10.9 million (before
dividing such gain with Pro-Fac and before taxes), which was offset by a
$3.1 million charge (before dividing such charge with Pro-Fac and before
taxes) to adjust previous estimates recorded regarding these restructuring
activities. During the first quarter of fiscal 1995, the Company incurred a
restructuring charge of $8.4 million (before dividing such charge with
Pro-Fac and before taxes) to reflect the estimated impact of the potential
sale of certain assets of the Nalley's U.S. Chips and Snacks operation and
other expenses relating to the disposal of this operation.
(3) In fiscal 1994 and the first quarter of fiscal 1995 the Company expensed
$3.5 million and $1.8 million, respectively, in each case before dividing
such charges with Pro-Fac and before taxes, for legal, accounting,
investment banking and other expenses in connection with the change of
control issue. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company.'
(4) In the first quarter of fiscal 1995, the Company realized a gain of $6.5
million (before dividing such gain with Pro-Fac and before taxes),
representing insurance proceeds for the replacement value in excess of the
depreciated value of the building and equipment destroyed by fire on July 7,
1994 at the Southern division.
(5) For purposes of calculating earnings to fixed charges, earnings are
determined by adding fixed charges to pre-tax earnings (loss) after dividing
with Pro-Fac. On a pro forma basis, earnings are determined by adding fixed
charges to pre-tax earnings (loss) after dividing with Pro-Fac less
undistributed earnings of the Bank. Fixed charges consist of interest
expense and the interest component of rental obligations.
(6) Earnings were inadequate to cover fixed charges by $20.0 million in fiscal
1993.
(7) Total debt is defined as the sum of (i) the current and long-term debt due
to Pro-Fac, (ii) the current and long-term debt due to others, including
notes payable and borrowings under the Seasonal Facility, if any, (iii) the
current and long-term capital lease obligations, (iv) the other amounts due
to Pro-Fac and (v) the finance receivable relating to intangibles owed to
Pro-Fac, which was $53.4 million, $55.8 million, $53.4 million, $26.5
million, $24.9 and $24.5 million at June 29, 1990, June 28, 1991, June 26,
1992, June 26, 1993, June 25, 1994 and September 24, 1994, respectively, and
would have been zero at September 24, 1994, on a pro forma basis, after
giving effect to Transactions.
(8) Adjusted EBITDA is defined as the sum of (i) pre-tax earnings (loss) before
dividing with Pro-Fac, (ii) total interest expense, (iii) depreciation and
amortization of fixed assets and (iv) amortization of intangibles. Adjusted
EBITDA excludes the nonrecurring restructuring charge of $61.0 million in
fiscal 1993, the nonrecurring restructuring gain of $7.8 million in fiscal
1994, the nonrecurring restructuring charge of $8.4 million and the
nonrecurring gain on assets resulting from the fire claim of $6.5 million in
the first quarter of fiscal 1995 and the $3.5 million and $1.8 million
charges in fiscal 1994 and the first quarter of fiscal 1995, respectively,
relating to legal and advisory costs incurred in connection with the change
of control. Adjusted EBITDA is presented not as an alternative measure of
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles), but rather to provide
additional information related to the debt servicing ability of the Company.
(9) Amortization of intangibles is defined as the sum of amortization of
goodwill and intangibles, including the amount of the finance receivable
relating to goodwill recognized by Pro-Fac. Through the provisions of the
earnings split, amortization of intangibles has been recognized equally
between
(footnotes continued on next page)
35
<PAGE>
(footnotes continued from previous page)
the Company and Pro-Fac in the amounts of $2.3 million, $2.9 million, $2.8
million, $2.6 million, $1.7 million and $0.4 million and $0.4 million for
fiscal 1990, 1991, 1992, 1993 and 1994, the first quarter of fiscal 1994 and
the first quarter of fiscal 1995, respectively.
(10) Includes capital expenditures of the Company of $5.7 million, $1.5 million,
$0.6 million, $8.4 million, $9.5 million, $4.5 million and $4.5 million for
fiscal 1990, 1991, 1992, 1993 and 1994, the first quarter of fiscal 1994
and the first quarter of fiscal 1995, respectively, and capital
expenditures of Pro-Fac of $34.3 million, $23.4 million, $15.6 million,
$13.1 million, $10.0 million, $0.0 million and $0.9 million for fiscal
1990, 1991, 1992, 1993 and 1994, the first quarter of fiscal 1994 and the
first quarter of fiscal 1995, respectively. Historically, under the
Integrated Agreement, the Company financed its purchases of assets through
Pro-Fac.
(11) The ratio has been presented on an annualized basis. Adjusted EBITDA for
the three months ended September 25, 1993 and September 24, 1994 has been
annualized in computing this ratio and therefore does not take into account
seasonal factors that affect Adjusted EBITDA.
36
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF PRO-FAC
The following table sets forth selected historical financial data of
Pro-Fac for the periods indicated. The information should be read in conjunction
with the Pro-Fac Financial Statements and related notes thereto appearing
elsewhere herein and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations of Pro-Fac.'
The selected historical financial data for each of the years ended June 26,
1992, June 26, 1993 and June 25, 1994 and as of June 26, 1993 and June 26, 1994
have been derived from Pro-Fac's audited financial statements included elsewhere
herein. The selected historical financial information for each of the years
ended June 29, 1990 and June 28, 1991 and as of June 29, 1990, June 28, 1991 and
June 26, 1992 have been derived from Pro-Fac's audited financial statements not
included herein. The financial data for the three months ended September 25,
1993 and September 24, 1994 and as of September 24, 1994 are unaudited, but in
the opinion of Pro-Fac reflect all adjustments necessary for a fair presentation
of such data. The data for the three months ended September 24, 1994 are not
necessarily indicative of results of operations for fiscal 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------------------------
JUNE 25, 1994
JUNE 29, JUNE 28, JUNE 26, JUNE 26, -----------------------
1990 1991 1992 1993 ACTUAL PRO FORMA(1)
-------- -------- -------- -------- ------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ -- -- -- -- -- $ 749.2
Raw product deliveries at Commercial
Market Value........................... $ 54.9 $ 61.2 $ 64.2 $ 59.8 $ 59.2 --
Adjust to fiscal year basis.............. 5.9 1.0 (0.7) (0.1) (1.0 ) --
Additional proceeds (loss) from Curtice-
Burns under the Integrated Agreement... 11.5 5.9 9.5 (21.8) 18.6 --
Interest income.......................... 22.6 22.7 19.8 17.1 15.6 --
Other income............................. 1.1 0.9 1.4 1.9 1.9 --
-------- -------- -------- -------- ------- ------
Total revenues....................... 96.0 91.7 94.2 56.9 94.3 749.2
-------- -------- -------- -------- ------- ------
Cost of sales............................ -- -- -- -- -- 534.3
Selling, administrative and general...... -- -- -- -- -- 160.1
Total interest and other expenses........ 20.4 21.2 18.0 14.7 12.4 37.2
Commercial Market Value paid or accrued.. 60.8 62.2 63.4 59.7 58.2 --
Amortization of unallocated excess of
purchase cost over net assets
acquired............................... -- -- -- -- -- 4.7
-------- -------- -------- -------- ------- ------
Total costs and expenses............. 81.2 83.4 81.4 74.4 70.6 736.3
-------- -------- -------- -------- ------- ------
Excess (deficiency) of revenues before
taxes, dividends and allocation of net
proceeds............................... 14.8 8.3 12.8 (17.5) 23.7 12.9
Tax benefit (provision) for taxes on
income................................. (4.4) (3.0) 1.1 -- 0.8 (3.0)
-------- -------- -------- -------- ------- ------
Net income (loss) (proceeds before
dividends)......................... $ 10.4 $ 5.3 $ 13.9 $(17.5) $ 24.5 $ 9.9
-------- -------- -------- -------- ------- ------
-------- -------- -------- -------- ------- ------
Ratio of earnings to fixed charges(2).... 1.71x 1.41x 1.74x -- (3) 3.04x 1.00x
BALANCE SHEET DATA:
Investment in direct financing leases.... $146.6 $193.3 $187.3 $173.5 $141.4
Total assets............................. 385.1 385.6 361.4 324.9 296.1
Total debt............................... 192.4 178.0 164.0 168.0 127.1
Shareholders' investment and members'
capitalization......................... 124.1 126.6 133.1 109.9 123.8
<CAPTION>
THREE MONTHS ENDED
------------------------------------
SEPTEMBER 24, 1994
SEPTEMBER 25, ---------------------
1993 ACTUAL PRO FORMA(1)
------------- ------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ -- -- $174.5
Raw product deliveries at Commercial
Market Value........................... $ 42.3 $ 37.7 --
Adjust to fiscal year basis.............. -- -- --
Additional proceeds (loss) from Curtice-
Burns under the Integrated Agreement... 2.8 2.4 --
Interest income.......................... 4.1 4.2 --
Other income............................. 0.4 0.2 --
------ ------ ------
Total revenues....................... 49.6 44.5 174.5
------ ------ ------
Cost of sales............................ -- -- 125.3
Selling, administrative and general...... -- -- 36.3
Total interest and other expenses........ 3.4 3.1 9.9
Commercial Market Value paid or accrued.. 42.3 37.7 --
Amortization of unallocated excess of
purchase cost over net assets
acquired............................... -- -- 1.2
------ ------ ------
Total costs and expenses............. 45.7 40.8 172.7
------ ------ ------
Excess (deficiency) of revenues before
taxes, dividends and allocation of net
proceeds............................... 3.9 3.7 1.8
Tax benefit (provision) for taxes on
income................................. (0.4 ) 0.0 (1.2)
------ ------ ------
Net income (loss) (proceeds before
dividends)......................... $ 3.5 $ 3.7 $ 0.6
------ ------ ------
------ ------ ------
Ratio of earnings to fixed charges(2).... 2.22x 2.28x 1.00x
BALANCE SHEET DATA:
Investment in direct financing leases.... $130.7 --
Total assets............................. 338.1 $684.7
Total debt............................... 190.9 421.3
Shareholders' investment and members'
capitalization......................... 122.1 122.1
</TABLE>
- ------------
(1) For information regarding the pro forma data, see 'Pro Forma Financial Data
of Pro-Fac and the Company.'
(2) For purposes of calculating earnings to fixed charges, earnings are
determined by adding fixed charges to excess (deficiency) of revenues before
taxes, dividends and allocation of net proceeds less undistributed earnings
of the Bank. Fixed charges consist of interest expense.
(3) Earnings were inadequate to cover fixed charges by $19.9 million in fiscal
1993.
37
<PAGE>
PRO FORMA FINANCIAL DATA OF THE COMPANY
The following unaudited pro forma condensed consolidated financial data
(the 'Pro Forma Financial Data') of the Company is based on the historical
Consolidated Financial Statements of the Company included elsewhere herein,
adjusted to give effect to the Transactions.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company
as of September 24, 1994 gives effect to the Transactions as if they had
occurred as of September 24, 1994. The Unaudited Pro Forma Consolidated
Statements of Operations for the Year Ended June 25, 1994 and for the Three
Months Ended September 24, 1994 of the Company give effect to the Transactions
as if they had occurred as of June 27, 1993 and June 26, 1994, respectively. The
Pro Forma Financial Data do not purport to represent what the Company's results
of operations or financial position would actually have been had the
Transactions in fact occurred on such dates or to project the Company's results
of operations or financial position for any future period or date. The Pro Forma
Financial Data do not give effect to any transactions other than the
Transactions as discussed in the notes to the Pro Forma Financial Data set forth
below.
The Acquisition will be accounted for using the purchase method of
accounting. Under purchase accounting, tangible and identifiable intangible
assets acquired and liabilities assumed will be 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 unaudited pro forma
condensed consolidated financial data. Accordingly, the purchase accounting
adjustments made in connection with the development of the unaudited pro forma
condensed consolidated financial data are preliminary and have been made solely
for purposes of developing the unaudited pro forma condensed consolidated
financial data. The Acquisition and Merger will be accounted for as a step
acquisition. The step acquisition method of purchase accounting requires that
the percentage of assets and liabilities acquired be recorded at fair values at
the acquisition date. As Pro-Fac has historically shared in 50% of the earnings
of the Company, acquired assets will be reflected as 50% of historic value,
representing the interest of Pro-Fac retained. The remaining 50% will be
recorded at fair value, representing the interest acquired. Once an appropriate
allocation is made after the closing of the Acquisition in accordance with
generally accepted accounting principles, any remaining excess of purchase cost
over net assets acquired will be recorded as goodwill. The Company expects that
significant goodwill will be recorded as a result of the Acquisition.
The Pro Forma adjustments are based on available information and upon
certain assumptions that management of the Company believes are reasonable under
the circumstances. The Pro Forma Financial Data and accompanying notes should be
read in conjunction with the historical Consolidated Financial Statements of the
Company, including the notes thereto, and other financial information pertaining
to the Company included elsewhere herein.
38
<PAGE>
CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 24, 1994
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------
ACQUISITION
AND OLD
CURTICE-BURNS NOTES
FOODS, INC. DIVISION OFFERING
(HISTORICAL) DISPOSALS(A) ADJUSTMENTS TOTAL
------------- ------------ ----------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Inventory.................................................... $ 222.4 $ (1.5) $220.9
Accounts receivable trade.................................... 65.1 (3.2) 61.9
Other current assets......................................... 34.2 $ 0.5(e)(i) 34.7
------------- ------ ----------- ------
Total current assets.................................... 321.7 (4.7) 0.5 317.5
Net property, plant and equipment................................. 160.3 (0.5) 159.8
Net assets available for disposal................................. 3.4 3.4
Goodwill and other intangibles.................................... 24.5 0.0(c)(g) 24.5
Unallocated excess of purchase cost over net assets acquired...... 132.0(g) 132.0
Other assets...................................................... 17.9 26.3(e)(g) 44.2
------------- ------ ----------- ------
Total assets............................................ $ 524.4 $ (1.8) $ 158.8 $681.4
------------- ------ ----------- ------
------------- ------ ----------- ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable................................................ $ 40.0 $ (40.0)(d)
Seasonal Facility under New Credit Agreement................. 78.5(b) $ 78.5
Current portion of long-term debt under New Credit
Agreement.................................................. 8.0(b) 8.0
Current portion of obligations under Pro-Fac capital
leases..................................................... 17.7 (17.7)(c)
Current portion of Pro-Fac long-term debt.................... 14.0 (14.0)(c)
Current portion of other long-term debt and capital leases... 1.4 1.7(j) 3.1
Due to Pro-Fac............................................... 49.3 (42.8)(c)(f) 6.5
Accounts payable............................................. 53.5 $ (1.4) 52.1
Accruals and other current liabilities....................... 44.0 (0.4) (0.1)(j)(k) 43.5
------------- ------ ----------- ------
Total current liabilities............................... 219.9 (1.8) (26.4) 191.7
Long-term debt under New Credit Agreement:
Acquisition Facility:
Term Loan............................................... 72.0(b) 72.0
Term Loan Facility...................................... 97.5(b) 97.5
Notes............................................................. 160.0(b) 160.0
Long-term debt due Pro-Fac........................................ 89.0 (89.0)(c)
Obligations under Pro-Fac capital leases.......................... 113.1 (113.1)(c)
Long-term debt due others and obligations under other capital
leases.......................................................... 2.2 2.2
Other long-term liabilities....................................... 20.3 3.1(g)(k) 23.4
------------- ------ ----------- ------
Total liabilities....................................... 444.5 (1.8) 104.1 546.8
Shareholders' equity:
Common stock................................................. 22.9 111.7(h) 134.6(l)
Retained earnings............................................ 57.0 (57.0)(h)
------------- ------ ----------- ------
Total shareholders' equity.............................. 79.9 54.7 134.6
------------- ------ ----------- ------
Total liabilities and shareholders' equity.............. $ 524.4 $ (1.8) $ 158.8 $681.4
------------- ------ ----------- ------
------------- ------ ----------- ------
</TABLE>
See accompanying notes to the pro forma consolidated financial data.
39
<PAGE>
CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 25, 1994
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------------------
ACQUISITION AND
CURTICE-BURNS OLD NOTES
FOODS, INC. DIVISION OFFERING
(HISTORICAL) DISPOSALS ADJUSTMENTS TOTAL
------------- --------- --------------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales............................................ $ 829.1 $ (79.9)(a) $749.2
Cost of sales........................................ 592.6 (58.3)(a) 534.3(e)
------------- --------- ------
Gross profit.................................... 236.5 (21.6) 214.9
Selling, administrative and general.................. 186.9 (24.0)(a) $(3.6)(b)(c) 159.3(e)
Amortization of unallocated excess of purchase cost
over net assets acquired........................... 4.7(b) 4.7
Restructuring including net (gain)/loss from division
disposals.......................................... (7.8) 7.8(h)
Change in control expenses........................... 3.5 (3.5)(g)
------------- --------- ------- ------
Operating income (loss)......................... 53.9 2.4 (5.4) 50.9
Total interest expense............................... 18.2 19.0(d) 37.2
------------- --------- ------- ------
Pre-tax earnings before dividing with Pro-Fac... 35.7 2.4 (24.4) 13.7
Pro-Fac share of earnings (loss)..................... 16.9 1.2(f) (11.2)(f) 6.9
------------- --------- ------- ------
Income (loss) before taxes...................... 18.8 1.2 (13.2) 6.8
Provision (benefit) for taxes........................ 8.7 0.5(i) (5.4)(i) 3.8
------------- --------- ------- ------
Net income (loss)............................... $ 10.1 $ 0.7 $ (7.8) $ 3.0
------------- --------- ------- ------
------------- --------- ------- ------
</TABLE>
CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 24, 1994
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------------------
ACQUISITION AND
CURTICE-BURNS OLD NOTES
FOODS, INC. DIVISION OFFERING
(HISTORICAL) DISPOSALS ADJUSTMENTS TOTAL
------------- --------- --------------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales............................................ $ 176.8 $ (2.3)(a) $174.5
Cost of sales........................................ 126.8 (1.5)(a) 125.3(e)
------------- --------- ------
Gross profit.................................... 50.0 (0.8) 49.2
Selling, administrative and general.................. 38.0 (1.2)(a) $ (0.7)(b)(c) 36.1(e)
Amortization of unallocated excess of purchase cost
over net assets acquired........................... 1.2(b) 1.2
Restructuring including net (gain)/loss from division
disposals.......................................... 8.4 (8.4)(h)
(Gain) on assets resulting from fire claim........... (6.5) 6.5(h)
Change in control expenses........................... 1.8 (1.8)(g)
------------- --------- ------- ------
Operating income (loss)......................... 8.3 0.4 3.2 11.9
Total interest expense............................... 5.1 4.8(d) 9.9
------------- --------- ------- ------
Pre-tax earnings before dividing with Pro-Fac... 3.2 0.4 (1.6) 2.0
Pro-Fac share of earnings (loss)..................... 1.5 0.2(f) (0.7)(f) 1.0
------------- --------- ------- ------
Income (loss) before taxes...................... 1.7 0.2 (0.9) 1.0
Provision (benefit) for taxes........................ 1.4 0.1(i) (0.9)(i) 0.6
------------- --------- ------- ------
Net income (loss)............................... $ 0.3 $ 0.1 $ 0.0 $ 0.4
------------- --------- ------- ------
------------- --------- ------- ------
</TABLE>
See accompanying notes to the pro forma consolidated financial data.
40
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL DATA
NOTE 1 -- BASIS OF PRESENTATION
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 24, 1994 has been presented assuming the Merger of the Company and
PFAC occurred as of September 24, 1994. The unaudited Pro Forma Consolidated
Statements of Operations for the Year Ended June 25, 1994 and for the Three
Months Ended September 24, 1994 have been presented assuming the Merger was
consummated as of June 27, 1993 and June 26, 1994, respectively. The unaudited
pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Company and Pro-Fac
included elsewhere in this document.
NOTE 2 -- UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 24, 1994 ADJUSTMENTS
(a) To reflect anticipated net realizable value and related adjustments
from the sale of the Nalley's U.S. Chips and Snacks operations, expected to
occur in fiscal 1995.
(b) To reflect the issuance by the Company of $160.0 million in aggregate
principal amount of Notes, due 2005, bearing interest at an estimated rate of
12.25% and borrowings of $256.0 million under the New Credit Agreement. The New
Credit Agreement includes (i) an $80.0 million Term Loan, which was fully drawn
on the Closing Date, with a 10 year term (the current portion of which is $8.0
million), bearing an interest rate, at the Company's option, of (A) the relevant
London interbank offered rate plus 2.60%, (B) the relevant prime rate plus 0.50%
or (C) the relevant U.S. Treasury Rate plus 3.00%, which rate is assumed to be
8.5%; (ii) a $120.0 million Term Loan Facility, approximately $97.5 million of
which has been or will be drawn in connection with the Transactions, payable
during the first five years in annual installments in an amount equal to the
'annual cash sweep' (as defined in the New Credit Agreement) for the preceding
fiscal year (there was no amount of annual cash sweep for the quarter ended
September 24, 1994; accordingly, a current portion of long-term debt is not
reflected in the unaudited pro forma condensed consolidated balance sheet), and
payable thereafter in ten equal, consecutive semi-annual installments, bearing
an interest rate, at the Company's option of (A) the relevant London interbank
offered rate plus 2.60%, (B) the relevant prime rate plus 0.50% or (C) the
relevant U.S. Treasury Rate plus 3.00%, which rate is assumed to be 8.0% and
(iii) an $86.0 million Seasonal Facility, $78.5 million of which would have been
drawn as of September 24, 1994, after giving effect to the Transactions,
borrowings under which mature 18 months after the Closing Date, except that for
15 consecutive calendar days before the end of fiscal 1995, the borrowings under
such facility must be zero, bearing an interest rate at the Company's option of
(A) the relevant London interbank offered rate plus 1.75%, (B) the relevant
prime rate minus 0.25% or (C) the relevant U.S. Treasury Rate plus 2.00%, which
rate is assumed to be the same as the actual rate for seasonal borrowings during
the first quarter of fiscal 1995. The assumed rates for the Acquisition Facility
reflect the Bank's extension under the New Credit Agreement of certain fixed
rates selected by the Company earlier this year. For a description of the
indebtedness under the New Credit Agreement, see 'Description of Certain
Indebtedness -- New Credit Agreement.'
(c) To reflect the elimination of certain outstanding amounts due to
Pro-Fac from the Company of $303.7 million, including the repurchase by the
Company of the finance receivable related to intangibles held by Pro-Fac of
$24.5 million and other amounts as follows: (i) current portion of obligations
under Pro-Fac capital leases of $17.7 million; (ii) current portion of Pro-Fac
long-term debt in the amount of $14.0 million; (iii) certain amounts due to
Pro-Fac totalling $42.8 million (which includes borrowings under seasonal debt,
which has been refinanced with borrowings under the New Credit Agreement); (iv)
long-term debt due to Pro-Fac of $89.0 million; (v) obligations under Pro-Fac
capital leases totalling $113.1 million; and (vi) the $2.6 million credited to
Pro-Fac upon consummation of the Transactions as a result of the resolution of
the disputed matter regarding legal, accounting, investment banking and other
expenses incurred by the Company in connection with the change of control.
(d) To reflect repayment of seasonal debt, which has been refinanced with
borrowings under the New Credit Agreement.
41
<PAGE>
(e) To reflect the transfer of the investment in the Bank to the Company,
including the current portion of $1.3 million and the long-term portion of $20.0
million. This transfer is required under the provisions of the New Credit
Agreement and reflects a capital contribution by Pro-Fac. See 'Certain
Transactions -- Equity Ownership in Springfield Bank for Cooperatives.'
(f) To reflect the crediting to Pro-Fac of $2.6 million upon consummation
of the Transactions as a result of the settlement of the disputed matter
regarding legal, accounting, investment banking and other expenses incurred in
fiscal 1994 and the first quarter of fiscal 1995 by the Company in connection
with the change of control.
(g) Under purchase accounting, tangible and identifiable intangible assets
acquired will be recorded at their respective fair values. Current information
regarding the fair values of assets to be acquired is not available. As such, no
allocation of the excess of purchase cost over net assets acquired has been made
for purposes of this pro forma presentation. 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 unaudited pro forma condensed consolidated financial data.
Accordingly, the purchase accounting adjustments made in connection with the
development of the unaudited pro forma condensed consolidated financial data are
preliminary and have been made solely for purposes of developing the unaudited
pro forma condensed consolidated financial data. Once an appropriate allocation
is made, any remaining excess of purchase cost over net assets acquired will be
recorded as goodwill. The acquisition and merger will be accounted for as a step
acquisition. The step acquisition method of purchase accounting requires that
the percentage of assets and liabilities acquired be recorded at fair values at
the acquisition date. As Pro-Fac has historically shared in 50% of the earnings
of the Company, acquired assets will be reflected at 50% of historic value,
representing the interest of Pro-Fac retained. The remaining 50% will be
recorded at fair value, representing the interest acquired. It is expected that
significant goodwill in addition to existing goodwill retained will be recorded
as a result of the Merger.
(h) To reflect the elimination of the historical shareholders' equity
accounts of the Company of $22.9 million for the common stock and $57.0 million
of retained earnings, and to reflect the capital contribution of approximately
$134.6 million by Pro-Fac in conjunction with the Merger.
(i) To reflect the elimination of debt issuance costs of $0.8 million
relating to debt repaid in connection with the Merger.
(j) To reflect (i) employee severance and retirement benefits for certain
employees incurred in conjunction with the Merger in the amount of $0.7 million
and (ii) the reclassification of previously accrued retirement benefits
totalling $1.0 million. Such amounts are treated as Senior Indebtedness under
the Indenture.
(k) To reflect a reclassification for the income tax effect of the pro
forma adjustments based on an estimated marginal income tax rate of 40% in the
amount of $0.9 million.
42
<PAGE>
(l) The amount of common stock as reflected in the unaudited pro forma
condensed consolidated balance sheet is summarized as follows:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C>
Class A and Class B Common Stock, prior to Merger.................................. $ 22.9
Adjustments:
To reflect elimination of historical common stock............................. (22.9)
To reflect the capital contribution of Pro-Fac:
Capital lease obligations and certain debt due Pro-Fac................... 305.1
Accounts payable due to Pro-Fac to be canceled at closing................ 5.1
Accounts payable due to Pro-Fac not to be canceled at closing............ (6.5)
Repayment in part of capital lease obligations and certain debt due
Pro-Fac................................................................ (193.7)
--------
Sub-total........................................................... 110.0
Transfer of the investment in the Bank from Pro-Fac to the Company....... 21.3
Other.................................................................... 3.3
--------
Common stock, after the Merger...................................... $ 134.6
--------
--------
</TABLE>
NOTE 3 -- UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR YEAR
ENDED JUNE 25, 1994 ADJUSTMENTS
(a) To reflect the division disposals completed during fiscal 1994 and to
reflect the elimination of the fiscal 1994 operating activities of the Nalley's
U.S. Chips and Snacks operation anticipated to be sold. In conjunction with this
decision, the Company has recognized a charge of approximately $8.4 million
(pre-tax and pre-earnings split with Pro-Fac) during the first quarter of fiscal
1995. Such charge has not been reflected in the unaudited Pro Forma Consolidated
Statement of Operations.
(b) To reflect $4.7 million of additional amortization assuming an
estimated weighted average life of 28 years. Depreciation and amortization
recorded by the Company subsequent to the Merger will be determined based upon
the fair values of acquired assets and their related lives as ultimately
recorded under purchase accounting. Additionally, to reduce previously recorded
amortization of goodwill and other intangibles by $1.7 million.
(c) To reflect the fiscal 1994 patronage dividend from the Bank of $1.9
million.
(d) To reflect the net adjustment to interest expense calculated as
follows:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C>
Notes at rate of 12.25%.................................................. $19.6
Borrowings under New Credit Agreement:
$80.0 million Term Loan at assumed rate of 8.3%..................... 6.7
$97.5 million Term Loan Facility at assumed rate of 7.8%............ 7.6
Amortization of debt issuance costs (10 year period)..................... 0.8
Less historical interest expense net adjustment.......................... (15.4)
Less amortization of debt issuance costs related to debt repaid.......... (0.3)
------
Net adjustment to interest expense..................................... $19.0
------
------
</TABLE>
(e) Cost of sales and other selling, administrative and general expenses
includes $21.4 million of depreciation and amortization expenses (including $1.7
million of amortization of goodwill and intangibles, which is not extinguished
as a result of the Transactions).
(f) Reflects the assumption that the Pro-Fac Marketing Agreement will, in
effect, continue a comparable 50% earnings split with Pro-Fac.
(g) To reflect the elimination of change in control expenses incurred by
the Company during fiscal 1994.
(h) To reflect the elimination of the restructuring charge, including net
gains from division disposals, incurred by the Company during fiscal 1994.
43
<PAGE>
(i) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed marginal income tax
rate of 40%.
NOTE 4 -- UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED SEPTEMBER 24, 1994 ADJUSTMENTS
(a) To reflect the elimination of the fiscal 1995 operating activities of
the Nalley's U.S. Chips and Snacks operation prior to the disposition of this
operation. The operation is anticipated to be sold during fiscal 1995.
(b) To reflect $1.2 million of additional depreciation and amortization
assuming an estimated weighted average life of 28 years. Depreciation and
amortization recorded by the Company subsequent to the Merger will be determined
based upon the fair values of acquired assets and their related lives as
ultimately recorded under purchase accounting. Additionally, to reduce
previously recorded amortization of goodwill and other intangibles by $0.4
million.
(c) To reflect the patronage dividend from the Bank of $0.3 million for the
three month period ended September 24, 1994.
(d) To reflect the net adjustment to interest expense calculated as
follows:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C>
Notes at rate of 12.25%............................................................ $ 4.9
Borrowings under New Credit Agreement:
$80.0 million Term Loan at assumed rate of 8.5%............................... 1.7
$97.5 million Term Loan Facility at assumed rate of 8.0%...................... 2.0
Amortization of debt issuance costs (10 year period)............................... 0.2
Less historical interest expense net adjustment.................................... (3.8)
Less amortization of debt issuance costs related to debt repaid.................... (0.2)
------
Net adjustment to interest expense............................................ $ 4.8
------
------
</TABLE>
(e) Cost of sales and other selling, administrative and general expenses
includes $5.0 million of depreciation and amortization expenses (including $0.4
million of amortization of goodwill and intangibles, which is not extinguished
as a result of the Transactions).
(f) Reflects the assumption that the Pro-Fac Marketing Agreement will, in
effect, continue a comparable 50% earnings split with Pro-Fac.
(g) To reflect the elimination of change in control expenses incurred by
the Company during the three month period ended September 24, 1994.
(h) To reflect the elimination of the restructuring charge, including net
gains from division disposals, and the elimination of the gain on assets
resulting from the Southern Frozen Foods fire claim incurred by the Company
during the three month period ended September 24, 1994.
(i) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed marginal income tax
rate of 40%.
44
<PAGE>
PRO FORMA FINANCIAL DATA OF PRO-FAC AND THE COMPANY
The following unaudited pro forma condensed combined financial data (the
'Pro Forma Combined Financial Data') of Pro-Fac and the Company is based on the
historical Financial Statements of Pro-Fac and the historical Consolidated
Financial Statements of the Company included elsewhere herein, adjusted to give
effect to the Transactions.
The Unaudited Pro Forma Condensed Combined Balance Sheet of Pro-Fac and the
Company as of September 24, 1994 gives effect to the Transactions as if they had
occurred as of September 24, 1994. The Unaudited Pro Forma Combined Statements
of Operations of Pro-Fac and the Company for the Year Ended June 25, 1994 and
the Three Months Ended September 24, 1994 give effect to the Transactions as if
they had occurred as of June 27, 1993 and June 26, 1994, respectively. The Pro
Forma Combined Financial Data do not purport to represent what the combined
results of operations or financial position of Pro-Fac and the Company would
actually have been had the Transactions in fact occurred on such dates or to
project the combined results of operations or financial position of Pro-Fac and
the Company for any future period or date. The Pro Forma Combined Financial Data
do not give effect to any transactions other than the Transactions as discussed
in the notes to the Pro Forma Combined Financial Data set forth below.
The Acquisition will be accounted for using the purchase method of
accounting. Under purchase accounting, tangible and identifiable intangible
assets acquired and liabilities assumed will be 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 accompanied unaudited pro forma
condensed combined financial data. Accordingly, the purchase accounting
adjustments made in connection with the development of the unaudited pro forma
condensed combined financial data are preliminary and have been made solely for
purposes of developing the unaudited pro forma condensed combined financial
data. The Acquisition and Merger will be accounted for as a step acquisition.
The step acquisition method of purchase accounting requires that the percentage
of assets and liabilities acquired be recorded at fair values at the acquisition
date. As Pro-Fac has historically shared in 50% of the earnings of the Company,
acquired assets will be reflected as 50% of historic value, representing the
interest of Pro-Fac retained. The remaining 50% will be recorded at fair value,
representing the interest acquired. Once an appropriate allocation is made after
the closing of the Acquisition in accordance with generally accepted accounting
principles, any remaining excess of purchase cost over net assets acquired will
be recorded as goodwill. The Company expects that significant goodwill will be
recorded as a result of the Acquisition.
The Pro Forma adjustments are based on available information and upon
certain assumptions that management of the Company believes are reasonable under
the circumstances. The Pro Forma Combined Financial Data of Pro-Fac and the
Company and accompanying notes should be read in conjunction with the historical
Financial Statements of Pro-Fac and the historical Consolidated Financial
Statements of the Company, including the notes thereto, and other financial
information pertaining to Pro-Fac and the Company included elsewhere herein.
45
<PAGE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 24, 1994
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------------------
PRO-FAC ACQUISITION
COOPERATIVE, CURTICE-BURNS AND OLD NOTES
INC. FOODS, INC. DIVISION OFFERING
(HISTORICAL) (HISTORICAL) DISPOSALS(A) ADJUSTMENTS COMBINED
------------ ------------- ------------ ------------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Receivable from the Company..................... $ 51.9 $ (51.9)(c)
Current portion of long-term loans receivable
from the Company.............................. 14.0 (14.0)(c)
Current portion of investment in direct
financing leases.............................. 17.7 (17.7)(c)
Inventory....................................... $ 222.4 $ (1.5) $220.9
Accounts receivable trade....................... 65.1 (3.2) 61.9
Other current assets............................ 5.0 34.2 (4.1)(f)(h) 35.1
------ ------ ------ ------------- --------
Total current assets........................ 88.6 321.7 (4.7) (87.7) 317.9
Long-term loans receivable from the Company......... 89.0 (89.0)(c)
Long-term portion of investment in direct financing
leases............................................ 113.1 (113.1)(c)
Finance receivable related to intangibles........... 24.5 (24.5)(c)
Net property, plant and equipment................... 160.3 (0.5) 159.8
Net assets available for disposal................... 3.4 3.4
Goodwill and other intangibles...................... 24.5 0.0(c)(f) 24.5
Unallocated excess of purchase cost over net assets
acquired.......................................... 132.0(f) 132.0
Other assets........................................ 22.9 17.9 6.3(f) 47.1
------ ------ ------ ------------- --------
Total assets................................ $338.1 $ 524.4 $ (1.8) $(176.0) $684.7
------ ------ ------ ------------- --------
------ ------ ------ ------------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable................................... $ 50.0 $ 40.0 $ (90.0)(d)
Seasonal Facility under New Credit Agreement.... 78.5(b) $ 78.5
Current portion of long-term debt under New
Credit Agreement.............................. 8.0(b) 8.0
Current portion of obligations under Pro-Fac
capital leases................................ 17.7 (17.7)(c)
Current portion of Pro-Fac long-term debt....... 14.0 14.0)(c)
Current portion of other long-term debt......... 14.0 1.4 (12.3)(d)(i) 3.1
Due to Pro-Fac.................................. 49.3 (49.3)(c)(e)
Accounts payable................................ 2.3 53.5 $ (1.4) 54.4
Accruals and other current liabilities.......... 22.3 44.0 (0.4) (2.9)(d)(i)(j) 63.0
------ ------ ------ ------------- --------
Total current liabilities................... 88.6 219.9 (1.8) (99.7) 207.0
Long-term debt due others........................... 126.9 (126.9)(d)
Long-term debt under New Credit Agreement:
Acquisition Facility:
Term Loan................................... 72.0(b) 72.0
Term Loan Facility.......................... 97.5(b) 97.5
Notes............................................... 160.0(b) 160.0
Long-term debt due Pro-Fac.......................... 89.0 (89.0)(c)
Obligations under Pro-Fac capital leases............ 113.1 (113.1)(c)
Long-term debt due others and obligations under
other capital leases.............................. 2.2 2.2
Other long-term liabilities......................... 0.5 20.3 3.1(f)(j) 23.9
------ ------ ------ ------------- --------
Total liabilities........................... 216.0 444.5 (1.8) (96.1) 562.6
Shareholders' equity and members' capitalization:
Retained earnings allocated to members.......... 36.9 36.9
Non-qualified allocations to members............ 6.0 6.0
Capital stock:
Preferred....................................... 65.6 65.6
Common.......................................... 10.2 22.9 (22.9)(g) 10.2
Earned surplus/retained earnings.................... 3.4 57.0 (57.0)(g) 3.4
------ ------ ------ ------------- --------
Total capitalization........................ 122.1 79.9 (79.9) 122.1
------ ------ ------ ------------- --------
Total liabilities and capitalization........ $338.1 $ 524.4 $ (1.8) $(176.0) $684.7
------ ------ ------ ------------- --------
------ ------ ------ ------------- --------
</TABLE>
See accompanying notes to the pro forma combined financial data.
46
<PAGE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 25, 1994
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------------
PRO-FAC ACQUISITION
COOPERATIVE, CURTICE-BURNS AND OLD NOTES
INC. FOODS, INC. DIVISION OFFERING PRO FORMA
(HISTORICAL) (HISTORICAL) DISPOSALS ADJUSTMENTS COMBINED
------------ ------------- --------- ------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales and revenues........................ $ 94.3 $ 829.1 $ (79.9)(a) $ (94.3)(d) $ 749.2
Cost of sales................................. 58.2 592.6 (58.3)(a) (58.2)(d) 534.3(g)
------ ------------- --------- ------------- ---------
Gross profit............................. 36.1 236.5 (21.6) (36.1) 214.9
Selling, administrative and general........... 0.8 186.9 (24.0)(a) (3.6)(b)(d) 160.1(g)
Amortization of unallocated excess of purchase
cost over net assets acquired............... 4.7(b) 4.7
Restructuring including net (gain) loss from
division disposals.......................... (7.8) 7.8(f)
Change in control expenses.................... 3.5 (3.5)(e)
Pro-Fac share of earnings..................... 16.9 1.2(a) (18.1)(d)
------ ------------- --------- ------------- ---------
Operating income......................... 35.3 37.0 1.2 (23.4) 50.1
Total interest expense........................ 11.6 18.2 7.4(c) 37.2
------ ------------- --------- ------------- ---------
Pre-tax earnings (loss).................. 23.7 18.8 1.2 (30.8) 12.9
(Benefit) provision for taxes................. (0.8) 8.7 0.5(h) (5.4)(h) 3.0
------ ------------- --------- ------------- ---------
Net income (loss)........................ $ 24.5 $ 10.1 $ 0.7 $ (25.4) $ 9.9
------ ------------- --------- ------------- ---------
------ ------------- --------- ------------- ---------
</TABLE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 24, 1994
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------------
PRO-FAC ACQUISITION
COOPERATIVE, CURTICE-BURNS AND OLD NOTES
INC. FOODS, INC. DIVISION OFFERING
(HISTORICAL) (HISTORICAL) DISPOSALS ADJUSTMENTS COMBINED
------------ ------------- --------- ------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales and revenues........................ $ 44.5 $ 176.8 $ (2.3)(a) $ (44.5)(d) $ 174.5
Cost of sales................................. 37.7 126.8 (1.5)(a) (37.7)(d) 125.3(g)
------ ------------- --------- ------------- ---------
Gross profit............................. 6.8 50.0 (0.8) (6.8) 49.2
Selling, administrative and general........... 0.2 38.0 (1.2)(a) (0.7)(b)(d) 36.3(g)
Amortization of unallocated excess of purchase
cost over net assets acquired............... 1.2(b) 1.2
Restructuring including net (gain) loss from
division disposals.......................... 8.4 (8.4)(f)
Change in control expenses.................... 1.8 (1.8)(e)
Gain on assets resulting from fire claim...... (6.5) 6.5(f)
Pro-Fac share of earnings..................... 1.5 0.2(a) (1.7)(d)
------ ------------- --------- ------------- ---------
Operating income......................... 6.6 6.8 0.2 (1.9) 11.7
Total interest expense........................ 2.9 5.1 1.9(c) 9.9
------ ------------- --------- ------------- ---------
Pre-tax earnings (loss).................. 3.7 1.7 0.2 (3.8) 1.8
Provision (benefit) for taxes................. 1.4 0.1(h) (0.9)(h) 0.6
------ ------------- --------- ------------- ---------
Net income (loss)........................ $ 3.7 $ 0.3 $ 0.1 $ (2.9) $ 1.2
------ ------------- --------- ------------- ---------
------ ------------- --------- ------------- ---------
</TABLE>
See accompanying notes to the pro forma combined financial data.
47
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL DATA
NOTE 1 -- BASIS OF PRESENTATION
The unaudited Pro Forma Condensed Combined Balance Sheet as of September
24, 1994 has been presented assuming the Merger of the Company and PFAC occurred
as of September 24, 1994. The unaudited Pro Forma Combined Statements of
Operations for the Year Ended June 25, 1994 and the Three Months Ended September
24, 1994 have been presented assuming the Merger was consummated as of June 27,
1993 and June 26, 1994, respectively. The unaudited pro forma financial
information should be read in conjunction with the historical financial
statements and notes thereto of the Company and Pro-Fac included elsewhere in
this document.
NOTE 2 -- UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER
24, 1994 ADJUSTMENTS
(a) To reflect anticipated net realizable value and related adjustments
from the sale of the Nalley's U.S. Chips and Snacks operations, expected to
occur in fiscal 1995.
(b) To reflect the issuance by the Company of $160.0 million in aggregate
principal amount of Notes, due 2005, bearing interest at an estimated rate of
12.25% and borrowings of $256.0 million under the New Credit Agreement. The New
Credit Agreement includes (i) an $80.0 million Term Loan, which was fully drawn
on the Closing Date, with a 10 year term (the current portion of which is $8.0
million), bearing an interest rate, at the Company's option, of (A) the relevant
London interbank offered rate plus 2.60%, (B) the relevant prime rate plus 0.50%
or (C) the relevant U.S. Treasury Rate plus 3.00%, which rate is assumed to be
8.5%; (ii) a $120.0 million Term Loan Facility, approximately $97.5 million of
which has been or will be drawn in connection with the Transactions, payable
during the first five years in annual installments in an amount equal to the
'annual cash sweep' (as defined in the New Credit Agreement) for the preceding
fiscal year (there was no amount of annual cash sweep for the quarter ended
September 24, 1994; accordingly, a current portion of long-term debt is not
reflected in the unaudited pro forma condensed combined balance sheet), and
payable thereafter in ten equal, consecutive semi-annual installments, bearing
an interest rate, at the Company's option of (A) the relevant London interbank
offered rate plus 2.60%, (B) the relevant prime rate plus 0.50% or (C) the
relevant U.S. Treasury Rate plus 3.00%, which rate is assumed to be 8.0% and
(iii) an $86.0 million Seasonal Facility, $78.5 million of which would have been
drawn as of September 24, 1994, after giving effect to the Transactions,
borrowings under which mature 18 months after the Closing Date, except that for
15 consecutive calendar days before the end of fiscal 1995, the borrowings under
such facility must be zero, bearing an interest rate at the Company's option of
(A) the relevant London interbank offered rate plus 1.75%, (B) the relevant
prime rate minus 0.25% or (C) the relevant U. S. Treasury Rate plus 2.00%, which
rate is assumed to be the same as the actual rate for seasonal borrowings during
the first quarter of fiscal 1995. The assumed rates for the Acquisition Facility
reflect the Bank's extension under the New Credit Agreement of certain fixed
rates selected by the Company earlier this year. For a description of the
indebtedness under the New Credit Agreement, see 'Description of Certain
Indebtedness -- New Credit Agreement.'
(c) To reflect the elimination of outstanding amounts due to Pro-Fac from
the Company of $310.2 million, including the repurchase by the Company of the
finance receivable related to intangibles held by Pro-Fac of $24.5 million and
other amounts as follows: (i) current portion of obligations under Pro-Fac
capital leases of $17.7 million; (ii) current portion of Pro-Fac long-term debt
in the amount of $14.0 million; (iii) certain amounts due to Pro-Fac totalling
$49.3 million (which includes borrowings under seasonal debt, which has been
refinanced with borrowings under the New Credit Agreement and intercompany
obligations eliminated in consolidation); (iv) long-term debt due to Pro-Fac of
$89.0 million; (v) obligations under Pro-Fac capital leases totalling $113.1
million; and (vi) the $2.6 million credited to Pro-Fac upon consummation of the
Transactions as a result of the resolution of the disputed matter regarding
legal, accounting, investment banking and other expenses incurred by the Company
in connection with the change of control.
(d) To reflect repayment of seasonal debt provided to the Company by
Pro-Fac and third parties, which debt has been refinanced under the New Credit
Agreement.
48
<PAGE>
(e) To reflect the crediting to Pro-Fac of $2.6 million upon consummation
of the Transactions as a result of the settlement of the disputed matter
regarding legal, accounting, investment banking and other expenses incurred in
fiscal 1994 and the first quarter of fiscal 1995 by the Company in connection
with the change of control.
(f) Under purchase accounting, tangible and identifiable intangible assets
acquired will be recorded at their respective fair values. Current information
regarding the fair values of assets to be acquired is not available. As such, no
allocation of the excess of purchase cost over net assets acquired has been made
for purposes of this pro forma presentation. 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 unaudited pro forma condensed combined financial data. Accordingly,
the purchase accounting adjustments made in connection with the development of
the unaudited pro forma condensed combined financial data are preliminary and
have been made solely for purposes of developing the unaudited pro forma
condensed combined financial data. Once an appropriate allocation is made, any
remaining excess of purchase cost over net assets acquired will be recorded as
goodwill. The acquisition and merger will be accounted for as a step
acquisition. The step acquisition method of purchase accounting requires that
the percentage of assets and liabilities acquired be recorded at fair values at
the acquisition date. As Pro-Fac has historically shared in 50% of the earnings
of the Company, acquired assets will be reflected at 50% of historic value,
representing the interest of Pro-Fac retained. The remaining 50% will be
recorded at fair value, representing the interest acquired. It is expected that
significant goodwill in addition to existing goodwill retained will be recorded
as a result of the Merger.
(g) To reflect the elimination of the historical shareholders' equity
accounts of the Company of $22.9 million for the common stock and $57.0 million
of retained earnings, and to reflect the capital contribution of approximately
$134.6 million by Pro-Fac in conjunction with the Merger, which capital
contribution is eliminated in consolidation.
(h) To reflect the elimination of debt issuance costs of $0.8 million
relating to debt repaid in connection with the Merger.
(i) To reflect (i) employee severance and retirement benefits for certain
employees incurred in conjunction with the Merger in the amount of $0.7 million
and (ii) the reclassification of previously accrued retirement benefits
totalling $1.0 million. Such amounts are treated as Senior Indebtedness under
the Indenture.
(j) To reflect a reclassification for the income tax effect of the pro
forma adjustments based on an estimated marginal income tax rate of 40% in the
amount of $0.9 million.
NOTE 3 -- UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JUNE 25, 1994 ADJUSTMENTS
(a) To reflect the division disposals completed during fiscal 1994 and to
reflect the elimination of the fiscal 1994 operating activities of the Nalley's
U.S. Chips and Snacks operations anticipated to be sold. In conjunction with
this decision, the Company has recognized a charge of approximately $8.4 million
(pre-tax and pre-earnings split with Pro-Fac) during the first quarter of fiscal
1995. Such charge has not been reflected in the unaudited Pro Forma Combined
Statement of Operations.
(b) To reflect $4.7 million of additional depreciation and amortization
assuming an estimated weighted average life of 28 years. Depreciation and
amortization recorded by the Company subsequent to the Merger will be determined
based upon the fair values of acquired assets and their related lives as
ultimately recorded under purchase accounting. Additionally, to reduce
previously recorded amortization of goodwill and other intangibles by $1.7
million.
49
<PAGE>
(c) To reflect the net adjustment to interest expense calculated as
follows:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C>
Notes at rate of 12.25%............................................................. $ 19.6
Borrowings under New Credit Agreement:
$80.0 million Term Loan at assumed rate of 8.3%................................ 6.7
$97.5 million Term Loan Facility at assumed rate of 7.8%....................... 7.6
Amortization of debt issuance costs (10 year period)................................ 0.8
Less historical interest expense net adjustment..................................... (27.0)
Less amortization of debt issue costs related to debt repaid........................ (0.3)
------
Net adjustment to interest expense............................................. $ 7.4
------
------
</TABLE>
(d) To reflect the elimination of the earnings split and other transactions
between the Company and Pro-Fac.
(e) To reflect the elimination of change in control expenses incurred
during fiscal 1994.
(f) To reflect the elimination of the restructuring charge, including net
gains from division disposals, incurred by the Company during fiscal 1994.
(g) Cost of sales and other selling, administrative and general expenses
include $21.4 million of depreciation and amortization expenses (including $1.7
million of amortization of goodwill and intangibles, which is not extinguished
as a result of the Transactions).
(h) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed marginal income tax
rate of 40%.
NOTE 4 -- UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED SEPTEMBER 24, 1994 ADJUSTMENTS
(a) To reflect the elimination of the fiscal 1995 operating activities of
the Nalley's U.S. Chips and Snacks operation prior to the disposition of this
operation. The operation is anticipated to be sold during fiscal 1995.
(b) To reflect $1.2 million of additional depreciation and amortization
assuming an estimated weighted average life of 28 years. Depreciation and
amortization recorded by the Company subsequent to the Merger will be determined
based upon the fair values of acquired assets and their related lives as
ultimately recorded under purchase accounting. Additionally, to reduce
previously recorded amortization of goodwill and other intangibles by $0.4
million.
(c) To reflect the net adjustment to interest expense calculated as
follows:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C>
Notes at rate of 12.25%............................................................. $ 4.9
Borrowings under New Credit Agreement:
$80.0 million Term Loan at assumed rate of 8.5%................................ 1.7
$97.5 million Term Loan Facility at assumed rate of 8.0%....................... 2.0
Amortization of debt issuance costs (10 year period)................................ 0.2
Less historical interest expense net adjustment..................................... (7.1)
Less amortization of debt issuance costs related to debt repaid..................... (0.2)
------
Net adjustment to interest expense............................................. $ 1.5
------
------
</TABLE>
(d) To reflect the elimination of the earnings split and other transactions
between the Company and Pro-Fac.
(e) To reflect the elimination of change in control expenses incurred by
the Company during the three month period ended September 24, 1994.
50
<PAGE>
(f) To reflect the elimination of the restructuring charge, including net
gains from division disposals, and the elimination of the gain on assets
resulting from the Southern Frozen Foods fire claim incurred by the Company
during the three month period ended September 24, 1994.
(g) Cost of sales and other selling, administrative and general expenses
includes $5.0 million of depreciation and amortization expenses (including $0.4
million of amortization of goodwill and intangibles, which is not extinguished
as a result of the Transactions).
(h) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed marginal income tax
rate of 40%.
51
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY
GENERAL
This discussion outlines the most significant reasons for changes in net
sales, expenses and earnings for the Company from fiscal 1992 through fiscal
1994 and the first quarter of fiscal 1995. The relevant figures are shown in the
Consolidated Financial Statements of the Company elsewhere herein. All figures
shown by business are before any allocation of corporate overhead and before
division with Pro-Fac. The historical operating results are not necessarily
indicative of the future operating results or financial condition of the
Company.
In addition to the results of operations during fiscal 1994 and the first
quarter of fiscal 1995 the Company continued a major restructuring program.
RESTRUCTURING PROGRAM
The restructuring program first initiated in fiscal 1993 was based on a
strategic foundation of five points: (i) a focus on a more limited number of
product lines and businesses for which the Company has the resources to compete
and grow profitably; (ii) a strengthening of its national sales and distribution
capability so as to better serve large regional and national customers; (iii) a
drive to true low-cost producer/distributor status, including a commitment to a
unified corporate program of information management; (iv) a continuation of the
development of one high-performance, adaptive culture for all divisions, capable
of dealing with the continuing change in the food industry; and (v) continuing
support of the historically decentralized, autonomous division management
system, operating within these overall strategic parameters.
The first step of the restructuring program was to divest businesses that
were unprofitable or declining for the Company, but would fit strategically with
other business portfolios. The businesses identified for divestiture were the
Lucca Frozen Foods business, the oats portion of the National Oats business, the
Hiland potato chips business, the meat snacks business and the Nalley's U.S.
Chips and Snacks business. The private label beverage business was sold before
the initiation of the restructuring program. Of these six businesses sold, all
but the private label beverage and oats businesses incurred significant
operating losses over the last few years. The private label beverage business
was divested in order to allow the Company to focus on a more limited number of
product lines. The National Oats business was divested because, after
experiencing record increases in sales and profitability in the oat-based
packaged and bulk cereal category during fiscal 1990, the demand for oat bran
had reached its peak and began falling off. While the National Oats business was
still profitable, the downward trend was expected to continue due to the
over-capacity situation in the oat industry. This over-capacity situation and
the Company's decision to focus on a more limited number of product lines were
the key reasons for the divestiture of the oats portion of the National Oats
business.
Information regarding businesses sold or to be sold is provided below:
Private Label Beverage. On July 20, 1992, the Company sold the private
label beverage business for $2.0 million. There was no material gain or
loss on this transaction.
Lucca Frozen Foods. On November 8, 1992, the Company divested Lucca
Frozen Foods. A loss of approximately $2.7 million was recognized on this
transaction as part of the $61.0 million restructuring charge in fiscal
1993.
National Oats. On November 19, 1993, the Company sold the oats portion
of the National Oats business for $39.0 million and transferred the popcorn
business to CMF. The sale of the oats business resulted in an approximate
$10.9 million gain in fiscal 1994.
Hiland Potato Chips. On November 22, 1993, the Company sold certain
assets of the Hiland potato chips business for approximately $3.0 million.
There was no material gain or loss on this transaction after taking into
account the fiscal 1993 restructuring charge.
Meat Snacks. On February 22, 1994, the Company sold the meat snacks
business. The Company will lease certain manufacturing facilities and
equipment and license its trademarks, trade names, etc. to the buyer until
February 1995, at which time the buyer is contractually obligated to
purchase these assets for $2.0 million. There was no material gain or loss
on this transaction after taking into account the fiscal 1993 restructuring
charge.
52
<PAGE>
Nalley's U.S. Chips and Snacks. On September 8, 1994, the Company
signed a letter of intent to sell the Nalley's U.S. Chips and Snacks
business. There can be no assurance that the transaction will be completed.
In the first quarter of fiscal 1995, the Company recognized a charge of
approximately $8.4 million in connection with the elimination of this line
of business. If the sale contemplated by the letter of intent is not
consummated by the end of December, 1995, it is anticipated that Nalley's
U.S. Chips and Snacks will discontinue operations, and the Company will
incur an additional $3.5 million charge.
The business divestitures resulted in the following charges to earnings in
fiscal 1993, fiscal 1994 and the first quarter of fiscal 1995:
Fiscal 1993 Restructuring Charge. To reflect completed and anticipated
effects of the restructuring program, the Company incurred restructuring
charges in fiscal 1993 of $61.0 million. This charge included the loss
incurred on the sale of the Lucca Frozen Foods business, anticipated losses
on the sale of the Hiland potato chips and meat snacks businesses, and
other costs anticipated in conjunction with the restructuring program.
Virtually all of this charge was a revaluation of assets, rather than cash
expense. The Company also made staff reductions in selected locations
throughout the Company. A $1.0 million accrual relating to such costs was
recorded as part of the fiscal 1993 restructuring charge.
Fiscal 1994 Restructuring Gain. Included in the fiscal 1994 results
was a net gain of $7.8 million comprised of a gain on the sale of the oats
business of $10.9 million, net of a charge of $3.1 million to adjust
previous estimates regarding activities initiated in fiscal 1993. Subject
to completion of the sale of Nalley's U.S. Chips and Snacks, the Company
will have completed its dispositions pursuant to the existing restructuring
program and does not currently plan to dispose of any other businesses.
First Quarter of Fiscal 1995 Restructuring Charge. Included in the
first quarter of fiscal 1995 results was a restructuring charge of $8.4
million to reflect the estimated impact of the potential sale of certain
assets of the Nalley's U.S. Chips and Snacks operation and other expenses
relating to the disposal of this operation. Of this amount, approximately
40% reflects non-cash charges.
DEVELOPMENTS RELATED TO CHANGE OF CONTROL OF THE COMPANY
On March 23, 1993, the Company announced that Agway Inc. ('Agway'), which
through its wholly-owned subsidiary, Agway Holdings, Inc., owned approximately
99% of the Company's Class B Shares and approximately 14% of the Class A Shares,
as of June 25, 1994, was considering the potential sale of its interest in the
Company. In August 1993, the Company's Board of Directors authorized the
Company's management, with the advice of its investment bankers, to pursue
strategic alternatives for the Company. These options included (i) negotiations
with Pro-Fac relative to Pro-Fac gaining control of the business; (ii) the
possible sale of the entire equity of the Company to a third party; and (iii)
the implementation of additional restructuring actions that may include
recapitalizing the Company to buy out Pro-Fac. Under the Integrated Agreement,
prior to the consummation of the Transactions, title to substantially all of the
Company's fixed assets was held by Pro-Fac, and Pro-Fac provided the major
portion of the financing of the Company's operations.
The Company actively explored these alternatives during fiscal 1994. On
June 8, 1994, the Company's Board of Directors voted to pursue a proposal
submitted by Dean Foods Company ('Dean Foods') to acquire all the outstanding
shares of common stock of the Company at a maximum cash price of $20.00 per
share, subject to a number of contingencies, including an agreement with Pro-Fac
covering the termination of the Integrated Agreement, an agreement with Hormel
Foods Corporation for the purchase of Nalley's (excluding Nalley's Canada Ltd.
and the Nalley's U.S. Chips and Snacks business) for $150.0 million, clearance
of the transaction by appropriate government agencies and negotiation of
definitive agreements.
On August 4, 1994, Pro-Fac submitted a proposal to the Board of Directors
of the Company to acquire the Shares for cash in the amount of $19.00 per Share.
Pro-Fac's proposal was subject to certain terms and conditions, including
receipt of approval of the Board of Directors and shareholders of the Company,
receipt of approval of a majority of Pro-Fac's members and receipt of sufficient
financing to consummate the Acquisition. In September, Pro-Fac modified its
proposal by removing several contingencies and indicating its interest in
purchasing the Shares pursuant to a tender offer.
53
<PAGE>
At its special meeting on September 27, 1994, the Board of Directors of the
Company accepted Pro-Fac's proposal. Pro-Fac and the Company entered into the
Merger Agreement on September 27, 1994. Pursuant to the Merger Agreement, the
Company notified Dean Foods that it had accepted Pro-Fac's proposal and was
terminating all negotiations with Dean Foods and other parties for the purchase
of all or part of the Company.
On October 4, 1994, Pro-Fac initiated a tender offer for all of the
Company's outstanding stock at $19.00 per share. At the expiration of the tender
offer on November 2, 1994, 6,229,442 shares of Class A and 2,046,997 shares of
Class B common stock (or approximately 94% and 99%, respectively, of the total
number of outstanding shares of Class A and Class B common stock of the Company)
had been validly tendered and not withdrawn. All such tendered shares were
accepted for payment by PFAC. On November 3, 1994, PFAC merged into the Company,
making the Company a wholly-owned subsidiary of Pro-Fac.
During fiscal 1994 and the first quarter of fiscal 1995, the Company
expensed $3.5 million and $1.8 million, respectively, of legal, accounting,
investment banking and other expenses relative to the change of control issue.
In recognizing these expenses, the Company allocated half of these amounts to
Pro-Fac as a deduction to the profit split.
RESULTS OF OPERATIONS OF THE COMPANY
The following tables illustrate the Company's results of operations by
business for the periods indicated.
NET SALES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED ---------------------------------------
----------------------------------------------------
SEPTEMBER 25, SEPTEMBER 24,
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 1993 1994
-------------- -------------- -------------- ----------------- -----------------
NET % OF NET % OF NET % OF NET % OF NET % OF
SALES TOTAL SALES TOTAL SALES TOTAL SALES TOTAL SALES TOTAL
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comstock Michigan Fruit........... $318.8 35.6% $317.8 36.1% $333.4 40.2% $ 75.0 35.7% $ 71.7 40.6%
Nalley's Fine Foods............... 211.9 23.6 211.1 24.0 214.8 26.0 52.7 25.1 54.0 30.5
Southern Frozen Foods............. 91.7 10.2 93.4 10.7 94.3 11.4 22.9 10.9 23.1 13.1
Snack Foods Group................. 65.3 7.3 65.4 7.4 61.2 7.4 15.5 7.4 15.4 8.7
Brooks Foods...................... 30.0 3.3 30.7 3.5 30.0 3.6 5.6 2.7 5.4 3.1
Finger Lakes...................... 46.9 5.2 47.1 5.4 49.9 6.0 12.6 6.0 14.6 8.3
Intercompany eliminations(1)...... (30.6) (3.4) (32.9) (3.7) (34.4) (4.2) (9.3) (4.5) (9.7) (5.6)
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Sub-total -- Ongoing
operations................. 734.0 81.8 732.6 83.4 749.2 90.4 175.0 83.3 174.5 98.7
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Businesses sold(2)................ 131.2 14.7 116.4 13.2 55.5 6.7 27.6 13.1 -- --
Business to be sold(3)............ 31.7 3.5 29.6 3.4 24.4 2.9 7.5 3.6 2.3 1.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Sub-total.................... 162.9 18.2 146.0 16.6 79.9 9.6 35.1 16.7 2.3 1.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total net sales......... $896.9 100.0% $878.6 100.0% $829.1 100.0% $210.1 100.0% $176.8 100.0%
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
</TABLE>
- ------------
(1) Principally intercompany sales by Finger Lakes.
(2) The Company has sold the private label beverage business, the Lucca Frozen
Foods business, the oats portion of the National Oats business, the Hiland
potato chips business and the meats snack business. See
' -- General -- Restructuring Program' above.
(3) On September 8, 1994, the Company signed a letter of intent to sell the
Nalley's U.S. Chips and Snacks business. There can be no assurance that the
transaction will be completed. However, if the sale contemplated by the
letter of intent is not consummated by the end of December, 1995, it is
anticipated that Nalley's U.S. Chips and Snacks will discontinue operations,
and the Company will incur an additional $3.5 million charge.
54
<PAGE>
OPERATING INCOME(1)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
-------------------------------------------------------- ------------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
---------------- ---------------- ---------------- ------------------- -------------------
OPERATING % OF OPERATING % OF OPERATING % OF OPERATING % OF OPERATING % OF
INCOME TOTAL INCOME TOTAL INCOME TOTAL INCOME TOTAL INCOME TOTAL
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comstock Michigan Fruit... $20.4 47.2% $23.0 59.1% $29.6 59.7% $ 4.9 45.8% $ 6.7 55.8%
Nalley's Fine Foods....... 19.5 45.1 21.4 55.0 17.6 35.5 4.7 43.9 4.6 38.3
Southern Frozen Foods..... 8.1 18.7 7.6 19.5 10.2 20.5 1.8 16.8 2.4 20.0
Snack Foods Group......... 5.1 11.8 4.1 10.6 2.7 5.4 0.9 8.4 0.8 6.7
Brooks Foods.............. 2.7 6.3 2.7 6.9 3.1 6.3 0.2 1.9 0.1 0.8
Finger Lakes Packaging.... (0.9) (2.0) 2.9 7.5 3.9 7.9 1.1 10.3 1.0 8.3
Intercompany eliminations
and corporate
overhead................ (11.2) (25.9) (14.4) (37.0) (15.1) (30.4) (3.7) (34.6) (3.2) (26.6)
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Sub-total -- Ongoing
operations......... 43.7 101.2 47.3 121.6 52.0 104.9 9.9 92.5 12.4 103.3
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Businesses sold(2)........ (0.1) (0.2) (7.3) (18.8) 1.2 2.4 1.0 9.4 -- --
Business to be sold(3).... (0.4) (1.0) (1.1) (2.8) (3.6) (7.3) (0.2) (1.9) (0.4) (3.3)
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Sub-total............ (0.5) (1.2) (8.4) (21.6) (2.4) (4.9) 0.8 7.5 (0.4) (3.3)
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Total operating
income........ $43.2 100.0% $38.9 100.0% $49.6 100.0% $10.7 100.0% $12.0 100.0%
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
</TABLE>
- ------------
(1) Table excludes restructuring loss from division disposals of $8.4 million,
change in control expense of $1.8 million, and an insurance gain on assets
resulting from a fire claim of $6.5 million in the first quarter of fiscal
1995. Table also excludes restructuring loss on division disposals for
fiscal 1993 of $61.0 million and restructuring gain from division disposals
in fiscal 1994 of $7.8 million and change of control expense in fiscal 1994
of $3.5 million.
(2) The Company has sold the private label beverage business, the Lucca Frozen
Foods business, the oats portion of the National Oats business, the Hiland
potato chips business and the meats snack business. See
' -- General -- Restructuring Program' above.
(3) On September 8, 1994, the Company signed a letter of intent to sell the
Nalley's U.S. Chips and Snacks business. There can be no assurance that the
transaction will be completed. However, if the sale contemplated by the
letter of intent is not consummated by the end of December, 1995, it is
anticipated that Nalley's U.S. Chips and Snacks will discontinue operations,
and the Company will incur an additional $3.5 million charge.
DEPRECIATION AND AMORTIZATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED --------------------------------------
-----------------------------------------------------
SEPTEMBER 25, SEPTEMBER 24,
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 1993 1994
--------------- --------------- --------------- ----------------- -----------------
DEPRE. & % OF DEPRE. & % OF DEPRE. & % OF DEPRE. & % OF DEPRE. & % OF
AMORT. TOTAL AMORT. TOTAL AMORT. TOTAL AMORT. TOTAL AMORT. TOTAL
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comstock Michigan Fruit........... $ 12.0 40.1% $ 11.6 38.0% $ 11.5 44.8% $3.1 47.7% $2.7 49.1%
Nalley's Fine Foods............... 3.7 12.4 3.7 12.1 3.6 14.0 1.0 15.4 1.0 18.2
Southern Frozen Foods............. 2.1 7.0 2.1 6.9 2.5 9.7 0.5 7.7 0.6 10.9
Snack Foods Group................. 1.9 6.4 2.0 6.5 2.0 7.8 0.5 7.7 0.5 9.1
Brooks Foods...................... 0.7 2.3 0.6 2.0 0.6 2.3 0.2 3.1 0.2 3.6
Finger Lakes Packaging............ 1.1 3.7 1.4 4.6 1.2 4.7 0.3 4.6 0.3 5.5
Intercompany eliminations and
corporate overhead.............. 0.9 3.0 2.7 8.9 1.7 6.6 0.0 0.0 0.1 1.8
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Sub-total -- Ongoing
operations................. 22.4 74.9 24.1 79.0 23.1 89.9 5.6 86.2 5.4 98.2
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Businesses sold(1)................ 6.4 21.4 5.3 17.4 1.5 5.8 0.7 10.7 0.0 0.0
Business to be sold(2)............ 1.1 3.7 1.1 3.6 1.1 4.3 0.2 3.1 0.1 1.8
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Sub-total.................... 7.5 25.1 6.4 21.0 2.6 10.1 0.9 13.8 0.1 1.8
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total depreciation and
amortization.......... $ 29.9 100.0% $ 30.5 100.0% $ 25.7 100.0% $6.5 100.0% $5.5 100.0%
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
</TABLE>
(footnotes on next page)
55
<PAGE>
(footnotes from previous page)
(1) The Company has sold the private label beverage business, the Lucca Frozen
Foods business, the oats portion of the National Oats business, the Hiland
potato chips business and the meats snack business. See
' -- General -- Restructuring Program' above.
(2) On September 8, 1994, the Company signed a letter of intent to sell the
Nalley's U.S. Chips and Snacks business. There can be no assurance that the
transaction will be completed. However, if the sale contemplated by the
letter of intent is not consummated by the end of December, 1995, it is
anticipated that Nalley's U.S. Chips and Snacks will discontinue operations,
and the Company will incur an additional $3.5 million charge.
TOTAL ASSETS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED ------------------------------------
-----------------------------------------------
SEPTEMBER 25, SEPTEMBER 24,
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 1993 1994
------------- ------------- ------------- --------------- ---------------
TOTAL % OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL % OF
ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comstock Michigan Fruit.............. $223.4 42.2% $238.3 48.3% $218.5 48.9% $239.2 43.7% $258.9 49.4%
Nalley's Fine Foods.................. 81.0 15.3 83.9 17.0 83.5 18.6 96.0 17.5 97.9 18.7
Southern Frozen Foods................ 47.6 9.0 45.4 9.1 48.2 10.8 46.8 8.6 47.6 9.1
Snack Foods Group.................... 26.6 5.0 27.6 5.6 24.5 5.5 26.0 4.7 24.1 4.6
Brooks Foods......................... 14.9 2.8 12.6 2.6 11.0 2.5 12.8 2.3 13.0 2.4
Finger Lakes Packaging............... 42.2 8.0 42.2 8.5 39.3 8.8 50.2 9.2 50.5 9.6
Intercompany eliminations and
corporate overhead................. (31.2) (5.9) (11.5) (2.3) 5.8 1.3 (48.3) (8.8) 22.0 4.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Sub-total -- Ongoing
operations.................... 404.5 76.4 438.5 88.8 430.8 96.4 422.7 77.2 514.0 98.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Businesses sold(1)................... 111.4 21.0 41.8 8.5 5.4 1.2 116.1 21.2 5.3 1.0
Business to be sold(2)............... 13.8 2.6 13.4 2.7 10.7 2.4 8.6 1.6 5.1 1.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Sub-total....................... 125.2 23.6 55.2 11.2 16.1 3.6 124.7 22.8 10.4 2.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total assets............... $529.7 100.0% $493.7 100.0% $446.9 100.0% $547.4 100.0% $524.4 100.0%
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
</TABLE>
- ------------
(1) The Company has sold the private label beverage business, the Lucca Frozen
Foods business, the oats portion of the National Oats business, the Hiland
potato chips business and the meats snack business. See
' -- General -- Restructuring Program' above.
(2) On September 8, 1994, the Company signed a letter of intent to sell the
Nalley's U.S. Chips and Snacks business. There can be no assurance that the
transaction will be completed. However, if the sale contemplated by the
letter of intent is not consummated by the end of December, 1995, it is
anticipated that Nalley's U.S. Chips and Snacks will discontinue operations,
and the Company will incur an additional $3.5 million charge.
56
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
The following table illustrates the Company's income statement data and the
percentage of net sales represented by these items for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------------------------------------ ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
--------------- --------------- --------------- ------------------ ------------------
% OF % OF % OF % OF % OF
DOLLARS SALES DOLLARS SALES DOLLARS SALES DOLLARS SALES DOLLARS SALES
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................. $ 896.9 100.0% $ 878.6 100.0% $ 829.1 100.0% $ 210.1 100.0% $ 176.8 100.0%
Cost of sales............. 652.3 72.7 632.6 72.0 592.6 71.5 153.1 72.9 126.8 71.7
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross profit......... 244.6 27.3 246.0 28.0 236.5 28.5 57.0 27.1 50.0 28.3
Operating expense:
Selling,
administrative and
general............ 201.4 22.5 207.1 23.6 186.9 22.5 46.3 22.0 38.0 21.5
Restructuring,
including net loss
(gain) on division
disposals.......... -- -- 61.0 6.9 (7.8) (0.9) -- -- 8.4 4.8
(Gain) on assets
resulting from fire
claim.............. -- -- -- -- -- -- -- -- (6.5) (3.7)
Change in control
expenses........... -- -- -- -- 3.5 0.4 -- -- 1.8 1.0
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total operating
expenses...... 201.4 22.5 268.1 30.5 182.6 22.0 46.3 22.0 41.7 23.6
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Operating income
(loss)............. 43.2 4.8 (22.1) (2.5) 53.9 6.5 10.7 5.1 8.3 4.7
Total interest expense.... 22.8 2.5 19.6 2.2 18.2 2.2 4.8 2.3 5.1 2.9
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Income (loss) before
split with Pro-Fac
and before tax..... 20.4 2.3 (41.7) (4.7) 35.7 4.3 5.9 2.8 3.2 1.8
Pro-Fac share of
(earnings) loss......... (9.5) (1.1) 21.8 2.5 (16.9) (2.0) (2.8) (1.3) (1.5) (0.8)
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Pre-tax income
(loss)............. 10.9 1.2 (19.9) (2.2) 18.8 2.3 3.1 1.5 1.7 1.0
Provision for taxes....... 4.8 0.5 3.9 0.4 8.7 1.1 1.9 0.9 1.4 0.8
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Net income (loss).... $ 6.1 0.7% $ (23.8) (2.6)% $ 10.1 1.2% $ 1.2 0.6% $ 0.3 0.2%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
</TABLE>
57
<PAGE>
CHANGES FROM THREE MONTHS ENDED SEPTEMBER 25, 1993 TO THREE MONTHS ENDED
SEPTEMBER 24, 1994
Net Sales. The Company's net sales in the first quarter of fiscal 1995 of
$176.8 million decreased $33.3 million or 15.8% from $210.1 million the first
quarter of fiscal 1994. The net sales attributable to businesses sold or to be
sold in connection with the Company's restructuring program were $2.3 million in
the first quarter of fiscal 1995 and $35.1 million in the first quarter of
fiscal 1994. The Company's net sales from ongoing operations excluding
businesses sold or to be sold were $174.5 million in the first quarter of fiscal
1995, a decrease of $0.5 million or 0.3% from $175.0 million in the first
quarter of fiscal 1994.
Cost of Sales. The Company's cost of sales in the first quarter of fiscal
1995 of $126.8 million decreased $26.3 million or 17.2% from $153.1 million in
the first quarter of fiscal 1994. Of this decrease, $22.5 million was
attributable to businesses sold or to be sold and a $3.8 million reduction was
attributable to the Company's ongoing operations. This decrease of $3.8 million
was the result of variations in volume, selling prices and product mix.
Gross Profit. Gross profit of $50.0 million in the first quarter of fiscal
1995 decreased $7.0 million or 12.3% from $57.0 million in the first quarter of
fiscal 1994. Of this net decrease, a $10.3 million reduction was attributable to
businesses sold or to be sold and an increase of $3.3 million was attributable
to increased gross profit at the Company's ongoing operations. This increase of
$3.3 million was the result of variations in volume, selling prices, costs and
product mix.
Restructuring Expenses Including Net (Gain) Loss From Division Disposals.
Restructuring expenses, including net (gain) loss from division disposals
resulted in a charge in the first quarter of fiscal 1995 of $8.4 million to
reflect the estimated impact of the potential sale of certain assets of the
Nalley's U.S. Chips and Snacks operation and other expenses relating to the
disposal of this operation. Of this amount, approximately 40% reflects non-cash
charges. The Company annnounced on September 8, 1994 the signing of a letter of
intent, subject to a number of conditions, including successful financing by the
purchaser and the negotiation of a definitive agreement. If the sale
contemplated by the letter of intent is not consummated by the end of December,
1995, it is anticipated that Nalley's U.S. Chips and Snacks will discontinue
operations, and the Company will incur an additional $3.5 million charge.
Change in Control Expenses. Change in control expenses recorded in the
first quarter of fiscal 1995, amounting to $1.8 million, reflect non-tax
deductible expenses relating to the sale of the Company covering legal,
accounting, investment banking and other expenses relative to the change in
control issue. In recognizing this expense, the Company allocated half of this
amount to Pro-Fac as a deduction to the profit split. See ' -- Developments
Related to Change in Control of the Company' above.
Gain on Assets Resulting From Fire Claim. The gain on assets resulting from
fire claim recorded in the first quarter of fiscal 1995 amounted to $6.5 million
representing the insurance proceeds for the replacement value in excess of the
depreciated value of the building and equipment destroyed by fire on July 7,
1994 at Southern.
Other Selling, Administrative and General Expenses. Other selling,
administrative and general expenses in the first quarter of fiscal 1995 of $38.0
million decreased $8.3 million or 17.9% from $46.3 million in the first quarter
of fiscal 1994. This net decrease of $8.3 million includes primarily: a $1.2
million net decrease in trade promotions (comprised of a decrease attributable
to businesses sold or to be sold of $2.7 million and an increase for ongoing
operations of $1.5 million); a $4.3 million net decrease in advertising and
selling costs (comprised of a decrease attributable to businesses sold or to be
sold of $5.1 million and a $0.8 million increase for the Company's ongoing
operations); and a $2.8 million decrease in other administrative costs
(comprised of a decrease attributable to businesses sold or to be sold of $1.7
million and a decrease of $1.1 million attributable to the Company's ongoing
operations). Of the $1.5 million increase in trade promotions for the Company's
ongoing operations: $0.4 million is attributable to an increase at CMF; $0.9
million is attributable to increased spending at Nalley's; and $0.2 million is
attributable to increased spending at Southern. The $0.8 million increase in
advertising and selling costs attributable to the Company's ongoing operations
is comprised of no major variations in any individual division. The $1.1 million
decrease in other administrative costs attributable
58
<PAGE>
to the Company's ongoing operations is primarily related to reduced spending at
CMF ($0.2 million), Nalley's ($0.3 million) and corporate headquarters ($0.5
million).
Pretax Earnings Before Dividing Profits with Pro-Fac. The Company's pretax
earnings before dividing with Pro-Fac (excluding restructuring charges, change
in control expenses and the gain on assets resulting from the fire claim
discussed above) of $12.0 million in the first quarter of fiscal 1995 increased
$1.2 million or 11.1% from $10.8 million in the first quarter of fiscal 1994. Of
this net increase, a decrease of $1.2 million is attributable to businesses sold
or to be sold and an increase of $2.4 million is attributable to ongoing
operations. CMF experienced increased operating income during this period of
$1.8 million; Southern's operating income increased $0.6 million; and the
operating income of Nalley's, the Snack Foods Group, Brooks and Finger Lakes
each decreased $0.1 million. Reduced administrative expenses at the Company's
corporate headquarters operation increased operating profit by $0.4 million.
CMF's improved operating earnings resulted from increased profits relating to
the cheese sauce, fruit fillings and toppings, canned and frozen vegetables and
pudding product lines.
Interest Expense. Interest expense in the first quarter of fiscal 1995 of
$5.1 million increased $0.2 million or 4.1% from $4.9 million in the first
quarter of fiscal 1994. This net increase is attributable to an increase in debt
(with Pro-Fac), which accounted for $0.8 million, offset by a decrease of $0.6
million due to lower interest rates.
Pro-Fac Share of Earnings. Pro-Fac's share of the Company's earnings in the
first quarter of fiscal 1995 of $1.5 million decreased $1.3 million or 46.4%
from $2.8 million in the first quarter of fiscal 1994. Restructuring charges,
change in control expenses and the gain on assets resulting from the fire claim
accounted for a decrease of $1.8 million which offset an increase of $0.5
million due to operational improvements. The Pro-Fac share of earnings in the
first quarter of fiscal 1995 and fiscal 1994 was 45.8% and 47.0%, respectively,
of the Company's pretax earnings before dividing with Pro-Fac.
Income Before Taxes. The Company's income before taxes in the first quarter
of fiscal 1995 of $1.8 million decreased $1.3 million or 41.9% from $3.1 million
in the first quarter of fiscal 1994. Restructuring charges, change in control
expenses and the gain on assets resulting from the fire claim accounted for a
decrease of $1.8 million which offset an increase of $0.5 million due to
operational improvements.
Provision for Taxes. The provision for taxes in the first quarter of fiscal
1995 of $1.4 million decreased $0.5 million or 26.3% from $1.9 million in the
first quarter of fiscal 1994. The provision for taxes is adversely affected by
the non-deductibility of change in control expenses incurred in the first
quarter of fiscal 1995. The tax provision for the first quarter of fiscal 1994
includes a charge of $0.5 million to adjust deferred taxes to the higher rates
as legislated by the Congress and as required under Financial Accounting
Standards Board No. 109.
Net Income. The Company's net income for the first quarter of fiscal 1995
of $0.3 million decreased $0.9 million or 75% from $1.2 million in the first
quarter of fiscal 1994. Excluding non-recurring charges, the Company's net
income for the first quarter of fiscal 1995 of $2.1 million increased $0.4
million or 23.5% from $1.7 million in the first quarter of fiscal 1994.
CHANGES FROM FISCAL 1993 TO FISCAL 1994
Net Sales. The Company's net sales in fiscal 1994 of $829.1 million
decreased $49.5 million, or 5.6%, from $878.6 million in fiscal 1993. The net
sales attributable to businesses sold or to be sold in connection with the
Company's restructuring program discussed above were $79.9 million in fiscal
1994 and $146.0 million in fiscal 1993. The Company's net sales from ongoing
operations excluding businesses sold or to be sold in fiscal 1994 were $749.2
million, an increase of $16.6 million, or 2.3%, from $732.6 million in fiscal
1993. The increase in net sales from ongoing operations is attributable in part
to CMF. Net sales at CMF in fiscal 1994 of $333.4 million increased $15.6
million, or 4.9%, from $317.8 million in fiscal 1993. The increase in net sales
at CMF was due to an increase in net sales at CMF's New York vegetables business
resulting from increased prices and volumes associated with a national shortage
in supply in the vegetable market attributable to floods in the Midwest and a
drought in the South in the 1993 growing season. This increase in sales at CMF
was offset in part by reduced raw material costs at the Company, that were
reflected in reduced selling prices of the Company's products. Net sales at
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<PAGE>
Nalley's in fiscal 1994 of $214.8 million increased $3.7 million, or 1.8%, from
$211.1 million in fiscal 1993. The increase in net sales at Nalley's was
primarily net of increases and decreases as follows: (i) an $8.6 million
increase in the salad dressing operation that was primarily due to an increase
in volume, (ii) a $1.7 million decrease in pickles and relishes related to
reduced volume, and (iii) a $3.0 million reduction in the Canadian chips and
snacks operation due to reduced pricing. Net sales at Southern in fiscal 1994 of
$94.3 million remained essentially flat compared to $93.4 million in fiscal
1993. Net sales at the Snack Foods Group in fiscal 1994 of $61.2 million
decreased $4.2 million, or 6.4%, from $65.4 million in fiscal 1993. The decrease
was caused by reduced volume related principally to the competitive pressures of
the salty snacks business and the decline in consumption for the potato chip
category. Net sales at Brooks in fiscal 1994 of $30.0 million decreased $0.7
million, or 2.3%, from $30.7 million in fiscal 1993. This net decrease is
comprised of a decrease of $2.8 million of tomato products almost completely
offset by increased sales of bean products. The decrease in tomato products sold
was the result of the decision to exit the private label ketchup business. The
increase in bean products was due to a 21.0% increase in units sold. Net sales
at Finger Lakes in fiscal 1994 of $49.9 million increased $2.8 million, or 5.9%,
from $47.1 million (before elimination of intercompany sales) in fiscal 1993.
This was primarily the result of a 10.2% increase in volume.
Gross Profit. Gross profit of $236.5 million in fiscal 1994 decreased $9.5
million, or 3.9%, from $246.0 million in fiscal 1993. Of this net decrease, a
$21.1 million reduction was attributable to businesses sold or to be sold and an
increase of $11.6 million was attributable to increased gross profit at the
Company's ongoing operations. Gross profit for CMF increased $8.5 million,
Nalley's increased $2.1 million, Southern increased $2.5 million, and the Snack
Foods Group decreased $2.8 million. These changes were the result of variations
in volume, selling prices, costs and product mix.
Restructuring including net (gain)/loss from division disposals. Included
in the fiscal 1994 results was a net gain of $7.8 million comprised of a gain on
the sale of the oats operations of National Oats of $10.9 million, net of a
charge of $3.1 million to adjust previous estimates regarding activities
initiated in fiscal 1993. Subject to completion of the sale of Nalley's U.S.
Chips and Snacks the Company will have completed its dispositions pursuant to
the existing restructuring program and does not currently plan to dispose of any
other businesses. The Company incurred restructuring charges in fiscal 1993 of
$61.0 million, which included the loss incurred on the sale of the Lucca frozen
entree business, anticipated losses on the sale of the meat snacks and Hiland
potato chips businesses, and other costs anticipated in conjunction with the
restructuring program. See ' -- General -- Restructuring Program' above.
Change in control expenses. During fiscal 1994, the Company expensed $3.5
million of legal, accounting, investment banking and other expenses relative to
the change in control issue. In recognizing this expense, the Company allocated
half of this amount to Pro-Fac as a deduction to the profit split. See
' -- General -- Developments Related to Change of Control of the Company' above.
Selling, administrative and general expenses. Selling, administrative and
general expenses of $186.9 million in fiscal 1994 decreased $20.2 million, or
9.8%, from $207.1 million in fiscal 1993. Cost reductions include (i) a $0.7
million decrease in trade promotions, (ii) a $13.1 million decrease in
advertising and selling costs and (iii) a $5.1 million decrease in
administrative costs. Of the net decrease in trade promotions, an $8.4 million
decrease was attributable to businesses sold or to be sold and an increase of
$7.7 million was attributable to increased trade promotions at the Company's
ongoing operations. Of this increase, $2.6 million was due to increased
promotions on a reformulated fruit filling and topping product of CMF and to the
expansion of the pumpkin pie filling category and $4.3 million was primarily due
to new product promotions for Nalley's salad dressings and canned meats and
entrees introduced in fiscal 1993 and 1994. Of the net decrease in advertising
and selling costs, $12.2 million was attributable to businesses sold or to be
sold. The remaining decrease of $0.9 million was attributable to a $2.1 million
decrease in advertising and selling costs net of an increase in such costs of
$1.2 million at Nalley's. The increase at Nalley's was primarily related to
canned meats and entrees and salad dressings.
Operating Income. The Company's operating income in fiscal 1994 of $53.9
million increased $76.0 million from an operating loss of $22.1 million in
fiscal 1993. Excluding restructuring charges and change in control expenses, the
Company's operating income in fiscal 1994 was $49.6 million, a $10.7 million
increase, or 27.5%, from an operating income of $38.9 million in fiscal 1993.
Operating losses attributable to businesses sold or to be sold in connection
with the Company's restructuring program
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<PAGE>
were $2.4 million in fiscal 1994 and $8.4 million in fiscal 1993. Excluding
operating losses from businesses sold or to be sold, the Company's operating
income from continuing operations in fiscal 1994 was $52.0 million, an increase
of $4.7 million, or 9.9%, from $47.3 million in fiscal 1993. Of this increase,
CMF contributed $6.6 million, Southern contributed $2.6 million and Finger Lakes
contributed $1.0 million. These increases were off-set in part by decreased
operating income at Nalley's of $3.8 million and $1.4 million for the Snack
Foods Group. The increases for CMF's New York vegetables business and Southern
were attributable to increased selling prices as a result of the short crop of
vegetables nationally due to poor weather conditions in the Midwest during the
1993 growing season. Finger Lakes benefitted from improved production
efficiencies and procedures as a result of capital improvements. The decrease at
Nalley's pertained to both a sales volume decline and an increase in costs for
the peanut butter and pickles and relishes categories, and trade promotions and
selling costs on the canned meat and entree category. In addition, CMF's fruit
fillings and toppings business experienced increased trade promotions and
advertising costs related to reformulated fruit fillings and toppings and
expansion of the pumpkin pie filling markets. The decrease in the Snack Foods
Group is the result of the sales decline as previously mentioned. An increase of
$1.2 million related to the management incentive plan also reduced operating
income.
Interest Expense. Interest expense in fiscal 1994 of $18.2 million
decreased $1.4 million, or 7.1%, from $19.6 million in fiscal 1993. The
reduction in interest expense is due to lower interest rates off-set in part by
an increase in loan volume.
Pre-tax earnings/(loss) before dividing with Pro-Fac. Pre-tax
earnings/(loss) before dividing with Pro-Fac in fiscal 1994 of $35.7 million
increased $77.4 million from a loss of $41.7 million in fiscal 1993. Excluding
restructuring charges and change in control expenses, the Company's pre-tax
earnings before dividing with Pro-Fac in fiscal 1994 were $31.4 million, a $12.1
million increase, or 62.7%, from pre-tax earnings before dividing with Pro-Fac
of $19.3 million in fiscal 1993. The increase is attributable to the factors
described above.
Pro-Fac share of earnings/(loss). Pro-Fac share of earnings in 1994 of
$16.9 million increased $38.7 million from a share of loss of $21.8 million in
fiscal 1993. The increase is attributable to the factors described above. The
Pro-Fac share of earnings/(loss) in fiscal 1994 and fiscal 1993 was 47.3% and
52.3%, respectively, of the Company's pre-tax earnings/(loss) before dividing
with Pro-Fac. The change in percentage is the result of changes in the dividend
paid by the Bank that Pro-Fac shares with the Company.
Income/(loss) before taxes. Income/(loss) before taxes in fiscal 1994 of
$18.8 million increased $38.7 million from a loss of $19.9 million in fiscal
1993. Excluding restructuring charges and change in control expenses, the
Company's income before taxes in fiscal 1994 was $16.6 million, a $6.0 million
increase, or 56.6%, from income before taxes of $10.6 million in fiscal 1993.
The increase is attributable to the factors described above.
Provision for taxes. Provision for taxes in fiscal 1994 of $8.7 million
increased $4.8 million from a provision of $3.9 million in fiscal 1993. Included
in the fiscal 1994 results was a charge against earnings of $0.5 million to
adjust deferred taxes to the higher rate as legislated by Congress and as
required under Financial Accounting and Standards Board No. 109. The Company's
effective tax rate was significantly impacted during fiscal 1994 by
non-deductible legal and advisory expenses incurred in conjunction with the
change in control, the increase in the federal statutory income tax rate enacted
on August 10, 1993 and the adjustment of the valuation allowance previously
recorded.
Net income/(loss). The Company's fiscal 1994 net earnings were $10.1
million compared to a loss of $23.8 million in fiscal 1993. Also included in the
fiscal 1994 results was a net gain of $7.8 million comprised of a gain on the
sale of the oats operations of National Oats of $10.9 million, net of a charge
of $3.1 million to adjust previous estimates regarding activities initiated in
1993, and a charge of $3.5 million of legal, accounting and investment banking
and other expenses relating to the potential change of control of the Company.
Included in fiscal 1993 results were restructuring charges of $61.0 million. Net
earnings, excluding these items, were approximately $9.1 million in fiscal 1994
and $5.8 million in fiscal 1993, an increase of 56.9%.
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<PAGE>
CHANGES FROM FISCAL 1992 TO FISCAL 1993
Net Sales. The Company's net sales in fiscal 1993 of $878.6 million
decreased $18.3 million, or 2.0%, from $896.9 million in fiscal 1992. The net
sales attributable to businesses sold or to be sold in connection with the
Company's restructuring program discussed above were $146.0 million in fiscal
1993 and $162.9 million in fiscal 1992. The Company's net sales from continuing
operations excluding business sold or to be sold in fiscal 1993 were $732.6
million, a decrease of $1.4 million, or 0.2%, from $734.0 million in fiscal
1992. There were no major variations in net sales by division in these two
years.
Gross Profit. Gross profit of $246.0 million in fiscal 1993 increased $1.4
million, or 0.6%, from $244.6 million in fiscal 1992. Of this net increase, a
$10.1 million reduction was attributable to businesses sold or to be sold and an
increase of $11.5 million was attributable to increased gross profit at the
Company's operations. Gross profit for CMF increased $4.3 million, Nalley's
increased $4.9 million, Southern decreased $0.7 million, and the Snack Foods
Group decreased $0.1 million. These changes were the result of variations in
volume, selling prices, costs and product mix.
Restructuring including net (gain)/loss from division disposals. To reflect
completed and anticipated effects of the restructuring program, the Company
incurred restructuring charges in fiscal 1993 of $61.0 million, which included
the loss incurred on the sale of the Lucca frozen entree business, anticipated
losses on the sale of the meat snacks and Hiland potato chips businesses, and
other costs anticipated in conjunction with the restructuring program. See
' -- General-Restructuring Program' above.
Selling, administrative and general expenses. Selling, administrative and
general expenses of $207.1 million in fiscal 1993 increased $5.7 million, or
2.8%, from $201.4 million in fiscal 1992. This net increase includes an $8.6
million increase in trade promotions, a $1.9 million decrease in advertising and
selling costs, a one-time $3.3 million benefit due to operational changes in the
Company's salaried vacation policy, and a $2.3 million increase in other
administrative costs. Of the increase in trade promotions, $0.4 million was
attributable to businesses sold or to be sold and $8.2 million was attributable
to ongoing businesses. Of this $8.2 million increase in trade promotions
attributable to ongoing businesses, $4.8 million related to CMF, primarily
attributable to pie fillings and toppings, New York vegetables business and the
introduction of salad dressings in the eastern United States. Nalley's had a
$2.7 million increase in trade promotions, primarily attributable to canned
meats and entrees and salad dressings. All of the decrease in advertising and
selling costs were attributable to ongoing operations, primarily CMF, which was
mostly attributable to reduced advertising and selling costs for the fruit
filling and topping category. Of the $2.3 million increase in other
administrative costs, $1.8 million relates to increases attributable to ongoing
businesses and $0.5 million was attributable to businesses sold or to be sold.
Operating Income. The Company's operating loss in fiscal 1993 of $22.1
million was a decrease of $65.3 million, or 151.1%, from an operating income of
$43.2 million in fiscal 1992. Excluding the restructuring charge, the Company's
operating income in fiscal 1993 was $38.9 million, a $4.3 million decrease, or
10.0%, from fiscal 1992. Operating losses attributable to businesses sold or to
be sold in connection with the Company's restructuring program were $8.4 million
in fiscal 1993 and $0.5 million in fiscal 1992. Excluding operating losses from
businesses sold or to be sold, the Company's operating income from ongoing
operations in fiscal 1993 was $47.3 million, an increase of $3.6 million, or
8.2%, from $43.7 million in fiscal 1992. This $3.6 million increase was
comprised of a $2.6 million increase at CMF, including $2.8 million attributable
to fruit fillings and toppings and puddings, a $1.9 million increase at Nalley's
primarily comprised of a $1.6 million increase in canned meats and entrees and a
$0.3 million decrease in peanut butter, and a $3.8 million increase at Finger
Lakes primarily due to improved production efficiencies. These increases were
offset, in part, by reduced operating profits for CMF's New York vegetables
business of $0.9 million and Southern of $0.5 million as a result of the over-
supply situation in the commodity vegetable business. The Snack Foods Group had
a decreased operating income of $1.0 million as a result of competitive
pressures that prevented the implementation of price increases to cover
increased costs. An increase of $1.3 million related to the management incentive
plan also reduced operating income.
Interest Expense. Interest expense in fiscal 1993 of $19.6 million
decreased $3.2 million, or 14.0%, from $22.8 million in fiscal 1992. This
decrease was attributable to a reduction in debt, which accounted
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<PAGE>
for $0.8 million of the decrease, and lower interest rates, which accounted for
$2.4 million of the decrease.
Pro-Fac share of earnings/(loss). Pro-Fac's share of the Company's loss in
fiscal 1993 of $21.8 million decreased $31.3 million from a share of earnings in
fiscal 1992 of $9.5 million. Restructuring charges accounted for $30.5 million
of the decrease. The Pro-Fac share of earnings/(losses) in fiscal 1993 and
fiscal 1992 was 52.3% and 46.6%, respectively, of the Company's pre-tax
earnings/(losses) before dividing with Pro-Fac.
Income/(loss) before taxes. The Company's loss before taxes in fiscal 1993
of $19.9 million decreased $30.8 million from income of $10.9 million in fiscal
1992. This decrease in earnings was due primarily to the restructuring charges
discussed above.
Provision for taxes. Provision for taxes in fiscal 1993 of $3.9 million
decreased $0.9 million from a provision of $4.8 million in fiscal 1992. The
Company's effective tax rate was significantly impacted by the writedown of
goodwill and other intangibles having a lower tax basis than book value.
Net income/(loss). The Company's fiscal 1993 net loss of $23.8 million was
a decrease of $29.9 million compared to earnings of $6.1 million in fiscal 1992.
This decrease was almost entirely due to the restructuring charges (after
allocating to Pro-Fac its share of the loss) and the Company's increased
effective tax rate, as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL FUNDING AND CAPITAL EXPENDITURES
The operations of the Company historically have been funded with cash flows
generated by operations, borrowings from Pro-Fac (which in turn borrowed a
portion of these funds from the Bank) and borrowings under the Company's
seasonal facility with a syndicate of commercial lenders led by The Chase
Manhattan Bank, N.A. Pro-Fac and the Company had available seasonal lines of
credit of $100.0 million through September 1993, $86.0 million through September
1994 and $96.0 million thereafter. The maximum borrowing on those seasonal lines
during fiscal 1994 was $81.0 million, while the average amount outstanding
during such year totaled approximately $51.5 million. The balance outstanding at
September 24, 1994 was $90.0 million. These borrowings were repaid
simultaneously with the consummation of the Transactions.
In addition to borrowings by Pro-Fac, which have been loaned to the
Company, substantially all cash not distributed by Pro-Fac to its members or
securityholders has either been invested in assets leased to the Company or
loaned to the Company to finance its operations. As such, the information
provided below describes liquidity and capital resources of the Company and
Pro-Fac on a combined basis.
In the first quarter of fiscal 1995, the net cash used by combined
operating activities of the Company and Pro-Fac of $62.1 million reflects net
income of $0.3 million for the Company and $3.7 million for Pro-Fac.
Amortization of assets amounted to $5.5 million. Non-recurring charges amounted
to $3.7 million. Inventories increased $67.2 million, and accounts receivable
increased $7.1 million. Changes in other assets and liabilities amounted to $1.0
million.
In fiscal 1994, the net cash provided by combined operating activities of
the Company and Pro-Fac of $39.0 million reflects net income of $10.1 million
for the Company and $24.5 million for Pro-Fac. Amortization of assets amounted
to $25.7 million. Inventories decreased $0.3 million and accounts receivable
decreased $5.7 million. Changes in other assets and liabilities amounted to
$27.3 million.
Cash flows from investing activities include the acquisition and
disposition of property, plant and equipment and other assets held for or used
in the production of goods. Net cash used in investing activities of $4.7
million in the first quarter of fiscal 1995 was comprised of $1.0 million
received for the disposition of fixed assets, offset by $5.4 million paid for
fixed assets, and a $0.3 million increase in the investment in the Bank. Net
cash provided by investing activities of $22.4 million in fiscal 1994 was
comprised of $42.1 million received from disposals, $19.6 million paid for
purchases of property, plant and equipment, $1.3 million received for disposals
of fixed assets, and a $1.4 million increase in the investment of the Bank. In
fiscal 1994, the $42.1 million received from the disposition of the oats
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<PAGE>
portion of the National Oats business and the Hiland potato chips business was
generally applied to reduce debt.
Net cash provided by financing activities of $71.3 million in the first
quarter of fiscal 1995 was primarily comprised of proceeds of short-term debt of
$78.5 million which offset payments on long-term debt of $0.5 million, the cash
portion of non-qualified retain conversion of $0.3 million, and dividends paid
of $6.3 million. Net cash used in financing activities of $65.0 million in
fiscal 1994 was primarily comprised of payments on short-term debt of $0.5
million, payments on long-term debt of $50.2 million, payments on capital leases
of $2.1 million, repurchases of $3.2 million, and dividends paid of $9.9
million, less issuance of capital stock of $0.7 million.
Capital expenditures were $16.2 million, $21.5 million and $19.5 million in
the 1992, 1993 and 1994 fiscal years, respectively. These figures represent
capital expenditures for the Company and Pro-Fac. Under the Integrated
Agreement, Pro-Fac had historically provided the fixed assets used in the
business of the Company. Capital expenditures are expected to approximate $20.0
million in fiscal 1995. Management believes the Company's maintenance level of
capital expenditures to be approximately $8.0 million.
NEW BORROWINGS; ADDITIONAL CAPITAL CONTRIBUTION BY PRO-FAC
Under the New Credit Agreement, the Company is able to borrow up to $86.0
million for seasonal working capital purposes under the Seasonal Facility,
subject to a borrowing base limitation, and obtain up to $10.0 million in
aggregate face amount of letters of credit pursuant to a letter of credit
facility. The borrowing base is defined as the lesser of (i) $86.0 million and
(ii) the sum of 60% of eligible accounts receivable plus 50% of eligible
inventory. As of the Closing Date, after giving effect to the Transactions, the
borrowing base under the Seasonal Facility was $108.2 million.
As of the Closing Date, after giving effect to the Transactions, (i) cash
borrowings outstanding under the Seasonal Facility were $72.6 million, (ii)
additional availability under the Seasonal Facility, after taking into account
the amount of the borrowing base, was $13.4 million and (iii) outstanding
letters of credit were approximately $9.7 million. In addition to its seasonal
financing, as of November 3, 1994, after giving effect to the Transactions, the
Company would have had $22.5 million available for long-term borrowings under
the Term Loan Facility. The Company believes that the cash flow generated by its
operations and the amounts available under the Seasonal Facility should be
sufficient to fund its working capital needs, fund its capital expenditures and
service its debt for the foreseeable future. See 'Description of Certain
Indebtedness -- New Credit Agreement.'
Pro-Fac intends to make additional equity contributions to the Company.
Specifically, Pro-Fac has undertaken to contribute not less than $10.0 million
in equity to the Company by the end of fiscal 1995.
As a result of the Transactions, the Company's total debt and interest
expense have increased because the Notes have a substantially higher interest
rate than the debt that was repaid with the proceeds from the Old Note Offering.
The New Credit Agreement will require that both Pro-Fac and the Company meet
certain financial tests and ratios and comply with certain other restrictions
and limitations. See 'Description of Certain Indebtedness -- New Credit
Agreement.'
CERTAIN TAX MATTERS
In December 1991, the national office of the Internal Revenue Service
issued a technical advice memorandum ('TAM') concluding that virtually all of
Pro-Fac's income arises from patronage sources. As a result of the TAM, in
January 1992 an additional distribution of patronage proceeds for fiscal 1991
was made to members in the amount of $3.7 million. Patronage proceeds available
for distribution are determined by the Board of Directors each year, as
stipulated in the Bylaws.
In August 1993, the Internal Revenue Service issued a determination letter
which concluded that Pro-Fac is exempt from federal income tax to the extent
provided by Section 521 of the Internal Revenue Code of 1986, as amended (the
'Code'), 'Exemption of Farmers' Cooperatives from Tax.'
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<PAGE>
Unlike a non-exempt cooperative, a tax-exempt cooperative is entitled to deduct
any cash dividends it pays on its capital stock in computing its taxable income.
The exempt status is retroactive to fiscal year 1986. In conjunction with this
ruling, for fiscal years 1986 to 1990, Pro-Fac has filed for tax refunds in the
amount of approximately $5.8 million and interest payments of approximately $3.4
million. In addition, it is anticipated that Pro-Fac will file for tax refunds
for fiscal years 1991 and 1992 in the amount of approximately $3.1 million and
interest payments of approximately $0.4 million. No such refund amounts have
been reflected in the financial statements of Pro-Fac as of June 25, 1994 or
September 24, 1994. It is anticipated that the refund amounts will be recognized
upon receipt. It is anticipated, however, that as a result of the acquisition of
the Company, Pro-Fac may no longer be entitled to exempt status under Section
521 of the Code and may no longer be permitted to deduct the cash dividends paid
on its capital stock.
During fiscal 1989 and 1990, the Company entered into a series of
transactions with Pro-Fac which were recorded as financing transactions for
financial reporting purposes. For tax purposes, these transactions were
inadvertently reported in a manner that may have implied that certain intangible
assets had been disposed of. The Company is amending its tax returns to correct
the reporting. The years in question are currently under audit by the Internal
Revenue Service. Based upon consultation with its tax counsel and independent
accountants, the Company does not believe that there will be any material
incremental tax due as a result of such audit.
OTHER MATTERS
In November 1992, the Financial Accounting Standard Board issued Statement
of Accounting Standards No. 112, 'Employers' Accounting for Postemployment
Benefits.' This statement establishes accounting standards for employers who
provide benefits to former or inactive employees after employment but before
retirement. Postemployment benefits are all types of benefits provided to former
or inactive employees, their beneficiaries and covered dependents. This
statement is effective for fiscal years beginning after December 15, 1993. The
Company adopted this statement in the first quarter of fiscal 1995 with no
significant impact on its results of operations.
Statement of Position (SOP) 93-7, 'Reporting on Advertising Costs,' was
issued in December 1993. The Statement provides guidance on financial reporting
on advertising costs. The Company believes that the effect on the results of
operations will not be material.
SUPPLEMENTAL INFORMATION ON INFLATION
During the last three fiscal years, the changes in costs and prices within
the Company's business due to inflation were not significantly different from
inflation in the United States economy as a whole. Levels of capital investment,
pricing and inventory investment were not materially affected by the moderate
inflation.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PRO-FAC
GENERAL
This discussion outlines the most significant reasons for changes in the
major items of Pro-Fac's statement of net proceeds from fiscal 1992 through 1994
and the first quarter of fiscal 1995. The relevant figures are shown in the
Financial Statements of Pro-Fac elsewhere herein. The historical operating
results are not necessarily indicative of the future operating results or
financial condition of Pro-Fac.
Most of the proceeds of Pro-Fac are derived from the sale to the Company of
the crops of its members and hence depend primarily upon the volume and
Commercial Market Value of these crops (which accrues to Pro-Fac at the time of
delivery). In addition, proceeds depend upon the profitability of the finished
products made from Pro-Fac crops and raw materials from other sources which are
then processed and sold by the Company during the course of the fiscal year.
Under the Integrated Agreement, which has been superseded by the Pro-Fac
Marketing Agreement, the total purchase price for crops and the financing charge
were both based in part on the results of operations of the Company.
PRO-FAC'S RESULTS OF OPERATIONS
CHANGES FROM THREE MONTHS ENDED SEPTEMBER 25, 1993 TO THREE MONTHS ENDED
SEPTEMBER 24, 1994
The Commercial Market Value of crops delivered during the first quarter of
fiscal 1995 decreased to $37.7 million from $42.3 million in the first quarter
of fiscal 1994.
For the quarter ended September 24, 1994, the change in net proceeds
compared to the prior year quarter is summarized below:
<TABLE>
<CAPTION>
(MILLIONS)
<S> <C>
Decreased proceeds from the Company.......................................................... $ (0.4)
Increased net interest income................................................................ 0.3
Change in bank dividend...................................................................... (0.1)
----------
Change in excess of revenues before taxes, dividends and allocation of net proceeds.......... (0.2)
Change in tax provision...................................................................... 0.4
Increase in dividends........................................................................ (0.5)
----------
Change in net proceeds....................................................................... $ (0.3)
----------
----------
</TABLE>
CHANGES FROM FISCAL 1993 TO FISCAL 1994
The 1994 Commercial Market Value of crops delivered during this production
season decreased to $59.2 million from $59.8 million in fiscal 1993. This 1.0%
decrease was the net result of a 2.5% tonnage increase offset by the effect of
price and mix variations from the commodities.
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For the year ended June 25, 1994, the change in net proceeds and the
allocation to members compared to the prior year is summarized below:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C>
Increased proceeds from the Company................................................ $40.4
Increased net interest income...................................................... 0.7
All other.......................................................................... 0.1
------
Change in excess of revenues before taxes, dividends and allocation of net
proceeds......................................................................... 41.2
Benefit for taxes.................................................................. 0.8
Change in dividends................................................................ 0.2
------
Change in net proceeds............................................................. 42.2
Less increase in allocation to earned surplus...................................... (30.8)
------
Increase in net proceeds available to members...................................... $11.4
------
------
</TABLE>
CHANGES FROM FISCAL 1992 TO FISCAL 1993
The 1993 Commercial Market Value of crops delivered during the production
season decreased to $59.8 million from $64.2 million in fiscal 1992. This
decrease of 6.9% was the net result of a 12.0% tonnage increase offset by the
effect of price and mix variations for the commodities. Significant supplies of
cherries in 1992 drove Commercial Market Value for that crop down so that even
though the volume delivered to Pro-Fac increased 64% from the prior year the
dollar amount of Commercial Market Value decreased by 39%.
For the year ended June 25, 1994, the change in net proceeds and the
allocation to members compared to the prior year is summarized below:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C>
Decreased proceeds from the Company................................................ (31.3)
Increase net interest income....................................................... 0.6
Change in bank dividend............................................................ 0.4
------
Change in excess of revenues before taxes, dividends and allocation of net
proceeds......................................................................... (30.3)
Decrease in the benefit for taxes.................................................. (1.1)
Increase in dividends.............................................................. (0.1)
------
Change in net proceeds............................................................. (31.5)
Decrease in allocation to earned surplus........................................... 28.0
------
Decrease in net proceeds available to members from current operations.............. (3.5)
Additional distribution of 1991 net proceeds from earned surplus in fiscal 1992.... (3.7)
------
Decrease in net proceeds available to members...................................... (7.2)
------
------
</TABLE>
CERTAIN TAX MATTERS
In December 1991, the national office of the Internal Revenue Service
issued a TAM concluding that virtually all of Pro-Fac's income arises from
patronage sources. As a result of the TAM, in January 1992 an additional
distribution of patronage proceeds for fiscal 1991 was made to members in the
amount of $3.7 million. Patronage proceeds available for distribution are
determined by the Board of Directors each year, as stipulated in the Bylaws.
In August of 1993, the Internal Revenue Service issued a determination
letter which concluded that Pro-Fac is exempt from federal income tax to the
extent provided by Section 521 of the Internal Revenue Code, 'Exemption of
Farmers' Cooperatives from Tax.' Unlike a non-exempt cooperative, a tax-exempt
cooperative is entitled to deduct cash dividends it pays on its capital stock in
computing its taxable income. The exempt status is retroactive to fiscal year
1986. In conjunction with this ruling, for
67
<PAGE>
fiscal years 1986 to 1990, Pro-Fac has filed for tax refunds in the amount of
approximately $5.8 million and interest payments of approximately $3.4 million.
In addition, it is anticipated that Pro-Fac will file for tax refunds for fiscal
years 1991 and 1992 in the amount of approximately $3.1 million and interest
payments of approximately $0.4 million. No such refund amounts have been
reflected in the financial statements of Pro-Fac as of June 25, 1994 or
September 24, 1994. It is anticipated that the refund amounts will be recognized
upon receipt. It is anticipated, however, that as a result of the acquisition of
the Company Pro-Fac may no longer be entitled to exempt status under Section 521
of the Internal Revenue Code and may no longer be permitted to deduct the cash
dividends paid on its capital stock.
ACCOUNTING FOR INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued SFAS 109,
'Accounting for Income Taxes.' SFAS 109 eliminates and simplifies part of the
requirements of the previously issued SFAS 96. The Statement is effective for
fiscal years beginning after December 15, 1992, with retroactive adoption
permitted. Pro-Fac has retroactively adopted the provisions of this standard as
of June 29, 1991. There was no effect on Pro-Fac for this accounting change.
68
<PAGE>
BUSINESS
GENERAL
The Company is a producer and marketer of processed food products including
canned and frozen fruits and vegetables, canned desserts and condiments, fruit
fillings and toppings, canned chilies and stews, salad dressings, pickles,
peanut butter and snack foods. In addition, the Company manufactures cans which
are both utilized by the Company and sold to third parties. In fiscal 1994, on a
pro forma basis after giving effect to the Transactions, the Company would have
had net sales and operating income plus depreciation and amortization of $749.2
million and $77.0 million (excluding the nonrecurring restructuring gain of $7.8
million and the $3.5 million charge relating to legal and advisory costs
incurred in connection with the change of control), respectively. See 'Pro Forma
Financial Data of the Company.'
The Company sells products in three principal categories: (i) 'branded'
products, which are sold under the Company's trademarks, (ii) 'private label'
products, which are sold to grocers that in turn use their own brand names on
the products and (iii) 'food service' products, which are sold to food service
institutions such as restaurants, caterers and bakeries and to schools. In
fiscal 1994, approximately one-half of the Company's net sales were branded and
the remainder were split between private label and food service. The Company's
branded products include 'Comstock,' 'Thank You' and 'Wilderness' fruit fillings
and toppings, 'Nalley' chilies and stews, 'Bernstein's' salad dressings and
'Adams' peanut butter. The Company's private label products include salad
dressings, salsa, fruit fillings and toppings, canned puddings and canned and
frozen vegetables, which are sold to customers such as A&P, Kroger, Safeway,
Topco, Wegman's and Winn-Dixie. The Company's food service products include
salad dressings, pickles, fruit fillings and toppings, canned and frozen
vegetables, canned puddings, cheese sauces and canned and frozen fruit, which
are sold to customers such as Carvel, Disney, Foodservice of America, KFC,
McDonald's and Sysco.
BUSINESS STRATEGY
Achieve Leading Market Shares of Branded Products. The Company believes
that having branded products with strong shares in regional markets provides it
with distinct advantages. Specifically, by achieving a market presence within a
geographic region, the Company believes it is better able to create avenues for
the sale of the Company's other branded products and to assess and meet local
market and consumer needs.
Diversify Through Sales of Branded, Private Label and Food Service
Products. Historically, the Company has focused primarily on its branded
products, many of which have leading market shares in the regions they serve.
However, with the growth of the private label and food service businesses, the
Company has also begun to focus on profitable opportunities in these areas. For
example, Nalley's has been working with grocers on programs for private label
salsa, soups and salad dressings with 'good,' 'better' and 'best' categories.
This concept offers the grocer a three-tiered product selection and provides the
Company with a means to customize products and programs specifically for
consumer desires. The Company is currently reviewing the expansion of the
'good,' 'better' and 'best' program to many other products. In addition, with
the growth of the food service sector, the Company has pursued food service
opportunities for its fruit fillings and toppings, puddings and cheese sauces.
Future food service growth is planned for other products such as breaded
vegetables and salad dressings.
Engage in Selective National Expansion Program. Certain of the Company's
products have achieved significant market shares within specific geographic
regions, and the Company believes substantial opportunities exist to distribute
these products on a national basis. The Company recently began selling its
'Bernstein's' salad dressing, first introduced in California, in Arizona,
Colorado and Upstate New York. Other products under consideration for national
expansion include Mexican specialty items, such as chili and salsa, other salad
dressings and canned soups.
Continuous Focus on Cost Reduction. Through a corporate wide program of
information management, selected capital expenditures and individual division
initiatives, the Company continuously seeks to reduce costs and improve
efficiency. During fiscal 1993, the Company initiated production consolidation
efforts involving the closing of three plants located in Michigan, Colorado and
New York.
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<PAGE>
Further consolidations are being explored to reduce operational redundancies. In
the area of purchasing, by maximizing market leverage through collaborative and
cooperative purchasing activities throughout the Company, significant savings
have been achieved. As a result of the Company's cost reduction activities, the
Company's operating income margin from ongoing businesses improved from 6.0% to
6.5% to 6.9% in each of fiscal 1992, 1993 and 1994, respectively.
DESCRIPTION OF BUSINESSES
COMSTOCK MICHIGAN FRUIT
CMF, the Company's largest division, headquartered in Rochester, New York,
produces products in three principal categories: (i) fruit fillings and
toppings, (ii) aseptically produced products and (iii) canned and frozen fruits
and vegetables. In fiscal 1994, approximately one-third of CMF's net sales
represented branded products, approximately one-third represented private label
products and approximately one-third represented food service products. CMF
markets its branded products under the 'Thank You,' 'Comstock,' 'Wilderness,'
'Greenwood,' 'Silver Floss,' 'Blue Boy,' 'Victor,' 'Cortland Valley,' 'Cerise,'
'Super Pop,' 'Pop-Eye' and 'Pops-Rite' labels. The following table sets forth
the net sales and division operating income for CMF for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $ 318.8 $ 317.8 $ 333.4 $ 75.0 $ 71.7
Operating
income......... 20.4 23.0 29.6 4.9 6.7
</TABLE>
CMF estimates the national fruit fillings and toppings market to be
approximately $225.0 million. CMF's fruit fillings and toppings are marketed
under the 'Comstock,' 'Thank You' and 'Wilderness' brands, which held a national
market share of approximately 56% in the fruit filling segment in fiscal 1994.
CMF's fruit fillings and toppings are sold both through grocers to the public
and to food service institutions such as restaurants, caterers and bakeries and
to schools. In fiscal 1994, the Company introduced the 'More Fruit/More Flavor'
program at CMF, which involved the production of fruit fillings and toppings
with 25% more fruit content, which CMF sells at a premium price. The Company
believes this program has increased CMF's market share in the fruit fillings and
toppings category. In fiscal 1992, CMF also launched a pumpkin filling, which
represents approximately one-quarter of the fruit fillings and toppings
category. CMF is capitalizing on its existing brand franchise in fruit fillings
and toppings to make pumpkin a part of its full line.
CMF's aseptic operations produce puddings, cheese sauces and dips for sale
by CMF and diet drinks for sale by a third party under a co-packing arrangement.
The aseptic production process involves preparation of the product in a sterile
environment beginning with batch formulation and continuing through packaging.
As a result, once packaged, the product requires no further cooking. The Company
believes its aseptic production facility is state-of-the-art. In 1993, CMF's
aseptically processed puddings accounted for approximately one-half of the
national food service market and aseptically processed cheese sauces accounted
for approximately one-quarter of the national food service market.
CMF's fruit and vegetable processing business includes both branded and
private label production. It also includes value added products such as canned
specialty fruits and frozen vegetable mixes. Success in the fruit and vegetable
processing business is driven by, among other things, an ability to control
costs. The Company has aggressively sought to reduce costs in the fruit and
vegetable processing business by closing plants, making capital investments in
the modernization of processing equipment, changing its product mix and refining
advertising strategies. For example, in fiscal 1993, the Company initiated
production consolidation efforts involving the closing of CMF plants located in
Michigan and New York. Programs aimed at further reducing costs include
continued capital investment in cost savings projects and further vegetable
plant consolidation.
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<PAGE>
NALLEY'S
Nalley's, which includes the Nalley's Fine Foods division headquartered in
Tacoma, Washington and Nalley's Canada Ltd. located in Vancouver, British
Columbia, markets canned meat products such as chilies and stews, pickles, salad
dressings, peanut butter and syrup, which are sold throughout the Northwest and
Western United States and Western Canada under the 'Nalley' brand and other
brands, such as 'Bernstein's' salad dressing and 'Adams' natural peanut butter.
Approximately three-quarters of Nalley's products are branded; however, private
label accounts for a growing percentage of Nalley's business. The following
table sets forth the net sales and division operating income for Nalley's for
the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $ 211.9 $ 211.1 $ 214.8(1) $ 52.7 $ 54.0
Operating
income......... 19.5 21.4 17.6 4.7 4.6
</TABLE>
- ------------
(1) Sales by Nalley's Canada Ltd. accounted for approximately 20% of Nalley's
total net sales in fiscal 1994.
The Nalley's branded products have been a vehicle for growth through both
geographic expansion and line extension. Several of Nalley's branded products
have leading market shares in the Pacific Northwest, such as Nalley's chili,
which had a market share of approximately 57%, and 'Nalley' and 'Farman's'
pickles, which together had a market share of approximately 49%, for the 52-week
period ended August 7, 1994. In the Pacific Northwest, the Company's 'Nalley'
and 'Bernstein's' brands of salad dressings had a combined market share of
approximately 17% for the same period. The Company recently began selling its
'Bernstein's' salad dressings in Arizona, Colorado and Upstate New York. Plans
are under consideration to expand production to an existing facility in the
Midwest or East to service Eastern markets. In addition, Nalley's has begun
distribution of a refrigerated version of the 'Bernstein's' dressings in the
Pacific Northwest. Nalley's is currently exploring opportunities with two
national food companies in order to expand the distribution of its products.
Private label efforts include executing a new three-tiered store labeling
strategy for specialty Mexican products such as chili and salsa, salad dressings
and canned soups. The three-tiered strategy allows the Company to offer its
'Nalley' branded products to its private label customers in a 'good,' 'better,'
'best' product format. For example, if a given grocer seeks a premium salsa
brand, Nalley's can offer its top-tier brand of salsa. By using the three-tiered
product approach, the Company believes it can effectively extend the reach of a
given product line. The private label customer base includes Kroger in the
Midwest, Ralph's on the West Coast, Wegman's in Upstate New York and Winn-Dixie
in the Southeast.
SOUTHERN FROZEN FOODS
Southern, located in Montezuma, Georgia, freezes and sells a full line of
southern vegetables such as black-eyed peas, okra and leafy greens as well as a
line of traditional vegetables such as corn, peas, squash and green beans.
Southern also produces specialty side dishes and a small amount of frozen fruit.
The following table sets forth the net sales and division operating income for
Southern for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $91.7 $93.4 $94.3 $ 22.9 $ 23.1
Operating
income......... 8.1 7.6 10.2 1.8 2.4
</TABLE>
Southern's products are marketed under the following brand names:
'McKenzie's,' 'Southern Farms,' 'Gold King,' 'Chill-Ripe' and 'Tropic Isle.'
Approximately one-half of Southern's products are sold under brand labels, with
'McKenzie's' and 'Southern Farms' accounting for approximately 26% of the
southern vegetable market in the Southeastern United States for the 52-week
period ended
71
<PAGE>
March 6, 1994. Approximately 15% of Southern's products are sold to private
label customers with major accounts including Winn-Dixie, Federated Foods,
SuperValue and Marketing Management. Distribution is primarily in the Southeast
and South Central portions of the United States.
On July 7, 1994, a fire extensively damaged Southern's breading and
packaging operations. By July 12, 1994, Southern had arranged for co-packing and
resumed shipments. The Company has business interruption insurance and believes
that all losses beyond its $250,000 deductible will be covered. The Company
began construction of a new breading and packaging facility in late October
1994. Completion is scheduled for June 1995.
SNACK FOODS GROUP
The Snack Foods Group consists of three separate divisions: (i) Snyder,
(ii) Tim's and (iii) Husman. The following table sets forth the net sales and
division operating income for the Snack Foods Group for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $65.3 $65.4 $61.2 $ 15.5 $ 15.4
Operating
income......... 5.1 4.1 2.7 0.9 0.8
</TABLE>
Snyder of Berlin, located in Berlin, Pennsylvania, produces and markets
several varieties of potato chips in distinctive silver-colored bags, as well as
several varieties of corn chips and similar snack products in conventional
packaging, primarily under the 'Snyder of Berlin' brand. Snyder's products are
recognized for their taste and freshness among users in Western Pennsylvania,
Ohio and West Virginia, some of the country's highest per capita snack
consumption markets.
Tim's Cascade Chips, located in Tacoma, Washington, produces kettle-fried
potato chips for distribution in the Seattle/Tacoma, Washington area.
Kettle-frying produces a potato chip that is thicker and crisper than other
potato chips.
Husman Snack Foods, located in Cincinnati, Ohio, markets potato chips in
Cincinnati and Dayton, Ohio. Husman has maintained volume with marketing
concepts such as a licensing agreement with a leading local restaurant chain to
use its recognizable Bar-B-Que flavor in potato chips and dip.
BROOKS FOODS
Brooks markets specialty chili beans, specialty tomato products, barbecue
sauce and related products under the 'Brooks' label. Its principal markets are
in the Midwest. In fiscal 1994, branded sales accounted for approximately
three-quarters of Brooks' total sales. However, Brooks is seeking to expand its
private label business, particularly for its specialty chili bean products. The
following table sets forth the net sales and division operating income for
Brooks for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $30.0 $30.7 $30.0 $5.6 $5.4
Operating
income......... 2.7 2.7 3.1 0.2 0.1
</TABLE>
Brooks sells a line of specialty tomato products under the 'Just for Chili'
brand name, a line of whole and stewed tomatoes under the 'Hoosier Sweets' brand
name and a line of chili hot beans under the 'Brooks' brand name. In fiscal
1994, 'Brooks' chili hot beans had a market share of approximately 68% in the
major Midwestern cities it serves.
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<PAGE>
FINGER LAKES PACKAGING COMPANY
Finger Lakes manufactures various sizes of three-piece sanitary food cans
for sale to the Company and third parties. In fiscal 1994, approximately
two-thirds of Finger Lakes sales were to other divisions of the Company and
one-third were to other customers. The following table sets forth the net sales
and division operating income (before elimination of corporate overhead) for
Finger Lakes for the periods shown:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------------------- ----------------------------------------
JUNE 26, 1992 JUNE 26, 1993 JUNE 25, 1994 SEPTEMBER 25, 1993 SEPTEMBER 24, 1994
------------- ------------- ------------- ------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales........ $46.9 $47.1 $49.9 $ 12.6 $ 14.6
Operating
income......... (0.9) 2.9 3.9 1.1 1.0
</TABLE>
Finger Lakes' three part metal sanitary cans are used in the retail, food
service and institutional markets. These cans are recyclable and provide
economical containers for the Company's products based on volume run and
customer base.
PACKAGING AND DISTRIBUTION
The food products produced by the Company are distributed to various
consumer markets in all 50 states as well as in Canada. Branded lines of CMF,
Southern and Brooks are sold through food brokers which sell primarily to
supermarket chains and various institutional feeders. Nalley's has its own sales
personnel responsible for sales within the Pacific Northwest and uses food
brokers for sales in other marketing areas. Snyder's, Tim's and Husman's
products are marketed through distributors, some of which are owned and operated
by the Company, who sell directly to retail outlets in Kentucky, Maryland, Ohio,
Pennsylvania, Virginia and West Virginia.
Customer brand operations encompass the sale of products under private
labels to chain stores and under the controlled labels of buying groups. For
example, private label customers of CMF include such major food distributors as
A&P, Kroger, Safeway, Topco, Wegman's and Winn-Dixie. The Company has developed
central storage and distribution facilities that permit multi-item single
shipment to customers in key marketing areas.
Curtice-Burns Express ('CBX'), a subsidiary of the Company, is a licensed
common carrier with authority in 48 states. It is used by the Company to obtain
backhaul volume on shipments via the Company's trucks or contract haulers. The
other divisions of the Company lease their equipment to CBX for these backhauls.
TRADEMARKS
The major brand names under which the Company markets its products are
trademarks of the Company. Such brand names are considered to be of material
importance to the business of the Company since they have the effect of
developing brand identification and maintaining consumer loyalty. All of the
Company's trademarks are of perpetual duration so long as periodically renewed,
and it is currently intended that the Company will maintain them in force. The
major brand names utilized by the Company are as follows:
73
<PAGE>
<TABLE>
<CAPTION>
PRODUCT BRAND NAME
- ------------------------------------ -----------------------------------------------------------------
<S> <C>
Chilies, stews and soups............ Brooks, Mariners Cove, Nalley
Fruits and vegetables............... Blue Boy, Brooks, Cerise, Chill-Ripe, Gold King, Gracias,
Greenwood, Hoosier Sweets, Just for Chili, McKenzie's, Naturally
Good, Ritter, Southern Farms, Southland, Thank You, Tropic Isle
Fruit fillings and toppings......... Comstock, Globe, Gracias, Thank You, Wilderness
Peanut butter....................... Adams
Pickles............................. Farman's, Nalley
Popcorn............................. Pop-Eye, Pops-Rite, Super Pop
Puddings............................ Gracias, Thank You
Salad dressings..................... Bernstein's, Bernstein's Light Fantastic, Nalley
Sauerkraut.......................... Cortland Valley, Silver Floss, Victor
Snack food.......................... Cheese Pleezers, Husman, La Restaurante, Snyder of Berlin,
Thunder Crunch, Tim's Cascade Chips
Syrup............................... Lumberjack
</TABLE>
RAW MATERIALS
It is currently anticipated that the Company will acquire a substantial
part of its raw agricultural products from Pro-Fac. In fiscal 1994,
approximately 65% of the crops processed by the Company were supplied by
Pro-Fac. The Company also will purchase on the open market some crops of the
same type and condition as those purchased from Pro-Fac. Such open market
purchases may occur at prices higher or lower than those paid to Pro-Fac for
similar products. See 'Certain Transactions -- Pro-Fac Marketing Agreement.'
The canned and frozen vegetable portion of the Company's 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 in a given year. This oversupply
typically will result in depressed selling prices and reduced profitability to
the Company on the inventory produced from that year's crops. Excessive rain or
drought conditions can produce low crop yields and a shortage situation. This
shortage typically will result in higher selling prices and increased
profitability to the Company. While the national supply situation controls the
pricing, the supply can differ regionally because of variations in weather. The
1993 floods in the Midwest and the drought in the South increased prices, even
though the crops in the Company's growing areas were at normal levels.
Except for cans manufactured by Finger Lakes, the Company purchases all of
its requirements for nonagricultural products, including containers, on the open
market. Although the Company has not experienced any difficulty in obtaining
adequate supplies of such items, occasional periods of short supply of certain
raw materials may occur.
COMPETITION
All products of the Company, particularly branded products, compete with
those of national and major regional food processors under highly competitive
conditions. Many of the national manufacturers have substantially greater
resources than the Company. The principal methods of competition in the food
industry are ready availability of a broad line of products, product quality,
price, advertising and sales promotion.
In recent years, and particularly when various food items are in short
supply, the constant availability of a full line of food items and the ability
to deliver the required items rapidly and economically have been among the most
important competitive factors in the markets in which the Company operates. The
Company believes that it is competitive with national brands in this area since
distribution of many of its regional brands and custom-pack food items are
limited to areas which can easily be served from its production and distribution
facilities.
Quality of product and uniformity of quality are also important methods of
competition. The Company's relationship with Pro-Fac has provided the Company
with local sources of supply, thus
74
<PAGE>
allowing the Company to exercise control over the quality and uniformity of much
of the raw product which it purchases. The members of Pro-Fac generally operate
relatively large production units with emphasis on mechanical growing and
harvesting techniques. This factor is also an advantage in producing uniform,
high-quality food products.
The Company believes that its pricing is generally competitive with that of
other food processors for products of comparable quality. The branded products
of the Company are marketed under regional brands and its marketing programs are
focused on local tastes and preferences as a means of developing consumer brand
loyalty. The Company's advertising program utilizes local media, and strong
emphasis is placed on in-store promotions.
Although the relative importance of the above factors may vary as between
particular products or customers, the above description is generally applicable
to all of the products of the Company in the various markets in which they are
distributed.
An estimate of the number of competitors in the markets served by the
Company is very difficult. Nearly all products sold by the Company compete with
the nationally advertised brands of the leading food processors, including
Borden, DelMonte, Eagle, Green Giant, Heinz, Frito-Lay, Kraft, Vlasic, Birdseye
and similar major brands, as well as with the branded and private label products
of a number of regional processors, many of which operate only in portions of
the marketing area served by the Company. While the major brands are dominant in
branded products on a national level, the Company believes that it is a
significant factor in many of the marketing areas served by one or more of its
regional brands.
ENVIRONMENTAL MATTERS
The disposal of solid and liquid waste material resulting from the
preparation and processing of foods and the emission of wastes and odors
inherent in the heating of foods during preparation are subject to various
federal, state, and local environmental laws and regulations. Such laws and
regulations have had an important effect on the food processing industry as a
whole, requiring substantially all firms in the industry to incur material
expenditures for modification of existing processing facilities and for
construction of new waste treatment facilities. The Company is also subject to
standards imposed by regulatory agencies pertaining to the occupational health
and safety of its employees. Management believes that continued measures to
comply with such laws and regulations will not have a material adverse effect
upon its competitive position.
Among the various programs for the protection of the environment which have
been adopted to date, the most important for the operations of the Company are
the wastewater discharge permit programs administered by the environmental
protection agencies in those states in which the Company does business and by
the federal Environmental Protection Agency. Under these programs, permits are
required for processing facilities which discharge certain wastes into streams
and other bodies of water, and the Company is required to meet certain discharge
standards in accordance with compliance schedules established by such agencies.
The Company has to date received permits for all facilities for which permits
are required, and each year submits applications for renewal permits for some of
the facilities. Such renewal permits are currently being processed, and the
Company expects that they will be issued by the agencies in due course.
While the Company cannot predict with certainty the effect of any proposed
or future environmental legislation or regulations on its processing operations,
management of the Company believes that the waste disposal systems which are now
in operation or which are being constructed or designed are sufficient to comply
with all currently applicable laws and regulations.
In 1991, the Company settled criminal charges arising out of its alleged
failure to file accurate monthly discharge reports pursuant to waste water
discharge permits at its Red Creek, New York and Rushville, New York facilities.
There was no claim of any harm to the environment, only that certain reports
were not properly filed as required by the permits. At the time the criminal
charges were settled by payment of a fine of $50,000, the New York State
Department of Environmental Conservation ('DEC'), which issued the permits,
indicated that it might seek a civil penalty for the same alleged violations on
which the criminal charges were based. During the ensuing three years the DEC
has not
75
<PAGE>
formally sought any such penalties, and in any event the Company believes that
it has valid defenses to any such claims.
A facility owned by the Company in Brockport, New York, known as the Former
3M/Dynacolor Plant Site (DEC Site No. 828066) and used by prior owners as a
manufacturing facility, is under study by DEC to determine whether it should be
classified as a hazardous waste site presenting a significant threat to the
public health or the environment. Levels of contaminants of concern in soil
appear to be below DEC action levels. However, DEC is currently assessing any
impact on groundwater from soil contamination. Until the results of DEC's
assessment are available, it is not possible to determine what, if any, response
actions will be required at the facility.
The Company has been identified as a potentially responsible party ('PRP')
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, ('CERCLA') along with over 100 other entities, at the Ellis
Road Site in Jacksonville, Florida. To date, the Company has paid approximately
$45,000 toward the completion of various removal actions and soil clean up. EPA
is evaluating the need for groundwater remediation which, if required, the
Company does not believe will have a material impact on its earnings given its
relatively small contribution of material to the site and the availability of
other viable PRPs.
The Company has been identified by EPA as a PRP under CERCLA at the
Spectron Inc. Site located in Elkton, Maryland. The investigation of the site is
still in the preliminary stages, and it is not yet possible to estimate the
scope or cost of whatever remedial action may be required. However, based upon
its very small contribution of material to the site and the large number of
other viable PRPs, the Company does not believe this matter will have a material
impact on its earnings.
The Company is cooperating with environmental authorities in remediating
various leaks and spills at several of its plants, primarily associated with
underground storage tanks. Such actions are being conducted pursuant to
procedures approved by the appropriate environmental authorities at a cost which
is not significant, except for one project at the Company's Nalley's plant in
Tacoma, Washington, where the cost of remediation is expected to be
approximately $800,000. Approximately three-quarters of this amount has already
been expended by the Company.
Historically, expenditures for facilities related to protection of the
environment have been made from the regular capital budget of Pro-Fac and such
facilities were then leased to the Company pursuant to the facilities financing
section of the Integrated Agreement. Expenditures related to environmental
programs and facilities have not had, and are not expected to have, a material
effect on the earnings of the Company.
In fiscal 1994, total capital expenditures of Pro-Fac and the Company were
$19.5 million, of which approximately $2.1 million was devoted to the
construction of environmental facilities. The Company estimates that the capital
expenditures for environmental control facilities, principally waste water
treatment facilities, for the 1995 fiscal year will be approximately $2.7
million. However, there can be no assurance that expenditures will not be
higher.
EMPLOYEES
As of June 25, 1994, the Company had 4,325 full-time employees, of whom
2,750 were engaged in production and the balance in management, sales and
administration. As of that date, the Company also employed approximately 1,000
seasonal and other part-time employees, almost all of whom were engaged in
production. Most of the production employees are members of various labor
unions. The Company believes its relationship with its employees is good.
LEGAL PROCEEDINGS
A grower has filed suit against the Company for damages resulting from
defective seed which was purchased from Southern. The lawsuit alleges that the
defective seed resulted in the loss of crops and acreage, and the grower is
seeking $950,000 in damages. Management believes this claim is without merit and
intends to vigorously defend its position. In addition, management anticipates
that any material costs of settlement, if incurred, will be covered under its
insurance policies.
76
<PAGE>
In conjunction with the sale of the National Oats division by Pro-Fac and
the Company, Pro-Fac terminated the membership of the Harvest States Cooperative
('Harvest States') in Pro-Fac. Harvest States was the only supplier of oats to
the Company's National Oats division. As a result of this action, Harvest States
filed a claim against Pro-Fac for, among other things, the receipt of payments
for future oats purchases after the sale of National Oats division through
fiscal 1995. The Company agreed to indemnify Pro-Fac as to certain expenses
arising out of the termination of the membership of Harvest States in Pro-Fac.
It was agreed that any settlement payments would be deemed an expense of the
Company under the division of earnings with Pro-Fac. The exact amount of any
potential settlement related to this issue cannot be estimated at September 24,
1994, but Pro-Fac's management does not believe that this is a material exposure
to the Company.
The owner of property formerly leased by the Company in the City of South
San Francisco, San Mateo, California sued the Company in February 1994 seeking,
inter alia, damages for alleged contamination from underground storage tanks and
other activities at the facility, an order requiring the Company to perform
environmental investigation and remediation, and additional rental payments at
the rate of approximately $26,800 per month commencing November 1, 1993. 350
Harborway Associates v. Curtice-Burns Foods, Inc., Civ. Action No. 387014
(Super. Ct., San Mateo County, Cal.). The Company has completed soil remediation
and is conducting groundwater monitoring with the approval of the San Mateo
County Health Department and believes there is no need for additional study or
clean-up at the facility. Management believes this claim is without merit and
intends to vigorously defend its position.
The Company has been named as a third-party defendant in a lawsuit brought
by the Federal Environmental Protection Agency (EPA) under CERCLA against, inter
alia, the owner of the International Disc Site in Ellsworth, Michigan to recover
response costs. United States v. Taylor, 802 F. Supp. 116 (W.D. Mich. 1992). The
site was formerly owned by a business acquired by the Company in 1974. The
Company believes it has valid defenses to this suit and does not expect it to
have a material impact on its earnings.
Other than these disputes there are no material pending legal proceedings
other than routine litigation incidental to the business to which either the
Company or Pro-Fac is a party or to which any of their property is subject.
Further, no such proceedings are known to be contemplated by governmental
authorities.
PROPERTIES
Historically, Pro-Fac has held title to, and leased to the Company, most of
the processing facilities, warehouses and other plants and equipment (including
equipment located in properties not owned by Pro-Fac) utilized in the Company's
business. Nalley's Canada Ltd. owns the facility used in its business and the
Company leases some facilities from third parties. In connection with the
Transactions, Pro-Fac contributed title to all of its properties to PFAC, which
was merged into the Company, and Pro-Fac, PFAC and the Company terminated the
lease arrangements.
Seven of the properties contributed by Pro-Fac are not being used for
production by the Company and are held for resale. These properties are located
in Denver, Colorado; Des Moines, Iowa; Wall Lake, Iowa; Clifton, New Jersey;
Alton, New York; Rushville, New York; and Albany, Oregon. The aggregate net book
value of these properties was $11.9 million as of June 25, 1994.
In July 1994, a plant operated by Southern, located in Montezuma, Georgia,
was damaged by fire. All material costs associated with repairs to the facility
and business interruption are anticipated to be covered under the Company's
insurance policies.
The following table describes all facilities leased or owned by the Company
(other than the seven properties held for resale and certain public warehouses
leased by the Company from third parties from time to time). Except as otherwise
noted, each facility set forth below is owned by the Company.
77
<PAGE>
<TABLE>
<CAPTION>
TYPE OF PROPERTY (BY DIVISION) LOCATION SQUARE FEET
- ------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
COMSTOCK MICHIGAN FRUIT:
Office building, manufacturing plant and warehouse.................. Benton Harbor, MI 239,252
Distribution center................................................. Coloma, MI 400,000
Manufacturing plant and warehouse................................... Fennville, MI 370,600
Warehouse........................................................... Sodus, MI 243,138
Warehouse and office; public storage facility (1)................... Vineland, NJ 198,000
Warehouse........................................................... Alton, NY 60,060
Freezing plant; warehouse; office and dry storage................... Barker, NY 150,100
Freezing plant...................................................... Bergen, NY 122,009
Cold storage and repack facility and public storage warehouse....... Brockport, NY 429,052
Cutting, curing and packaging plant................................. Gorham, NY 55,534
Canning plant and warehouse; freezing plant......................... Leicester, NY 205,599
Distribution center and warehouse................................... LeRoy, NY 137,300
Canning plant and warehouse; freezing plant......................... Oakfield, NY 203,403
Canning plant and warehouse......................................... So. Dayton, NY 151,140
Canning plant and warehouse......................................... Red Creek, NY 137,264
Cutting, curing and canning plant................................... Shortsville, NY 103,686
Cutting and curing plant............................................ Waterport, NY 21,626
Manufacturing plant................................................. Ridgway, IL 50,000
Manufacturing plant................................................. North Bend, NE 50,000
NALLEY'S FINE FOODS:
Office building, warehouse and tank farm............................ Enumclaw, WA 87,313
Office building, manufacturing plant and warehouse.................. Tacoma, WA 438,000
Sales offices and distribution warehouse (1)........................ Spokane, WA 16,300
Parking lot and yards (1)........................................... Tacoma, WA 162,570
Warehouses (1)...................................................... Tacoma, WA 254,000
Receiving and grading station (1)................................... Cornelius, OR 11,700
Sales offices and distribution warehouses (1)....................... Portland, OR 14,365
Receiving and grading station (1)................................... Mount Vernon, WA 30,206
Warehouse (1)....................................................... Sea-Tac, WA 13,950
Annacis Island,
Office, manufacturing plant and distribution warehouse (1).......... BC 108,000
Main office (1)..................................................... Burnaby, BC 8,350
Office building and warehouse (1)................................... Kelowna, BC 15,900
Office, manufacturing plant and warehouse........................... Vancouver, BC 48,000
Warehouse (1)....................................................... Calgary, AB 13,800
Warehouse (1)....................................................... Edmonton, AB 8,000
SOUTHERN FROZEN FOODS:
Office, freezing plant, cold storage and repackaging facility....... Montezuma, GA 545,942
Office, freezing plant and cold storage............................. Alamo, TX 110,000
SNACK FOODS GROUP:
Office, plant and warehouse......................................... Berlin, PA 190,225
Administrative, plant, warehouse and distribution center (1)........ Auburn, WA 37,600
Office, plant and warehouse......................................... Cincinnati, OH 113,576
Warehouse (1)....................................................... Elwood City, PA 8,000
BROOKS FOODS:
Office building, canning plant and warehouse........................ Mt. Summit, IN 200,000
FINGER LAKES PACKAGING:
Can manufacturing plant............................................. Lyons, NY 147,376
CORPORATE HEADQUARTERS:
Headquarters office (1) (Includes office space for CMF as well as
Corporate Conference Center)...................................... Rochester, NY 62,500
</TABLE>
- ------------
(1) Leased from third parties, although certain related equipment is owned by
the Company.
78
<PAGE>
MANAGEMENT
Effective upon consummation of the Transactions, Pro-Fac established a
management structure for the Company, providing for a Board of Directors
consisting of one management director, Pro-Fac Directors and Disinterested
Directors. The number of Pro-Fac Directors is equal to the number of
Disinterested Directors. The Chairman of the Board is a Pro-Fac Director. The
initial management and directors are listed below. The Company may in the future
expand the Board of Directors, but Pro-Fac has undertaken to cause the Company
to maintain a Board on which the number of Pro-Fac Directors does not exceed the
number of Disinterested Directors. The Indenture provides that there will be a
Change of Control if, for a period of 120 consecutive days, the number of
Disinterested Directors on the Board of Directors of the Company is less than
the greater of (i) two and (ii) the number of directors of the Company who are
Pro-Fac Directors.
Upon consummation of the Transactions, Roy A. Myers was elected as Chief
Executive Officer. The Company intends to commence a search for a chief
executive officer to replace Mr. Myers. Although the Company believes that it
will be able to find a qualified candidate to become chief executive officer,
there can be no assurance as to how long such search will take. Mr. Myers has
agreed to remain as Chief Executive Officer until his successor is found.
THE COMPANY
DIRECTORS AND OFFICERS
Set forth below is certain information concerning the individuals who serve
as directors and executive officers of the Company and the individuals who serve
as presidents and chief executive officers of certain of the Company's
divisions.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ----------------------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Roy A. Myers(1).......................... 63 Chief Executive Officer and Director
William D. Rice.......................... 60 Senior Vice President, Secretary and Treasurer
Stephen R. Wright........................ 47 Senior Vice President -- Procurement
Patrick D. Lindenbach.................... 39 Executive Vice President of the Company and President and Chief
Executive Officer of Nalley's
Dennis M. Mullen......................... 40 President and Chief Executive Officer of CMF
Thomas A. Collins........................ 56 President and Chief Executive Officer of Southern
Eugene W. Hermenet....................... 56 President and Chief Executive Officer of Brooks
Ronald R. Fithen......................... 48 President and Chief Executive Officer of Finger Lakes
Robert V. Call, Jr.(2)................... 68 Director
Bruce R. Fox(2).......................... 47 Director
Cornelius D. Harrington, Jr.(3).......... 67 Director
Steven D. Koinzan(2)..................... 45 Director
William B. McKnight, Jr.(3).............. 49 Director
Frank M. Stotz(3)........................ 64 Director
</TABLE>
- ------------
(1) Management director.
(2) Pro-Fac Director.
(3) Disinterested Director.
Roy A. Myers has been the Chief Executive Officer and a Director of the
Company since the completion of the Transactions. Mr. Myers served as a Director
and Executive Vice President of the Company from 1987 to the completion of the
Transactions (at which time he was appointed the Chief Executive Officer). He
served as Vice President-Operations of the Company from 1985 to 1987 and as Vice
President of the Company from 1983 to 1985. He has been an employee of the
Company or a predecessor to the Company since 1955 in various other capacities
including Industrial Relations Manager, Operations Manager and President of the
Corporate Services Division. He was General Manager of Pro-Fac from 1987 until
the completion of the Transactions, having served as Assistant General Manager
from 1983 to 1987.
79
<PAGE>
William D. Rice has been Senior Vice President Finance and Administration
of the Company since 1991, Secretary of the Company since 1989 and Treasurer of
the Company since 1975. He was Vice President-Finance of the Company from 1969
to 1991. He has been Assistant Treasurer of Pro-Fac since 1970.
Stephen R. Wright has been Senior Vice President -- Procurement of the
Company since the completion of the Transactions. He was Vice
President -- Procurement for the Company from 1990 to November, 1994, having
served as Director of Commodities and Administration Services for the Company
from 1988 to 1990.
Patrick D. Lindenbach has been an Executive Vice President of the Company
since March 1993 and Division President and Chief Executive Officer of Nalley's
since June 1990. He was Division President and Chief Executive Officer of
Nalley's Canada Ltd. from 1988 to 1990. Prior to working at the Company, he held
various positions at Kellogg Salada Canada Inc., Warner Lambert Canada, Inc. and
Standard Brands Canada Ltd.
Dennis M. Mullen has been President and Chief Executive Officer of CMF
since March 1993. He was Senior Vice President and Business Unit Manager-Food
Service of CMF from 1991 to 1993, and Senior Vice President-Custom Pack Sales
for Nalley's from 1990 to 1991. Prior to employment with the Company, he was
President and Chief Executive Officer of Globe Products Company.
Thomas A. Collins has been President and Chief Executive Officer of
Southern since 1990. He was Executive Vice President of Southern from 1989 to
1990, Vice President-Sales and Marketing of Southern from 1985 to 1989, Vice
President-Marketing for Retail and Foodservice of Southern from 1981 to 1985 and
Vice President-Foodservice Sales of Southern from 1975 to 1981.
Ronald R. Fithen has been President and Chief Executive Officer of Finger
Lakes since 1991. Prior to joining the Company in 1991, he was Plant Manager for
Continental Can's largest manufacturing operation in St. Louis.
Eugene W. Hermenet has been President and Chief Executive Officer of Brooks
since 1978. He was Executive Vice President of Brooks from 1975 to 1978. He was
President of Silver Floss from 1972 to 1975, Vice President of Silver Floss from
1971 to 1972 and Assistant to the President of Silver Floss from 1969 to 1971.
Robert V. Call, Jr. has been a Director of the Company since the completion
of the Transactions. Mr. Call had been a Director of the Company since 1986
until completion of the Transactions (at which time he resigned and was
reappointed). He has been a Director of Pro-Fac since 1962. He has been the
President of Pro-Fac since 1986, having served as Treasurer from 1973 to 1984,
and a member of Pro-Fac since 1961. He is a vegetable, fruit and grain farmer
(My-T Acres, Inc., Batavia, NY).
Bruce R. Fox has been a Director of the Company since the completion of the
Transactions. He has been a Director of Pro-Fac since 1974. He has been
Treasurer of Pro-Fac since 1984 and a member of Pro-Fac since 1974. Mr. Fox is a
fruit and vegetable grower (N.J. Fox & Sons, Inc., Shelby, MI).
Cornelius D. Harrington, Jr. has been a Director of the Company since the
completion of the Transactions. He has been retired since December 1990. Prior
to his retirement, Mr. Harrington was President of the Bank of New England-West
in Springfield, MA or a predecessor to the Bank of New England-West from 1978 to
December 1990. He was Chief Executive Officer of the Bank of New England-West
from 1984 to December 1990. Until 1987, he served as Chairman of the Board of
Directors of BayState Medical Center in Springfield, MA. He has been a Director
of the Farm Credit Bank of Springfield since January 1994.
Steven D. Koinzan has been a Director of the Company since the completion
of the Transactions. He has been a Director of Pro-Fac since 1983. He has been
Secretary of Pro-Fac since March 1993 and a member of Pro-Fac since 1979. Mr.
Koinzan is a popcorn, fieldcorn and soybean farmer (Koinzan Farms, Norden, NE).
80
<PAGE>
William B. McKnight, Jr. has been a Director of the Company since the
completion of the Transactions. Mr. McKnight is a management consultant. He was
Executive Vice President of the Nabisco Foods Group of RJR Nabisco, Inc. until
1993. He was President and Chief Executive Officer of the Nabisco Foods Company
from 1988 to 1992 and President of the Biscuit Division of the Nabisco Foods
Group from 1986 to 1988. Mr. McKnight was President of the Grocery Division of
the Nabisco Foods Group from 1984 to 1986, President of the Grocery Products
Division from 1982 to 1984 and Vice President, Marketing of the Special Products
Division from 1981 to 1982. From 1968 to 1981, he held various management
positions at General Mills, Inc. Mr. McKnight has been a Director of VideOcart,
Inc. since 1989 and a Director of Ghirardelli Chocolate Company since 1991. He
is a member of the Executive Committee of The Kenyon College Fund and St.
Clare's Riverside Hospital.
Frank M. Stotz has been a Director of the Company since the completion of
the Transactions. Mr. Stotz retired this year from his position as Senior Vice
President -- Finance of Bausch & Lomb Incorporated. Before joining Bausch & Lomb
in that capacity in 1991, Mr. Stotz was a partner in Price Waterhouse. He joined
Price Waterhouse in Chicago in 1954, was admitted to partnership in 1966 and
retired from the firm in 1991 to join Bausch & Lomb. From 1980 to 1991, he was
partner in charge of the Rochester office of Price Waterhouse. Mr. Stotz serves
on the Boards of Trustees of St. John Fisher College, The Genesee Hospital, The
Rochester Center for Governmental Research and The Automobile Club of Rochester.
He is also a member of the Bishop's Council of the Catholic Diocese of
Rochester.
TERM OF OFFICE
All directors of the Company will hold office from the date of election
until the next annual meeting of shareholders or until their successors are duly
elected and qualified. Each executive officer of the Company will hold office
from the date of election until his successor is elected or appointed.
PRO-FAC
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the individuals who serve
as directors and executive officers of Pro-Fac.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Robert V. Call, Jr.......... 68 President and Director
Albert P. Fazio............. 58 Vice President and Director
Bruce R. Fox................ 47 Treasurer and Director
Steven D. Koinzan........... 45 Secretary and Director
William D. Rice............. 60 Assistant Treasurer
Stephen R. Wright........... 47 Assistant General Manager
Thomas R. Kalchik........... 47 Vice President of Member Relations
Dale W. Burmeister.......... 54 Director
Glen Lee Chase.............. 57 Director
Tommy R. Croner............. 52 Director
Kenneth A. Mattingly........ 46 Director
Allan D. Mitchell........... 67 Director
Allan W. Overhiser.......... 34 Director
Paul E. Roe................. 55 Director
Edward L. Whitaker.......... 68 Director
</TABLE>
Robert V. Call, Jr. has been a Director of Pro-Fac since 1962. For
information regarding Mr. Call, see 'Management -- The Company -- Directors and
Officers.'
Albert P. Fazio has been a Director of Pro-Fac since 1976, Vice President
of Pro-Fac since March 1993 and a member of Pro-Fac since 1975. He was Secretary
of Pro-Fac from 1991 to 1993. Mr. Fazio is a vegetable, grain and livestock
farmer (New Columbia Garden Co., Inc., Vancouver, WA). Mr. Fazio also operates a
sand and gravel business (Fazio Bros. Sand Co., Vancouver, WA).
Bruce R. Fox has been a Director of Pro-Fac since 1974. For information
regarding Mr. Fox, see 'Management -- The Company -- Directors and Officers.'
81
<PAGE>
Steven D. Koinzan has been a Director of Pro-Fac since 1983. For
information regarding Mr. Koinzan, see 'Management -- The Company -- Directors
and Officers.'
William D. Rice has been Assistant Treasurer of Pro-Fac since 1970. For
information regarding Mr. Rice, see 'Management -- The Company -- Directors and
Officers.'
Stephen R. Wright has been Assistant General Manager of Pro-Fac since
November 14, 1994. For information regarding Mr. Wright, see 'Management -- The
Company -- Directors and Officers.'
Thomas R. Kalchik is employed by the Company to provide management services
to Pro-Fac pursuant to the Pro-Fac Marketing Agreement. In such capacity, he has
served as Vice President of Member Relations of Pro-Fac since June 1990 and
Assistant Secretary of Pro-Fac since 1983. Mr. Kalchik was Director of Member
Relations of Pro-Fac from August 1983 to June 1990.
Dale W. Burmeister has been a Director of Pro-Fac since 1992 and a member
of Pro-Fac since 1974. Mr. Burmeister is a fruit and vegetable grower (Lakeshore
Farms, Inc., and Dale Burmeister, sole proprietorship, Shelby, MI).
Glen Lee Chase has been a Director of Pro-Fac since 1989 and a member of
Pro-Fac since 1984. Mr. Chase is a peanut, poultry, grain and vegetable farmer
(Chase Farms Inc., Oglethorpe, GA).
Tommy R. Croner has been a Director of Pro-Fac since 1985 and a member of
Pro-Fac since 1973. Mr. Croner is a dairy and potato farmer (T-Rich Inc.,
Berlin, PA).
Kenneth A. Mattingly has been a Director of Pro-Fac since 1993 and a member
of Pro-Fac since 1978. Mr. Mattingly is a vegetable and grain farmer (M-B Farms
Inc., LeRoy, NY).
Allan D. Mitchell has been a Director of Pro-Fac since 1975 and a member of
Pro-Fac since 1961. He was Secretary of Pro-Fac from 1985 to 1990. Mr. Mitchell
is a fruit grower (North Rose, NY).
Allan W. Overhiser has been a Director of Pro-Fac since March 1994 and a
member of Pro-Fac since 1984. Mr. Overhiser is a fruit farmer (A.W. Overhiser
Orchards, South Haven, MI).
Paul E. Roe has been a Director of Pro-Fac since 1986 and a member of
Pro-Fac since 1961. Mr. Roe is a vegetable, grain and dry bean farmer (Roe
Acres, Inc., Bellona, NY).
Edward L. Whitaker has been a Director of Pro-Fac since 1992 and a member
of Pro-Fac since 1988. Mr. Whitaker is a farm land owner and a popcorn grower
(Forest City, IL).
REGIONAL REPRESENTATION
The business of Pro-Fac is conducted pursuant to policies established by
its Board of Directors. The territorial area in which Pro-Fac operates has been
divided into geographical regions based on natural divisions of product and
location. In addition, some regions have been further divided into districts.
The members within each region or district are represented on the Board by at
least one director. The Board designates the number of directors to be elected
from each region or district, based on the value of raw product delivered, so as
to attain reasonably balanced representation on the Board. At present, there are
five regions of Pro-Fac covering the following areas and represented by the
number of directors indicated:
<TABLE>
<CAPTION>
NUMBER
REGION AREA OF DIRECTORS
- -------------- --------------------------------- ------------
<C> <S> <C>
I (Dist. 1) Western Upstate New York 2
(Dist. 2) Eastern Upstate New York 2
(Dist. 3) Pennsylvania and Maryland 1
II (Dist. 1) Michigan 3
(Dist. 2) Illinois 1
III Iowa, Nebraska and North Dakota 1
IV Washington, Oregon and California 1
V Georgia and Florida 1
</TABLE>
TERM OF OFFICE
Directors of Pro-Fac are elected for three-year terms. Officers of Pro-Fac
are elected for one-year terms.
82
<PAGE>
EXECUTIVE COMPENSATION
THE COMPANY
The following table shows the cash compensation and certain other
components of the compensation of the chief executive officer and the four other
most highly compensated executive officers of the Company earned during fiscal
years ended June 25, 1994, June 26, 1993 and June 26, 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION DEFERRED
-------------------- AWARDS PROFIT
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS(3) SHARING(4)
- ------------------------------------------------------ ---- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
J. William Petty(5) .................................. 1994 $406,369 $219,440 0 $ 13,323
Chief Executive Officer and Director 1993 322,498 148,739 66,800 0
1992 283,134 73,803 11,785 0
Roy A. Myers ......................................... 1994 $228,615 $101,231 0 $ 7,886
Executive Vice President and Director(6) 1993 219,969 35,943 18,200 0
1992 211,467 0 3,460 0
Patrick D. Lindenbach ................................ 1994 $189,083 $ 66,438 0 $ 6,403
Executive Vice President and President and Chief 1993 166,779 102,152 12,700 0
Executive Officer, Nalley's 1992 145,206 84,569 1,154 0
William D. Rice ...................................... 1994 $230,912 $102,248 0 $ 7,933
Senior Vice President, Secretary and Treasurer 1993 222,700 36,389 19,500 0
1992 215,494 0 3,403 0
Dennis M. Mullen ..................................... 1994 $170,128 $101,643 0 $ 5,761
President and Chief Executive Officer, CMF 1993 151,880 98,531 10,200 0
1992 134,369 57,217 0 0
</TABLE>
- ------------
(1) No named executive officer has received personal benefits during the listed
years in excess of the lesser of $50,000 or 10% of annual salary.
(2) Pursuant to the Management Incentive Plan of the Company (the 'Incentive
Plan'), additional compensation is paid if justified by the activities of
the officers and employees eligible under the Incentive Plan and by the
earnings of the Company and Pro-Fac.
(3) Fiscal 1992 options are net of cancelled options as follows:
<TABLE>
<CAPTION>
GRANTED CANCELLED
------------------- -------------------
SHARES PER SHARE SHARES PER SHARE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
J. William Petty................................ 23,485 $ 10.25 11,700 $15.375
Roy A. Myers.................................... 12,460 10.25 9,000 15.375
Patrick D. Lindenbach........................... 6,554 10.25 5,400 15.375
William D. Rice................................. 12,803 10.25 9,400 15.375
</TABLE>
(4) The deferred profit sharing program (the 'Profit Sharing Plan') is a defined
contribution plan, which is dependent upon the financial success of the
Company.
(5) Mr. Petty resigned as a Director and the Chief Executive Officer of the
Company upon completion of the Transactions.
(6) Mr. Myers has been a Director and the Chief Executive Officer of the Company
since completion of the Transactions.
RETIREMENT PLANS
The Company's Master Salaried Retirement Plan (the 'Pension Plan') provides
defined retirement benefits for its officers and all salaried and clerical
personnel. The compensation upon which the pension benefits are determined for
the named executive officers of the Company is included in the salary column of
the Summary Compensation Table.
83
<PAGE>
For retirement before age 65, the annual benefits are reduced by an amount,
depending upon the participant's date of birth, for each year prior to age 65 at
which such retirement occurs so that if retirement occurs at age 55, the
benefits are 70% of those payable at age 65 for any participant whose date of
birth precedes January 1, 1938, and 61% for any participant whose of date of
birth is January 1, 1938 or later.
The number of years of credited participation under the Company's Pension
Plan as of June 25, 1994, of the executive officers listed in the Summary
Compensation Table are as follows: J. William Petty, 10; Roy A. Myers, 32;
Patrick D. Lindenbach, 4; William D. Rice, 22; and Dennis M. Mullen, 4.
The Company's Excess Benefit Retirement Plan serves to provide employees
with the same retirement benefit they would have received from the Pension Plan
under the career average base pay formula, but for changes required under the
1986 Tax Reform Act and the compensation limitation under Section 401(a)(17) of
the Code, which was $150,000 on January 1, 1994, having been revised in the 1992
Omnibus Budget Reform Act.
The following table shows the estimated pension benefits payable to a
covered participant, at age 65, at the specified final average pay, and years of
credited service levels under the Pension Plan and the Excess Benefit Retirement
Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL ----------------------------------------------------------------
AVERAGE PAY 15 20 25 30 35
- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 22,607 $ 29,558 $ 36,490 $ 43,446 $ 50,645
150,000 27,857 36,558 45,240 53,946 62,895
175,000 33,107 43,558 53,990 64,446 75,145
200,000 38,357 50,558 62,740 74,946 87,395
225,000 43,607 57,558 71,490 85,446 99,645
250,000 48,857 64,558 80,240 94,946 111,895
275,000 54,107 71,558 88,990 106,446 124,145
300,000 59,357 78,558 97,740 116,946 136,395
350,000 69,857 92,558 115,240 137,946 160,895
400,000 80,357 106,558 132,740 158,946 185,395
</TABLE>
The benefits listed on the Pension Plan Table are not subject to any
deduction for Social Security.
The Company also maintains a Supplemental Executive Retirement Plan (the
'SERP') to ensure that key executives affected by joining the Company at
mid-career will receive levels of retirement income reasonably related to their
service and compensation and reflecting their contribution to the success of the
Company.
CHANGE OF CONTROL PROVISIONS OF SEVERANCE AND OTHER BENEFIT PLANS
The Company has adopted the Key Executive Severance Plan concerning certain
key employees and executive officers (the 'KESP'). The KESP provides salary and
benefit continuation to designated executives (including the named executives
listed in the Summary Compensation Table) in the event their employment is
terminated within a specified period after a change of control of the Company,
as such term is defined in the KESP. The completion of the Transactions
constituted a change of control under the KESP as of November 3, 1994. As part
of the Transactions, Mr. Petty has resigned.
Because of the completion of the Transactions, the term of the KESP is
extended through November 3, 1996. The KESP cannot be terminated during this
two-year period. The KESP provides for salary and benefit continuation upon a
designated executive's termination, other than for cause, as follows: one year
of salary and benefit continuation for Messrs. Petty, Myers and Rice; two years
of salary and benefit continuation for the other designated executives including
Messrs. Lindenbach and Mullen, or until the executive (other than Mr. Petty)
obtains other employment at an annual salary not less than 75% of his annual
salary at termination, whichever occurs first.
Under the terms of the KESP, Mr. Petty was entitled to a minimum
supplemental retirement benefit equal to 50% of his salary as of the Closing
Date, less all other sources of retirement income including his supplemental
retirement benefit under the SERP. Messrs. Myers and Rice would be
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<PAGE>
entitled to a supplemental retirement benefit equal to the benefit they would
receive from the Pension Plan if they continue working until age 65 at their
current salary level, less their actual retirement benefit from such Plan. In
all cases, the supplemental retirement benefits begin at the end of the salary
and benefit continuation period. Also, upon completion of the Transactions all
stock options granted prior to February 15, 1993 became exercisable. However,
with the exception of Mr. Petty's stock options, the vesting of stock options
was accelerated only to the extent that such acceleration would not result in an
excise tax under the Code. Upon completion of the Transactions, payments were
made by the Company to the designated executives in connection with the
cancellation of exercisable stock options.
If any excise tax is imposed on Mr. Petty in respect to payments under
these agreements and the accelerated vesting of stock options, the Company will
pay to Mr. Petty an amount that will net him the same sum as he would have
retained if the excise tax did not apply. See 'Certain Transactions -- Golden
Parachutes/Severance in connection with the Transactions.'
The Profit Sharing Plan and the Incentive Plan also contain a change of
control provision pursuant to which, in the event of a change of control of the
Company, participants in such plans who are terminated within two years
following a change in control are entitled to benefits earned under such plans
for the fiscal year of their termination on a pro rata basis for the part of the
year they were employed.
EXECUTIVE STOCK OPTIONS
The following table provides information on unexercised stock options held
as of the end of the fiscal year by the named executive officers. No options
were exercised by the named executive officers during the fiscal year ended June
25, 1994. For certain amounts paid to the named executive officers on account of
cancelled options in connection with the consummation of the Transactions, see
'Certain Transactions -- Golden Parachutes/Severance in connection with the
Transactions.'
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL YEAR
FISCAL YEAR END(1) END(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
J. William Petty......................................... 59,038 49,474 $ 175,674 $ 140,047
Roy A. Myers............................................. 26,836 15,904 61,773 53,613
Patrick D. Lindenbach.................................... 17,145 10,242 35,227 31,955
William D. Rice.......................................... 27,632 16,821 64,573 56,046
Dennis M. Mullen......................................... 4,080 6,120 8,160 12,240
</TABLE>
- ------------
(1) Fair market value of the Company's Class A Common Stock on June 25, 1994 was
$16.625.
(2) Value of unexercised options equals the fair market value of the shares
underlying in-the-money options at June 25, 1994 ($16.625), less exercise
price, times the number of options outstanding.
Subject to certain limited exceptions, the Company will maintain in effect
for at least one year after the effective time of the Merger all existing
employee benefit plans (except stock-related plans) and will honor all deferred
compensation arrangements for current and former executive officers of the
Company. Upon the effective time of the Merger, all stock option plans, and the
provisions of any other benefit plan calling for the issuance of stock by the
Company, were terminated.
DIRECTORS COMPENSATION
In fiscal 1994, non-employee directors who were designated by either
Pro-Fac or Agway received an annual stipend of $6,000 per year, plus $200 per
day for attending Board or Committee meetings. In fiscal 1994, all other outside
directors, Messrs. Blazin and Tiedemann and Ms. Ford, received $18,000 in
addition to $600 per day. The Chairman of the Board receives a fixed amount in
lieu of the standard
85
<PAGE>
attendance fees and annual stipend. During fiscal 1994, Mr. Pease received
$24,700 for the fiscal year as Chairman of the Board. Directors who are also
officers of the Company or Agway were not paid directors' fees. Directors of the
Company will continue to be compensated according to the same terms. Due to the
consummation of the Transactions, there will no longer be any directors
designated by Agway.
PRO-FAC
Pro-Fac does not compensate its executive officers. However, under the
Integrated Agreement, which has been superseded by the Pro-Fac Marketing
Agreement, Pro-Fac had reimbursed the Company annually for the salaries and
expenses of the Company employees who performed Pro-Fac membership relations
functions. Under the Pro-Fac Marketing Agreement, the Company will continue to
manage the business and affairs of Pro-Fac and provide all personnel and systems
required for its management, and Pro-Fac will pay the Company a quarterly fee of
$25,000 for these services.
For fiscal 1994, the salary expense paid by Pro-Fac was $180,000 and the
employee expense (travel and telephone) was $68,000. Each director of Pro-Fac
receives an annual fee of $6,000 (except the President who receives $12,000)
plus an additional fee of $200 per day (except the President who receives $400)
for attendance at board and other designated meetings. Pro-Fac directors are
also reimbursed for their out-of-pocket expenses.
Pro-Fac has no pension or retirement plan under which retirement benefits
are proposed to be paid to any of its officers or directors.
CERTAIN TRANSACTIONS
PRO-FAC MARKETING AGREEMENT
GENERAL
Upon consummation of the Transactions, the Integrated Agreement was
terminated, and Pro-Fac and the Company entered into the Pro-Fac Marketing
Agreement. Under the Pro-Fac Marketing Agreement, Pro-Fac and the Company will
continue the marketing and management arrangements of the Integrated Agreement.
The Pro-Fac Marketing Agreement is the successor to similar marketing agreements
between the Company and Pro-Fac that have been continuously in effect since
these companies' formations in the early 1960s.
PURCHASE OF CROPS FROM PRO-FAC
Under the Pro-Fac Marketing Agreement, the Company purchases crops from
Pro-Fac at the Commercial Market Value of those crops, which is defined
generally as the weighted average of the prices paid by 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 market areas.
Under the predecessor agreements to the Pro-Fac Marketing Agreement, the Company
paid Pro-Fac $64.2 million, $59.8 million and $59.2 million as Commercial Market
Value for crops purchased from Pro-Fac in fiscal years 1992, 1993 and 1994,
respectively. The crops purchased by the Company from Pro-Fac represented
approximately 65%, 60% and 65% of all raw agricultural crops purchased by the
Company in fiscal 1992, 1993 and 1994, respectively.
Commercial Market Value will be determined, similar to the process that
existed prior to the Acquisition, by a joint committee of the Boards of
Directors of Pro-Fac and the Company, which is currently comprised of the Chief
Executive Officer of the Company and an equal number of Pro-Fac directors and
Disinterested Directors. The Pro-Fac Marketing Agreement requires a majority of
the Disinterested Directors to approve the recommendation of the joint
committee. Although Commercial Market Value is intended to be no more than the
fair market value of the crops purchased by the Company, it may be more or less
than the price the Company would pay in the open market in the absence of the
Pro-Fac Marketing Agreement. The volume and type of crops to be purchased by the
Company under the Pro-Fac Marketing Agreement are determined pursuant to its
annual profit plan, which requires the approval of a majority of the
Disinterested Directors.
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<PAGE>
PATRONAGE INCOME OF PRO-FAC
In addition to Commercial Market Value, under the Pro-Fac Marketing
Agreement, the Company will pay to Pro-Fac as additional patronage income (the
'Additional Patronage Income') up to 90% of the Company's pre-tax income on
Pro-Fac related products (the 'Pro-Fac Products'), or reduce Commercial Market
Value by up to 90% of the Company's losses on Pro-Fac Products. The Pro-Fac
Marketing Agreement provides that Additional Patronage Income may not exceed 50%
of the Company's entire pre-tax income and that no more than 50% of the
Company's entire pre-tax loss will be charged to Pro-Fac, through a reduction of
Commercial Market Value, during the term of the Notes. Additional Patronage
Income is paid to Pro-Fac for services provided to the Company, including the
provision of a long term, stable crop supply, favorable payment terms for crops
and access to cooperative bank financing and the sharing of risks in losses of
operations of the business.
The Company has historically paid Pro-Fac Additional Patronage Income based
on a portion of the Company's pre-tax income. Under the predecessor agreements
to the Pro-Fac Marketing Agreement, Additional Patronage Income has generally
been equal to 50% of the pre-tax income of the Company, or in loss years amounts
due to Pro-Fac for interest on its loans to the Company have been reduced by 50%
of the Company's pre-tax losses. The Company paid Additional Patronage Income to
Pro-Fac of $9.5 million and $16.9 million in fiscal 1992 and 1994 on account of
the Company's earnings for those years. In fiscal 1993, the Company reduced the
amount of interest due to Pro-Fac by $21.8 million based on a 50% allocation of
a loss at the Company.
Historically, the Company has deducted Additional Patronage Income for
income tax purposes as an ordinary and necessary business expense for
accommodations provided to the Company by Pro-Fac. Under the Pro-Fac Marketing
Agreement, Pro-Fac will continue to provide many of the same services as it has
in the past. Although the Company is a wholly-owned subsidiary of Pro-Fac, the
payment of Additional Patronage Income will be subject to a similar methodology
to that established at arm's length in the past and will be approved by a
majority of the Disinterested Directors. The Indenture provides that there will
be a Change of Control if, for a period of 120 consecutive days, the number of
Disinterested Directors on the Board of Directors of the Company is less than
the greater of (i) two and (ii) the number of directors of the Company who are
Pro-Fac Directors. The Company's management believes that it will continue to be
able to pay Additional Patronage Income to Pro-Fac and deduct such payments for
federal income tax purposes as ordinary and necessary business expenses. There
can be no assurance that all of such payments will be able to be deducted in the
future.
Additional Patronage Income received by Pro-Fac is deductible to Pro-Fac
for federal tax purposes only to the extent distributed to its members. Pro-Fac
may make this distribution to its members through a combination of cash and
securities as long as a minimum of 20% of the amount is paid in cash as required
by federal tax law. Pro-Fac has historically paid its members between 20% and
30% of Additional Patronage Income in cash and the remaining portion in
securities. Funds made available by the distribution of investment certificates
to members in lieu of cash have historically been reinvested by Pro-Fac in the
Company. Under the Indenture, Pro-Fac will be required to reinvest at least 70%
of the Additional Patronage Income in the Company. See 'Description of the
Notes -- Certain Covenants.'
Under the Pro-Fac Marketing Agreement, the Company will continue to manage
the business and affairs of Pro-Fac and provide all personnel and systems
required for its management, and Pro-Fac will pay the Company a quarterly fee of
$25,000 for these services. See 'Executive Compensation -- Pro-Fac.'
Immediately prior to the Acquisition, Pro-Fac contributed to PFAC all of
its properties, which were leased to the Company, and, upon consummation of the
Transactions, Pro-Fac, PFAC and the Company terminated the lease arrangements.
In addition, borrowings under the New Credit Agreement were used in part to
refinance the existing financing arrangements between Pro-Fac and the Company.
BORROWINGS BY PRO-FAC
The Indenture governing the Notes permits the Company to make demand loans
to Pro-Fac for working capital purposes in amounts not exceeding $10.0 million
at any time outstanding, each such loan to bear interest at a rate equal to the
rate in effect on the date of such loan under the Seasonal Facility. The loan
balance must be reduced to zero for a period of not less than 15 consecutive
days in
87
<PAGE>
each fiscal year. Except for the foregoing provision and except for Pro-Fac's
guarantee of the Notes and the New Credit Agreement, as long as Pro-Fac has the
right to borrow under the Pro-Fac Marketing Agreement, the Indenture does not
permit Pro-Fac to incur any other Indebtedness.
EQUITY OWNERSHIP IN SPRINGFIELD BANK FOR COOPERATIVES
As part of its historical lending arrangements with the Bank, which is a
cooperative, Pro-Fac made investments in the Bank. Pro-Fac made these
investments through (i) a capital purchase obligation equal to a percentage, set
annually based on the Bank's capital needs, of its interest paid to the Bank and
(ii) a patronage rebate on interest paid by Pro-Fac to the Bank based on the
Bank's earnings, which is paid in cash and capital certificates. The investments
in the Bank are capital certificates that are redeemed by the Bank, currently
beginning six years after issuance in four quarterly installments. As of June
25, 1994, the amount of Pro-Fac's investment in the Bank was approximately $20.9
million. Pursuant to its capital purchase obligation, Pro-Fac increased its
investment in the Bank by $2.5 million, $2.6 million and $2.6 million in fiscal
1992, 1993 and 1994, respectively. Amounts paid to Pro-Fac on account of
dividends and the redemption of capital certificates in connection with such
investment were $2.2 million, $2.5 million and $3.1 million in fiscal 1992, 1993
and 1994, respectively. In connection with the Transactions, Pro-Fac contributed
its investment in the Bank to the capital of the Company. Robert V. Call, Jr., a
director and executive officer of Pro-Fac and a director of the Company, is also
a director of the Bank. (The Bank announced that it will consolidate with the
Farm Credit Bank of Springfield and CoBank effective January 1, 1995 to form an
Agricultural Credit Bank named CoBank ACB.)
GOLDEN PARACHUTES/SEVERANCE IN CONNECTION WITH THE TRANSACTIONS
The completion of the Transactions constituted a change of control under
the KESP thereby causing the KESP to remain in effect until November 3, 1996.
The KESP provides ten executive officers of the Company with salary and benefit
continuation in the event of their termination within two years of the
Acquisition. Under the KESP, certain executives are provided with two years of
salary and benefit continuation and the other executives with up to twelve
months of salary and benefit continuation if they are terminated for reasons
other than 'cause' or resign for 'good reason' within the term of the KESP. In
addition, the KESP permits Mr. Petty and Mr. Lindenbach to receive severance
benefits if they voluntarily resign from the Company during the term of the
KESP.
Upon consummation of the Transactions, Mr. Petty resigned from the Company.
Under the KESP, Mr. Petty will receive salary continuation for one year of
approximately $424,000, less earned income from other sources of employment, an
annual supplemental retirement benefit for his life of approximately $58,000 and
benefits continuation for one year with a value of approximately $4,500. These
benefits to Mr. Petty are in addition to the projected annual benefits payable
under the SERP. See 'Executive Compensation -- Retirement Plans.'
In the event Mr. Lindenbach exercises his right to resign voluntarily from
the Company during the remaining term of the KESP, his benefits would include
salary continuation for two years with a present value of approximately $370,000
in the aggregate, and benefit continuation for two years with a present value of
approximately $11,000 in the aggregate.
Messrs. Myers, Mullen and Rice also participate in the KESP. Under the
KESP, none of these executives will be entitled to benefits unless his
employment with the Company is terminated for reasons other than 'cause' or he
resigns for 'good reason' within two years of the Acquisition.
Although not technically severance plans, the Profit Sharing Plan and
Incentive Plan provide that, in a change of control situation, a pro rata
portion of annual awards will be granted to terminated executives for the year
of termination.
The payments made by the Company to the named executive officers set forth
in the Summary Compensation Table in connection with the cancellation pursuant
to the Merger Agreement of certain options granted to such officers pursuant to
the Company's stock option plans, which options were exercisable at prices less
than $19.00 per share, were as follows: J. William Petty, $340,856; Roy A.
Myers, $148,342; Patrick D. Lindenbach, $85,545; William D. Rice, $154,231; and
Dennis M. Mullen, $17,850.
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<PAGE>
SALE OF CROPS TO PRO-FAC
Each of the members of Pro-Fac sells crops to Pro-Fac pursuant to a general
marketing agreement between such member and Pro-Fac, which crops in turn are
sold to the Company pursuant to the Pro-Fac Marketing Agreement. Prior to
consummation of the Transactions, these crops were sold to the Company pursuant
to the Integrated Agreement. During fiscal 1994, the following directors and
executive officers of Pro-Fac and beneficial owners of more than 5% of Pro-Fac's
common stock, directly or through sole proprietorships or corporations, sold
crops to Pro-Fac for the following aggregate amounts:
<TABLE>
<CAPTION>
RELATIONSHIP AGGREGATE AMOUNT PAID
NAME TO PRO-FAC IN FISCAL 1994
- -------------------------------------------- --------------------------- ---------------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Dale E. Burmeister(1)....................... Director $ 0.1
Robert V. Call, Jr.(2)...................... Director and President 2.0
Glen Lee Chase(3)........................... Director 0.1
Tommy R. Croner(4).......................... Director 0.2
Albert P. Fazio(5).......................... Director and Vice President 0.2
Bruce R. Fox(6)............................. Director and Treasurer 0.4
Steven D. Koinzan........................... Director and Secretary 0.1
Kenneth A. Mattingly(7)..................... Director 0.4
Paul E. Roe(8).............................. Director 0.2
Cherry Central Cooperative, Inc............. Stockholder 2.1
Michigan Blueberry Growers Assoc............ Stockholder 2.5
</TABLE>
- ------------
(1) Paid to Lakeshore Farms, Inc., which is 100% beneficially owned by Mr.
Burmeister.
(2) Paid to My-T Acres, Inc., which is 20% beneficially owned by Mr. Call.
(3) Paid to Chase Farms, Inc., which is 96% beneficially owned by Mr. Chase.
(4) Paid to T-Rich, Inc., which is 50% beneficially owned by Mr. Croner.
(5) Paid to New Columbia Garden Co., Inc., which is 30% beneficially owned by
Mr. Fazio.
(6) Paid to N.J. Fox & Sons, which is 33% beneficially owned by Mr. Fox.
(7) Paid to M-B Farms, Inc., which is 50% beneficially owned by Mr. Mattingly.
(8) Paid to Roe Acres, Inc., which is 100% beneficially owned by Mr. Roe.
OTHER TRANSACTIONS WITH DIRECTORS AND OFFICERS OF PRO-FAC
In fiscal 1994, CMF paid My-T Acres, Inc. $0.2 million for commercial
harvesting and hauling services and $0.1 million for crops (not covered by the
Integrated Agreement). Robert V. Call, Jr. is a Director and the President of
Pro-Fac, a Director of the Company and the President and a 20% beneficial owner
of My-T Acres, Inc.
In fiscal 1994, the Company paid T-Rich, Inc. $0.1 million for solid waste
removal services provided to Snyder. Tommy R. Croner is a Director of Pro-Fac
and is the President and a 50% beneficial owner of T-Rich, Inc.
In fiscal 1994, Pro-Fac paid N.J. Fox & Sons, Inc. $0.4 million for
storage, handling, hydrocooling and trucking services. Bruce R. Fox is a
Director and the Treasurer of Pro-Fac, a Director of the Company and the
President and a 33% beneficial owner of N.J. Fox & Sons.
In fiscal 1994, CMF paid H&M Harvesting $0.2 million for harvesting
services. M-B Farms Inc. is a 50% partner of H&M Harvesting. Kenneth A.
Mattingly is a Director of Pro-Fac and the President and a 50% beneficial owner
of M-B Farms Inc.
In fiscal 1994, CMF paid Roe Acres, Inc. $0.2 million for harvesting
services. Paul E. Roe is a Director of Pro-Fac and the President and sole
stockholder of Roe Acres, Inc.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
THE COMPANY
The following table sets forth certain information, as of November 3, 1994,
with respect to each person who is a beneficial owner of more than 5% of the
outstanding shares of the Common Stock of the Company. No shares of Common Stock
of the Company are owned by any director or executive officer of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE
- ---------------------------------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Pro-Fac Cooperative, Inc. ........................................................ 10,000 100%
90 Linden Place
P.O. Box 682
Rochester, New York 14603
</TABLE>
PRO-FAC
The following table sets forth certain information, as of November 3, 1994,
with respect to (i) each person known by Pro-Fac to own beneficially 5% or more
of any class of Pro-Fac's voting securities, (ii) each director and executive
officer of Pro-Fac and (iii) all directors and executive officers of Pro-Fac as
a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME TITLE OF CLASS BENEFICIAL OWNERSHIP(A) CLASS(B)
- -------------------------------------------------------------- --------------- ----------------------- ----------
<S> <C> <C> <C>
Cherry Central Cooperative, Inc. ............................. Common
P.O. Box 988 Preferred
Traverse City, MI 49685 383,942 18.79%
10,073 0.39
Michigan Blueberry Growers Assoc. ............................ Common
P.O. Drawer B Preferred
Grand Junction, MI 49056 116,400 5.70
51,060 1.95
Dale E. Burmeister............................................ Common 3,318(c) 0.16
Preferred 486(c) 0.02
7,535 0.29
Robert V. Call, Jr............................................ Common 35,197(d) 1.72
Preferred 27,112(d) 1.05
13,088(e) 0.50
392(f) 0.02
1,506 0.06
Glen Lee Chase................................................ Common 9,472(g) 0.46
Preferred 3,521(g) 0.13
Tommy R. Croner............................................... Common 7,026(h) 0.34
Preferred 9,057(i) 0.35
Albert P. Fazio............................................... Common 6,975(j) 0.34
Preferred 6,971(j) 0.27
Bruce R. Fox.................................................. Common 20,222(k) 0.99
Preferred 7,745(k) 0.30
3,196(l) 0.12
1,085 0.04
Steven D. Koinzan............................................. Common 7,140 0.35
Preferred 840 0.03
Kenneth A. Mattingly.......................................... Common 4,645(m) 0.23
Preferred 2,617(m) 0.10
Allan D. Mitchell............................................. Common 78 0.00
Preferred 1,674(n) 0.06
4,978 0.19
Allan W. Overhiser............................................ Common 1,139(o) 0.06
Preferred 1,332(o) 0.05
Paul E. Roe................................................... Common 12,005(p) 0.59
Preferred 2,683(p) 0.10
Edward L. Whitaker............................................ Common 240 0.01
Preferred -- --
All directors and officers as a group......................... Common 107,457 5.3
Preferred 96,146 3.7
</TABLE>
(footnotes on next page)
90
<PAGE>
(footnotes from previous next page)
(a) Certain of the directors named above may have the opportunity, along with
the other members producing a specific crop, to acquire beneficial
ownership of additional shares of the common stock of Pro-Fac within a
period of approximately 60 days commencing February 1, 1995 if Pro-Fac
determines that a permanent change is required in the total quantity of
that particular crop.
(b) In the above table, each director who has direct beneficial ownership of
common or preferred shares by reason of being the record owner of such
shares has sole voting and investment power with respect to such shares,
while each director who has direct beneficial ownership of common or
preferred shares as a result of owning such shares as a joint tenant has
shared voting and investment power regarding such shares. Each director who
has indirect beneficial ownership of common or preferred shares resulting
from his status as a shareholder or a partner of a corporation or
partnership which is the record owner of such shares has sole voting and
investment power if he controls such corporation or partnership. If he does
not control such corporation or partnership, he has shared voting and
investment power. Pro-Fac does not believe that the percentage ownership of
any such corporation or partnership by a director is material, since in the
aggregate no director beneficially owns in excess of 5% of either the
common or preferred shares of Pro-Fac.
(c) Record ownership by Lakeshore Farms, Inc.
(d) Record ownership by My-T Acres, Inc.
(e) Record ownership by My-T Acres, Inc. Employee Profit-Sharing Plan
(f) Record ownership by estate of L. Call
(g) Record ownership by Chase Farms, Inc.
(h) Record ownership by Richard Croner & Son
(i) Record ownership by T-Rich, Inc.
(j) Record ownership by New Columbia Garden Co., Inc.
(k) Record ownership by N.J. Fox & Sons, Inc.
(l) Record ownership by K. Fox
(m) Record ownership by M-B Farms, Inc.
(n) Record ownership jointly with spouse
(o) Record ownership by A.W. Overhiser Orchards
(p) Record ownership by Roe Acres, Inc.
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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW CREDIT AGREEMENT
The Bank has provided the Company, subject to the terms and conditions set
out in the New Credit Agreement, with loans of up to $200 million to finance the
purchase of Shares pursuant to the Tender Offer and the Merger, to refinance
certain existing indebtedness of Pro-Fac and the Company and to pay fees and
expenses related to the purchase of Shares.
The Bank also has provided the Company, subject to the terms and conditions
set out in the New Credit Agreement, with seasonal financing of up to $86.0
million and a $10.0 million letter of credit facility. The Acquisition Facility,
the Seasonal Facility and the Letter of Credit Facility are collectively
referred to herein as the 'Bank Facility.' The closing under the Bank Facility
occurred on the Closing Date substantially simultaneously with the closing of
the other Transactions.
Guarantees and Security. All obligations under the Bank Facility are
guaranteed by Pro-Fac and the Subsidiary Guarantors. The Company's obligations
under the Bank Facility, and Pro-Fac's and the Subsidiary Guarantors'
obligations under their respective guaranties, are secured by all of the assets
of the Company and each guarantor, respectively, including (i) all present and
future accounts, contract rights, chattel paper, instruments (excluding shares
of capital stock), documents, inventory, general intangibles and equipment, (ii)
all real property and (iii) all products and proceeds of the foregoing.
Interest. The Bank Facility provides for interest rates on the Acquisition
Facility, at the Company's option, equal to (i) the relevant London interbank
offered rate plus 2.60%, (ii) the relevant prime rate plus 0.50% or (iii) the
relevant U.S. Treasury Rate plus 3.00%. The Seasonal Facility provides for
interest rates on amounts outstanding thereunder, at the Company's option, equal
to (x) the relevant London interbank offered rate plus 1.75%, (y) the relevant
prime rate minus 0.25% or (z) the relevant U.S. Treasury Rate plus 2.00%. The
Bank has extended to a portion of the Acquisition Facility for a limited period
of time certain fixed rates that were in effect with respect to indebtedness
repaid to the Bank on the Closing Date. The weighted average rate of interest
applicable to that portion of the Acquisition Facility is estimated to equal
approximately 8.3% per annum for the period from the Closing Date through May 1,
1995.
Maturity. Borrowings of $80.0 million under the Term Loan portion of the
Acquisition Facility are payable in 20 equal semi-annual installments, beginning
in May 1995. Borrowings of up to an additional $120.0 million under the Term
Loan Facility portion of the Acquisition Facility are payable during the first
five years of the facility in annual installments on September 1 of each year,
in an amount equal to the 'annual cash sweep' for the preceding fiscal year, as
defined in the Acquisition Facility. The Company will be permitted to pay and
reborrow funds under the Term Loan Facility, subject to limitations on the
amount reborrowed and the other terms of the Acquisition Facility. Beginning in
the year 2000, the balance of the Term Loan Facility will be payable in ten
equal semi-annual installments.
Borrowings under the Seasonal Facility are payable at the expiration of
that portion of the facility, which is 18 months after the Closing Date, except
that for 15 consecutive calendar days before the end of fiscal 1995, the
borrowings under the Seasonal Facility must be zero. The Letter of Credit
Facility provides for the issuance of letters of credit during the first 12
months of the facility.
Certain Covenants. The Pro-Fac Bank Guarantee requires Pro-Fac, on a
consolidated basis, to achieve an adjusted cash flow coverage ratio at the end
of fiscal 1995 of at least 1.0 to 1.0 and at the end of each fiscal year
thereafter of at least 1.1 to 1.0, to maintain a minimum working capital of at
least $100.0 million for each fiscal year (beginning with the fiscal year ending
June 30, 1995), and to maintain a minimum long-term debt to equity ratio
(measured at each month-end) of 3.1 to 1.0 from the Closing Date through May,
1995, 2.8 to 1.0 from June 30, 1995 through May 1996 and declining over time to
1.8 to 1.0 at June 30, 2001 and thereafter. In addition, the Pro-Fac Bank
Guarantee requires Pro-Fac, on a consolidated basis, to maintain a consolidated
total net worth of not less than 15% of total assets for each month-end until
July 2000, and 20% thereafter and at least 19% of total assets at the fiscal
years ending June 1995 and 1996, increasing over time to at least 25% of total
assets at the fiscal year ending June 2001 and each fiscal year thereafter. The
Bank Facility and the Pro-Fac Bank Guarantee contain additional restrictions and
obligations on Pro-Fac and the Company, including (i) restrictions on the
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ability to declare or pay dividends or repurchase stock, (ii) limitations on the
incurrence of debt or prepayment of debt, (iii) limitations on debt,
investments, acquisitions, capital expenditures and asset sales and (iv)
requiring maintenance of properties and insurance and the delivery of
information, financial and otherwise.
Conditions. Subsequent drawings under the Bank Facility are subject to
various conditions, including the absence of defaults under the Bank Facility
and the accuracy in all material respects of certain representations on the date
of such drawing.
Events of Default. The Bank Facility contains customary events of default,
including (i) a cross default to certain defaults under other debt obligations
(including the Notes) and (ii) defaults relating to changes in ownership of the
Company.
Fees. PFAC agreed to pay certain fees with respect to the Bank Facility,
including a fee of 3/4% of the Acquisition Facility, which was paid at the
closing of the Acquisition Facility.
DESCRIPTION OF THE NOTES
GENERAL
The New Notes will be issued pursuant to the Indenture among the Company,
Pro-Fac, as Parent Guarantor, certain Subsidiaries of the Company, as Subsidiary
Guarantors (together with Pro-Fac, as Parent Guarantor, the 'Guarantors'), and
IBJ Schroder Bank & Trust Company, as trustee (the 'Trustee'), a copy of which
has been filed as an exhibit to the Registration Statement of which this
Prospectus constitutes a part. The Indenture is subject to and governed by the
Trust Indenture Act of 1939, as amended (the 'Trust Indenture Act'). The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act. The Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. The definitions of certain terms used in the following
summary are set forth below under ' -- Certain Definitions.'
On November 3, 1994, the Company issued $160.0 million aggregate principal
amount of Old Notes under the Indenture. The terms of the New Notes are
identical in all material respects to the Old Notes, except for certain transfer
restrictions and registration and other rights relating to the exchange of the
Old Notes for New Notes. The Trustee will authenticate and deliver New Notes for
original issue only in exchange for a like principal amount of Old Notes. Any
Old Notes that remain outstanding after the consummation of the Exchange Offer,
together with the New Notes, will be treated as a single class of securities
under the Indenture.
The 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 Agreement) as
described below under ' -- Subordination.' The Notes are unconditionally
guaranteed by the Guarantors on a senior subordinated basis, with each such
guarantee subordinated to the Guarantors' respective guarantees of the
obligations of the Company under the New Credit Agreement and all other Senior
Indebtedness of the Guarantors.
Interest on each New Note will accrue from November 3, 1994 or from the
most recent interest payment date to which interest was paid on the Old Note
surrendered in exchange therefor or on the New Note, as the case may be. The New
Notes will bear interest at 12 1/4% per annum, except that, if any interest
accrues on the New Notes in respect of any period prior to their issuance, such
interest will accrue at the rate or rates borne by the Old Notes from time to
time during such period.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $160.0 million and
will mature on February 1, 2005. Interest on the Notes accrues at the rate of
12 1/4% per annum and is payable semi-annually in arrears on February 1 and
August 1, commencing on February 1, 1995, to Holders of record on the
immediately preceding January 15 and July 15, respectively. Interest on the
Notes accrues from the most
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recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest is computed on the basis of a
360-day year comprised of twelve 30-day months. The Notes are payable as to
principal and interest at the office or agency of the Company maintained for
such purpose within the City and State of New York or, at the option of the
Company, by wire transfer of immediately available funds or, in the case of
certificated securities only, by mailing a check to the Holder's registered
address. See ' -- Delivery and Form of Securities -- Book Entry, Delivery and
Form.' Until otherwise designated by the Company, the Company's office or agency
in New York is the office of the Trustee maintained for such purpose. The Notes
are issued in registered form, without coupons, and in denominations of $1,000
and integral multiples thereof.
GUARANTEES
Each of Pro-Fac and the Subsidiary Guarantors has unconditionally
guaranteed the payment of Obligations of the Company under the Notes. Rights of
Holders pursuant to such guarantees are subordinate to the rights of the holders
of the Senior Indebtedness of Pro-Fac and the Subsidiary Guarantors to payment
in full in the same manner as the rights of Holders of the Notes are subordinate
to those of the holders of the Senior Indebtedness of the Company.
SUBORDINATION
The Indebtedness evidenced by the Notes is subordinated to the prior
payment in cash or Cash Equivalents when due of the principal of, and premium,
if any, and accrued and unpaid interest on and all other amounts owing in
respect of, all existing and future Senior Indebtedness of the Company. The
Notes rank pari passu with all existing and future senior subordinated
Indebtedness of the Company, and rank senior to all existing and future
subordinated Indebtedness of the Company.
The Indenture provides that, upon any distribution to creditors of the
Company of the assets of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company, (i) the holders of all Senior Indebtedness
of the Company then outstanding will be entitled to be paid in full in cash or
Cash Equivalents (including interest accruing subsequent to a bankruptcy or
insolvency, whether or not such interest is an allowed claim enforceable against
the Company in bankruptcy) before the Holders are entitled to receive any
payment on or with respect to the Notes; and (ii) the holders of all Senior
Indebtedness of the Company will be entitled to be paid in full in cash
(including interest accruing subsequent to a bankruptcy or insolvency, whether
or not such interest is an allowed claim enforceable against the Company in
bankruptcy) before the Holders are entitled to receive any cash payment on or
with respect to the Notes. Until all Senior Indebtedness of the Company is paid
in full in cash or Cash Equivalents, any distribution to which the Holders would
be entitled but for the subordination provisions will be made to holders of
Senior Indebtedness of the Company as their interests may appear, and until all
Senior Indebtedness of the Company is paid in full in cash (or in Cash
Equivalents subsequently converted to cash), any cash distribution to which the
Holders would be entitled but for the subordination provisions will be first,
exchanged for Cash Equivalents previously applied to the payment of Senior
Indebtedness (and not subsequently converted to cash), and second, made to
holders of Senior Indebtedness of the Company as their interests may appear.
Upon the occurrence of any default beyond the applicable grace period in
the payment of any principal of or interest on or other amounts due on any
Senior Indebtedness of the Company (a 'Payment Default'), no payment shall be
made by the Company with respect to the Notes unless and until such Payment
Default shall have been cured or waived or shall have ceased to exist, such
Senior Indebtedness has been discharged or paid in full or the benefits of this
sentence have been waived by or on behalf of the holders of such Senior
Indebtedness of the Company, immediately after which the Company must resume
making any and all required payments, including missed payments, in respect of
its obligations under the Notes.
Upon (1) the occurrence of a continuing event of default (other than a
Payment Default) relating to Senior Indebtedness of the Company, as such event
of default is defined therein or in the instrument or agreement under which it
is outstanding, which event of default, pursuant to the instruments
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governing such Senior Indebtedness, entitles the holders (or a specified portion
of the holders) of such Senior Indebtedness to immediately accelerate without
further notice (except such notice as may be required to effect such
acceleration) the maturity of such Senior Indebtedness (a 'Non-payment Default')
and (2) the receipt by the Trustee and the Company from a senior representative
of written notice (a 'Payment Blockage Notice') of such occurrence, no payment
is permitted to be made by the Company in respect of the Notes for a period (a
'Payment Blockage Period') commencing on the date of receipt by the Trustee of
such notice and ending on the earliest to occur of the following events (subject
to any blockage of payments that may then be in effect due to a Payment Default
on Senior Indebtedness of the Company): (w) such Non-payment Default has been
cured or waived or has ceased to exist; (x) a 179-consecutive-day period
commencing on the date such written notice is received by the Trustee has
elapsed; (y) such Payment Blockage Period has been terminated by written notice
to the Trustee from the Senior Representative, whether or not such Non-payment
Default has been cured or waived or has ceased to exist; and (z) such Senior
Indebtedness of the Company has been discharged or paid in full, immediately
after which, in the case of clause (w), (x), (y) or (z), the Company must resume
making any and all required payments, including missed payments, in respect of
its obligations under the Notes. Notwithstanding the foregoing, (a) not more
than one Payment Blockage Period may be commenced in any period of 365
consecutive days and (b) no default or event of default with respect to the
Senior Indebtedness of the Company that was the subject of a Payment Blockage
Notice which existed or was continuing on the date of the giving of any Payment
Blockage Notice shall be or serve as the basis for the giving of a subsequent
Payment Blockage Notice whether or not within a period of 365 consecutive days
unless such default or event of default shall have been cured or waived for a
period of at least 120 consecutive days after such date.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Guarantor, whether in cash,
property or securities (other than securities that are subordinated at least to
the same extent as the Notes and the guarantees are to Senior Indebtedness of
the Company or such Guarantor, respectively), shall be received by the Trustee
or the Holders of Notes at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or distribution shall be
held in trust for the benefit of the holders of Senior Indebtedness of the
Company or such Guarantor, as the case may be, and shall be paid or delivered by
the Trustee or such Holders, as the case may be, to the holders of the Senior
Indebtedness of the Company or such Guarantor, as the case may be, remaining
unpaid or unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company or such Guarantor, as
the case may be, may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness of the Company or
such Guarantor, as the case may be, held or represented by each, for application
to the payment of all Senior Indebtedness of the Company or such Guarantor, as
the case may be, remaining unpaid, to the extent necessary to pay or to provide
for the payment of all such Senior Indebtedness in full in cash and Cash
Equivalents after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
If the Company fails to make any payment on the Notes when due or within
any applicable grace period, whether or not such failure is on account of the
subordination provisions referred to above, such failure would constitute an
Event of Default under the Indenture and would enable the Holders to accelerate
the maturity of the Notes. See ' -- Events of Default and Remedies.'
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OPTIONAL REDEMPTION
Except as set forth below, the Notes are not redeemable at the option of
the Company prior to February 1, 2000. At any time on or after February 1, 2000,
the Notes will be redeemable, at the option of the Company, in whole or in part,
at the redemption prices (expressed as percentages of the principal amount) set
forth below, plus accrued interest to the redemption date, if redeemed during
the 12 month period beginning February 1, of the years indicated below:
<TABLE>
<CAPTION>
%
-------
<S> <C>
2000........................................................... 104.594
2001........................................................... 103.063
2002........................................................... 101.531
2003 and thereafter............................................ 100.000
</TABLE>
Notwithstanding the foregoing, at any time on or prior to February 1, 1998,
the Company may redeem up to $56.0 million aggregate principal amount of Notes
(provided that at least $104.0 million aggregate principal amount of Notes
remains outstanding immediately after the occurrence of such redemption), at a
redemption price equal to 110.0% of the principal amount of such Notes, plus
accrued interest to the date of redemption, with the proceeds of any offering of
Capital Stock (other than a public offering pursuant to a registration statement
on Form S-8 or an offering of Disqualified Stock) or the proceeds of any Asset
Sale generating Net Proceeds in excess of $20.0 million to the extent such
proceeds are not otherwise applied in accordance with the terms of the
Indenture.
MANDATORY REDEMPTION
Except as set forth below under ' -- Repurchase at the Option of Holders,'
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the 'Change of Control Offer') at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, Additional Payments and Liquidated Damages thereon, if any, to the
date of purchase (the 'Change of Control Payment'). Within 30 days following any
Change of Control, the Company will mail a notice to each Holder stating: (i)
that the Change of Control Offer is being made pursuant to the covenant entitled
'Change of Control' and that all Notes tendered will be accepted for payment and
setting forth the facts and circumstances relevant to such Change of Control;
(ii) the purchase price and the purchase date, which will be no earlier than 30
days nor later than 60 days from the date such notice is mailed (the 'Change of
Control Payment Date'); (iii) that any Note not tendered will continue to accrue
interest; (iv) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on and after the Change of Control
Payment Date; (v) that Holders electing to have any Notes purchased pursuant to
a Change of Control Offer will be required to surrender the Notes, with the form
entitled 'Option of Holder to Elect Purchase' on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have such Notes purchased; and (vii) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal
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amount or an integral multiple thereof. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in connection with a
Change of Control.
On or before the Change of Control Payment Date, the Company will, to the
extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent will
promptly mail to each Holder of Notes so accepted the Change of Control Payment
for such Notes, and the Trustee will promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any
assets (including by way of a sale-and-leaseback) other than sales of inventory
in the ordinary course of business consistent with past practice (provided that
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Company will be governed by the provisions of the Indenture
described above under the caption ' -- Change of Control' and the provisions
described below under the caption ' -- Certain Covenants -- Merger,
Consolidation or Sale of Assets' and not by the provisions of this covenant), or
(ii) issue Equity Interests in any of its Subsidiaries, or sell Equity Interests
in any of its Subsidiaries, in the case of either clause (i) or (ii) above,
whether in a single transaction or a series of related transactions, (a) that
have a fair market value in excess of $1.0 million, or (b) for net proceeds in
excess of $1.0 million (each of the foregoing, an 'Asset Sale'), unless (x) the
Company or the Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise disposed of and (y)
any securities and other non-cash consideration acquired in connection with such
Asset Sale are Permitted Asset Sale Consideration. A transfer of assets or
issuance of Equity Interests by a Subsidiary of the Company to the Company or a
Subsidiary Guarantor will not be deemed to be an Asset Sale and a transfer of
assets that constitutes a Restricted Investment and that is permitted by the
covenant described below under the caption ' -- Certain Covenants -- Restricted
Payments' will not be deemed to be an Asset Sale.
Within 270 days after any Asset Sale, the Company or the relevant
Subsidiary, as the case may be, may apply the Net Proceeds from such Asset Sale,
at its option, either (i) to permanently reduce borrowings under the New Credit
Agreement or any successor facility or to permanently repay any other Senior
Indebtedness (and, in each case, correspondingly to reduce commitments
thereunder, if any, unless such borrowings could be incurred under the first
paragraph of the covenant described below under the caption ' -- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock' as of
such date), (ii) to acquire properties and assets in the same line of business
as the Company or the relevant Subsidiary, as the case may be, was engaged in on
the date of the Asset Sale or a similar business or a business reasonably
related thereto or (iii) to redeem the Notes in whole or in part to the extent
permitted under the caption ' -- Optional Redemption.' Pending the final
application of any such Net Proceeds, the Company or the relevant Subsidiary, as
the case may be, may temporarily reduce borrowings under any revolving credit
facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from the Asset Sale that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute 'Excess
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Proceeds.' When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall make an offer to all Holders of Notes (an 'Asset Sale Offer')
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest, Additional Payments
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company or the relevant Subsidiary, as the case may be, may use
such remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased as nearly as
possible on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
The Indenture also provides that, notwithstanding the foregoing, to the
extent that the Company or any of its Subsidiaries receives securities or other
non-cash property or assets as proceeds of an Asset Sale, the Company will not
be required to make any application of such non-cash proceeds required by the
covenant described in the immediately preceding paragraph until such non-cash
property has been converted to cash or Cash Equivalents.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate or, if the
relevant notice of redemption identifies the requirements applicable to such
selection of the principal national securities exchange, if any, on which the
Notes are listed, then selection of Notes for redemption will be made by the
Trustee in compliance with such requirements; provided that no Notes of $1,000
or less shall be redeemed in part. Notices of redemption shall be mailed by
first class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the
original Note. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend
or make any distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Subsidiary of the Company); (iii)
purchase, redeem or otherwise acquire or retire for value prior to its scheduled
final maturity any Indebtedness that is subordinated to the Notes; or (iv) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as 'Restricted
Payments'), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) at the time of such Restricted Payment and after giving effect
thereto as if such Restricted Payment (and any other Restricted Payments
made since the end of the applicable four-quarter period) had been made at
the beginning of such four-quarter period, the Fixed Charge Coverage Ratio
(calculated in the manner set forth in clause (i) of the proviso contained
in the first paragraph of the covenant described below under the caption
' -- Incurrence of Indebtedness and Issuance of Preferred Stock') would
have been at least 1.75 to 1.00; and
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(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
of the Indenture (including, but not limited to, Restricted Payments
permitted by clauses (i), (ii) and (iii)(b) of the next succeeding
paragraph), is less than the sum of (u) 50% of the Consolidated Net Income
(or, if Consolidated Net Income is negative, 100% of the Consolidated Net
Income) of the Company for the period (taken as one accounting period) from
June 26, 1994 to the end of the most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment, plus (v) 100% of the aggregate net cash proceeds (50%
with respect to the first $10.0 million) received by the Company from the
issue or sale since the date of the Indenture of Equity Interests of the
Company (including, but not limited to, Equity Interests issued as
described in clauses (ii) and (iii)(b) of the next succeeding paragraph,
but excluding amounts contributed to the Company as contemplated by clause
(y) and any Equity Interests purchased with the proceeds of loans by the
Company or any of its Subsidiaries to employees of the Company or any of
its Subsidiaries or additional contributions of capital by Pro-Fac in
respect of Equity Interests), plus (w) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale since the date of
the Indenture of debt securities of the Company that have been converted
into such Equity Interests (other than (1) Equity Interests (or convertible
debt securities) sold to a Subsidiary of the Company, (2) Disqualified
Stock or debt securities that have been converted into Disqualified Stock
and (3) Equity Interests purchased by members of the Company's or its
Subsidiaries' management with the proceeds of loans from the Company or any
of its Subsidiaries), plus (x) to the extent that any Restricted Investment
that was made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment, plus (y)
40% of the aggregate contributions by Pro-Fac to the Company pursuant to
the covenant entitled ' -- Payments Pursuant to the Pro-Fac Marketing
Agreement; Reinvestments by Pro-Fac; Borrowings by Pro-Fac' subsequent to
the date of the Indenture, plus (z) $5.0 million.
The foregoing provisions of clauses (b) and (c) will not prohibit (i) the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration such payment would have complied with the provisions
of the Indenture; (ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company) of other Equity Interests of the Company (other than any
Disqualified Stock); (iii) the defeasance, redemption, repurchase or other
retirement of subordinated Indebtedness (a) with the net proceeds from an
incurrence of Permitted Refinancing Indebtedness or (b) in exchange for, or out
of the proceeds of, the substantially concurrent sale of Equity Interests of the
Company (other than (x) Disqualified Stock, (y) Equity Interests sold to a
Subsidiary of the Company and (z) Equity Interests purchased by members of the
Company's or its Subsidiaries' management with the proceeds of loans from the
Company or any of its Subsidiaries); and (iv) the payment of amounts required to
fund Pro-Fac's reasonable operating expenses, not in excess of $250,000, as
adjusted to reflect changes in the Consumer Price Index between the date of the
Indenture and the date of any such payment, in any fiscal year.
PAYMENTS PURSUANT TO THE PRO-FAC MARKETING AGREEMENT; REINVESTMENTS BY
PRO-FAC; BORROWINGS BY PRO-FAC
As promptly as practicable, and in any event within ten Business Days,
after receipt from the Company of any payment made in excess of the Commercial
Market Value for crops and other services pursuant to the Pro-Fac Marketing
Agreement, Pro-Fac will invest in cash as common equity interests (other than
Disqualified Stock) in the Company an amount equal to 70% of such excess.
Without the consent of the Holders of at least 75% in principal amount of the
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for the Notes), the Company will not: (a) amend the
calculation of amounts payable to Pro-Fac under the Pro-Fac Marketing Agreement
in a manner which would increase the payments made to Pro-Fac or (b) amend the
Pro-Fac Marketing Agreement to require that Affiliate Transactions involving
Pro-Fac be approved by less than a majority of the Disinterested Directors. The
Indenture permits the Company to make demand loans to Pro-Fac
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for working capital purposes in amounts not exceeding $10.0 million at any time
outstanding, each such loan to bear interest at a rate equal to the rate in
effect on the date of such loan under the Seasonal Facility. The loan balance
must be reduced to zero for a period of not less than 15 consecutive days in
each fiscal year. Except for the foregoing provision and except for Pro-Fac's
guarantee of the Obligations under the Indenture and the New Credit Agreement,
as long as Pro-Fac has the right to borrow under the Pro-Fac Marketing
Agreement, the Indenture does not permit Pro-Fac to incur any other Indebtedness
(it being understood that Pro-Fac's obligations in respect of retained earnings
allocated to its members shall not be deemed to be Indebtedness).
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to (collectively, 'incur') any Indebtedness
(including Acquired Debt) and will not issue any Disqualified Stock and will not
permit any of its Subsidiaries to incur any Indebtedness (including Acquired
Debt) or to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness and issue shares of Disqualified Stock if (i) the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.0 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, and the net proceeds
therefrom had been applied, at the beginning of such four-quarter period and
(ii) no Default or Event of Default shall have occurred and be continuing
immediately after such incurrence.
The foregoing limitations will not apply to the incurrence (i) by the
Company of Indebtedness (and by Subsidiary Guarantors of related guarantees)
under the Seasonal Working Capital Facility in an aggregate principal amount at
any time outstanding not to exceed the amount of the Borrowing Base calculated
as of the date of such incurrence; (ii) (A) by the Company of Indebtedness
evidenced by letters of credit issued in the ordinary course of business
consistent with past practice to support the Company's insurance or
self-insurance obligations (including to secure workers' compensation and other
similar insurance coverage) or to support surety bonds or appeal bonds provided
by the Company in the ordinary course of business and (B) by the Company of
Indebtedness (and by Subsidiary Guarantors of related guarantees) available
under the Letter of Credit Facility evidenced by letters of credit with an
aggregate face amount not to exceed $10.0 million; (iii) by the Company of
Indebtedness (and by Subsidiary Guarantors of related guarantees) available
under the Term Loan Facility in an aggregate principal amount at any time
outstanding not to exceed $120.0 million, as reduced by any mandatory commitment
reductions under the Term Loan Facility; (iv) by the Company of Indebtedness
under the Term Loan (and by Subsidiary Guarantors of related guarantees) in an
aggregate principal amount at any time not to exceed $80.0 million, as reduced
by any mandatory commitment reductions under the Term Loans; (v) by the Company
of Indebtedness represented by the Notes (and by the Subsidiary Guarantors of
Indebtedness represented by the Guarantees); (vi) by the Company or any
Subsidiary in respect of Capital Lease Obligations in an aggregate principal
amount not to exceed $10.0 million at any time outstanding; (vii) by the Company
or any Subsidiary in respect of purchase money obligations in an aggregate
amount not to exceed $5.0 million at any time outstanding; (viii) by the Company
or any Subsidiary in respect of industrial revenue bonds or similar securities
provided that the net proceeds thereof are applied to construct new facilities
and that the aggregate principal amount of such industrial revenue bonds does
not exceed 75% of the fair market value of the facilities financed thereby; (ix)
by any Subsidiary of the Company of Indebtedness to the Company; (x) by the
Company of Hedging Obligations for the purpose of fixing or hedging interest
rate risk with respect to any floating rate Indebtedness that is permitted by
the terms of the Indenture to be outstanding; and (xi) Permitted Refinancing
Indebtedness of Indebtedness incurred by the Company pursuant to clause (v)
above or pursuant to the preceding paragraph.
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LIENS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom, or assign or convey any right to receive income therefrom,
except Permitted Liens, unless (i) in the case of any Lien that secures an
Obligation that is pari passu with the Indebtedness represented by the Notes,
all payments in respect of the Notes are secured on an equal and ratable basis
with the Obligation so secured and (ii) in the case of any Lien that secures an
Obligation that is subordinated to the Indebtedness represented by the Notes,
all payments in respect of the Notes are secured on a senior basis reflecting
the subordination of the Obligation so secured.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any such Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (x) on its Capital Stock
or (y) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) applicable law, (b) customary non-assignment
provisions in leases or other contracts entered into in the ordinary course of
business and consistent with past practices, (c) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in this clause (iii) on the property so acquired, (d)
customary restrictions imposed on the transfer of copyrighted or patented
materials, (e) the entering into of a contract for the sale or other disposition
of assets, directly or indirectly, so long as such restrictions do not extend to
assets that are not subject to such sale or other disposition, (f) provisions in
Indebtedness of Subsidiaries that is permitted by the Indenture to be incurred
that only restrict the transfer of the assets purchased with the proceeds of
such Indebtedness or (g) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS
In addition to permitting the Acquisition, the Indenture provides that the
Company may consolidate or merge with or into (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another corporation, Person or entity, but only if (i)
the Company is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation or, subject to the final sentence of this
paragraph, a limited liability company or similar entity organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the Obligations of the Company under the Notes
and the Indenture pursuant to a supplemental indenture in a form satisfactory to
the Trustee in its reasonable judgment; (iii) immediately after such transaction
no Default or Event of Default exists; and (iv) the Company or any entity or
Person formed by or surviving any such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (a) will have Consolidated Net Worth (immediately after the
transaction) equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (b) would, after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the most
recently ended four full fiscal quarter period for which internal financial
statements are available, be permitted to incur at
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least $1.00 of additional Indebtedness pursuant to the Fixed Coverage Ratio test
set forth in the covenant entitled ' -- Incurrence of Indebtedness and Issuance
of Preferred Stock.' At or prior to consummation of any transaction otherwise
permitted by this provision, if the entity or the Person formed by or surviving
any such consolidation or merger or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a limited
liability company or similar entity (such transaction being hereinafter referred
to as an 'LLC Restructuring'), the Company shall deliver to the Trustee (i) an
opinion of counsel in the United States acceptable to the Trustee in its
reasonable judgment to the effect that (a) the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such LLC Restructuring and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such LLC Restructuring had not occurred or (b) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling to the same effect; (ii) an opinion of counsel to the effect that, as a
result of the LLC Restructuring, the rights of the Holders of the outstanding
Notes will not be adversely affected in any material respect by the application
of any bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (iii) an Officers' Certificate stating that the LLC
Restructuring was not effected by the Company with the intent of preferring the
Holders of Notes over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company or others;
and (iv) such other opinions of counsel and Officers' Certificates customary in
the issuance of debt securities as the Trustee may reasonably request.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an 'Affiliate
Transaction'), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction involving Pro-Fac (including, without
limitation, any amendment to or waiver under the Pro-Fac Marketing Agreement and
any agreement for the purchase of crops entered into pursuant to the Pro-Fac
Marketing Agreement) or involving aggregate payments in excess of $1.0 million,
a written resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and such Affiliate Transaction is approved by a majority of the
Disinterested Directors and (b) with respect to any Affiliate Transaction (other
than relating to the Pro-Fac Marketing Agreement or any agreement for the
purchase of crops entered into pursuant to the Pro-Fac Marketing Agreement)
involving aggregate payments in excess of $5.0 million, either (I) an opinion as
to the fairness to the Company or such Subsidiary from a financial point of view
issued by an investment banking firm of national standing or (II) with respect
to any Affiliate Transaction involving a transfer of tangible assets, a written
appraisal from a nationally recognized appraiser showing such tangible assets to
have a value not less than the value of such payments, in the case of a transfer
of such assets to the Company or such Subsidiary, and not more than the value of
such payments, in the case of a transfer of such assets from the Company or such
Subsidiary; provided, however, that (x) any employment agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, (y) except
to the extent referenced in the parenthetical to clause (a), the Pro-Fac
Marketing Agreement and any transactions effected pursuant thereto and (z)
transactions permitted by the provisions of the Indenture described above under
the covenant ' -- Restricted Payments,' in each case, shall not be deemed
Affiliate Transactions.
LIMITATIONS ON LAYERING DEBT
The Indenture provides that the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any
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Senior Indebtedness of the Company and senior in right of payment to the Notes
and that neither Pro-Fac nor any Subsidiary Guarantor will incur, create, issue,
assume, guarantee, or otherwise become liable for any Indebtedness that is
subordinate in right of payment to any Senior Indebtedness of Pro-Fac or any
such Subsidiary Guarantor, as the case may be, and senior in any respect in
right of payment to the guarantee of Pro-Fac or such Subsidiary Guarantor, as
the case may be, with respect to the Notes.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, enter into any sale and leaseback transaction; provided
that the Company or its Subsidiaries may enter into such sale and leaseback
transaction if (i) the Company or such Subsidiary could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction pursuant to the covenant described above under the
caption ' -- Incurrence of Indebtedness and Issuance of Preferred Stock' and (b)
incurred a Lien to secure such Indebtedness pursuant to the covenant described
above under the caption ' -- Liens,' (ii) the proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Company's Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the Company shall apply or cause
to be applied the proceeds of such transaction in compliance with the covenant
entitled ' -- Repurchase at the Option of Holders -- Asset Sales.' To the extent
that the Company or any Subsidiary enters into a sale and leaseback transaction,
the Company will specify to the Trustee the provision of the covenants relating
to incurrence of Indebtedness pursuant to which such Attributable Debt would
have been permitted to have been incurred and the amount available under such
provision for future incurrences of Indebtedness or Attributable Debt shall be
correspondingly reduced.
ADDITIONAL SUBSIDIARY GUARANTORS
If the Company shall at any time have a Subsidiary that is a guarantor of
any Senior Indebtedness of the Company or any Guarantor, the Company shall cause
such Subsidiary to become a Subsidiary Guarantor.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, Pro-Fac and the Company will furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the Commission on Forms 10-Q and
10-K if Pro-Fac and the Company were required to file such Forms, including a
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' that describes the financial condition and results of operations of
Pro-Fac, the Company and its Subsidiaries, and, with respect to the annual
information only, a report by Pro-Fac's and the Company's certified independent
accountants and (ii) all reports that would be filed with the Commission on Form
8-K if Pro-Fac and the Company were required to file such reports. In addition,
whether or not required by the rules and regulations of the Commission,
following Consummation of the Exchange Offer, Pro-Fac and the Company will file
a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to investors who request it in writing. Each of Pro-Fac
and the Company has agreed that, for so long as any Transfer Restricted
Securities remain outstanding, they will furnish to the Holders and beneficial
holders of Transfer Restricted Securities and to prospective purchasers of
Transfer Restricted Securities designated by the Holders of Transfer Restricted
Securities and to broker-dealers, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
RELEASE OF A SUBSIDIARY GUARANTOR
Upon the sale or disposition of all of the Equity Interests of a Subsidiary
Guarantor by the Company, or upon the consolidation or merger of a Subsidiary
Guarantor with or into any entity or the sale, conveyance, assignment, transfer,
lease or other disposition of all or substantially all of its
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properties and assets to any entity (in each case, other than the Company or an
Affiliate of the Company), such Subsidiary Guarantor will be automatically and
unconditionally released from all obligations under its guarantee of the Notes;
provided that the proceeds received by the Company or any Subsidiary of the
Company, from such transaction shall be applied as described above under the
caption ' -- Optional Redemption' or ' -- Repurchase at the Option of
Holders -- Asset Sales.'
SECURITIES OWNED BY THE COMPANY OR AN AFFILIATE OF THE COMPANY
The Indenture provides that the Company shall, as promptly as reasonably
practicable, notify the Trustee of any Notes owned by the Company or any
Affiliate of the Company and that the Trustee shall provide to each Holder upon
the request of such Holder all such information furnished to the Trustee.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest or
Additional Payments on, or Liquidated Damages with respect to, the Notes; (ii)
default in payment when due of the principal of or premium, if any, on the
Notes; (iii) failure by the Company or any Subsidiary to comply with the
provisions described above under the captions ' -- Certain
Covenants -- Restricted Payments,' ' -- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock' or ' -- Certain
Covenants -- Merger, Consolidation or Sale of Assets' or by Pro-Fac to comply
with the provisions described above under the caption ' -- Payments Pursuant to
the Pro-Fac Marketing Agreement; Reinvestments by Pro-Fac; Borrowings by
Pro-Fac'; (iv) failure by the Company or any Guarantor for 60 days after notice
from the Trustee or from holders of at least 25% of the aggregate principal
amount of the Notes outstanding to comply with any of its other agreements in
the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default results in the acceleration of
such Indebtedness prior to its express maturity and the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which has been so accelerated, aggregates $2.0
million or more; (vi) default by any Guarantor under its guarantee with respect
to the Notes or such guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of such Guarantor, shall
deny or disaffirm its Obligations under such guarantee; (vii) failure by the
Company or any of its Subsidiaries to pay final judgments aggregating in excess
of $2.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days; (viii) failure by the Company to file the certificate of merger with
respect to the Merger on the Closing Date and to take all other steps, if any,
required to effectuate the Merger by 5:00 P.M. New York City time on the
business day following the Closing Date; and (ix) certain events of bankruptcy
or insolvency with respect to the Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding Notes will
become due and payable without further action or notice. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a continuing Default or Event of Default in the payment of
interest or Additional Payments or Liquidated Damages on, or the principal of or
premium on, the Notes) if it determines that withholding notice is in their
interest.
Except as set forth in the last sentence of this paragraph, no Holder of
any of the Notes has any right to institute any proceeding with respect to the
Indenture or any remedy thereunder unless such Holder gives to the Trustee
written notice of a continuing Event of Default, the Holders of at least 25% in
aggregate principal amount of the outstanding Notes have made written request
and offered reasonable indemnity to the Trustee to institute such proceeding as
Trustee, the Trustee does not pursue the remedy addressed in such request within
30 days after receipt of such notice and offer and the
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Trustee has not within such 30-day period received directions inconsistent with
such written request from Holders of a majority in principal amount of the
outstanding Notes. Such limitations do not apply, however, to a suit instituted
by a Holder of a Note for the enforcement of the payment of the principal of,
premium, if any, or accrued interest on such Note on or after the due date
expressed in such Note (including acceleration thereof) or, following
notification by the Trustee to the Company of its resignation as Trustee under
the Indenture and prior to the appointment of a successor Trustee, the
institution of any proceeding with respect to the Indenture or any remedy
thereunder, including acceleration, by the Holders of a majority in principal
amount of outstanding Notes with respect to such Holders' Notes, provided that
upon institution of any proceeding or exercise of any remedy such Holders
provide the Trustee with prompt notice.
In the case of an Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes as described under
the caption ' -- Optional Redemption,' an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, upon the
acceleration of the Notes. If an Event of Default occurs prior to February 1,
2000 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to February 1, 2000, then, upon acceleration of
the Notes, an additional premium shall also become and be immediately due and
payable, to the extent permitted by law, in an amount equal to 110.0%.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, member or stockholder of
Pro-Fac, the Company or their Subsidiaries, as such, shall have any liability
for any Obligations of the Company or the Guarantors under the Notes, the
Guarantees, or the Indenture or for any claim based on, in respect of, or by
reason of, such Obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes and the Guarantees. Such waiver
may not be effective to waive liabilities under the federal securities laws, and
it is the view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
Obligations discharged with respect to the outstanding Notes ('Legal
Defeasance') except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (ii) the Company's Obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
Obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the Obligations of the Company released with respect to certain
covenants that are described in the Indenture ('Covenant Defeasance') and
thereafter any omission to comply with such Obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership and insolvency events) described under ' -- Events of Default and
Remedies' will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the
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principal of, premium, if any, and interest, Additional Payments on, and
Liquidated Damages with respect to, the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be, of such principal or
installment of principal of, premium, if any, or interest or Additional Payments
on, or Liquidated Damages with respect to, the outstanding Notes; (ii) in the
case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States acceptable to the Trustee in its
reasonable judgment confirming that (a) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (b) since the
date of the Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that and based thereon, such opinion of
counsel shall confirm that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States acceptable to the Trustee in its reasonable
judgment confirming that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (except as the
result of the incurrence of Indebtedness the proceeds of which are applied to
such defeasance) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after the
date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
opinion of counsel acceptable to the Trustee in its reasonable judgment to the
effect that the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; (vii) the Company shall
have delivered to the Trustee an Officers' Certificate stating that the deposit
was not made by the Company with the intent of preferring the Holders of Notes
over the other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and (viii) the
Company shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of such Note
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Indenture
or the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing Default or Event of Default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder of Notes): (i) reduce
the principal amount of Notes whose
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Holders must consent to an amendment, supplement or waiver, (ii) reduce the
principal of or change the fixed maturity of any Note or alter the provisions
with respect to the redemption of the Notes, (iii) reduce the rate of or change
the time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Note payable
in money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the right of
Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any
Note, (viii) make any change in the provisions described above under the caption
' -- Repurchase at the Option of Holders -- Change of Control' that adversely
affects the rights of any Holder of Notes or (ix) make any change in the
foregoing amendment and waiver provisions.
Any amendment to the Indenture or the Notes which would materially and
adversely affect the rights of the lenders under the New Credit Agreement will
also require the consent of such lenders.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or the Guarantors'
respective Obligations to Holders of the Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements of
the Commission in order to effect or maintain the qualifications of the
Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as Trustee with such conflict or resign as Trustee.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee reasonable indemnity satisfactory to the Trustee against any loss,
liability or expense.
DELIVERY AND FORM OF SECURITIES
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were initially issued in the form of one or more Global Notes
(collectively, the 'Old Global Note'). Except for New Notes issued to Non-Global
Purchasers (as defined below), the New Notes will initially be issued in the
form of one or more Global Notes (collectively, the 'New Global Note'). The Old
Global Note was deposited on the date of closing of the sale of the Old Notes,
and the New Global Note will be deposited on the date of closing of the Exchange
Offer, with or on behalf of the Depositary and registered in the name of Cede &
Co., as nominee of the Depositary (such nominee being referred to herein as the
'Global Note Holder').
Notes that are (i) originally issued to or transferred to 'institutional
accredited investors' that are not 'qualified institutional buyers,' as defined
in Rule 144A under the Securities Act (the 'Non-Global Purchasers') or (ii)
issued as described below under ' -- Certificated Securities' will be issued in
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registered form (the 'Certificated Securities'). Upon the transfer to a
qualified institutional buyer of Certificated Securities initially issued to a
Non-Global Purchaser, such Certificated Securities will, unless the Global Note
has previously been exchanged for Certificated Securities, be exchanged for an
interest in the Global Note representing the principal amount of Notes being
transferred. 'Global Note' means the Old Global Note or the New Global Note, as
the case may be.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the 'Participants'
or the 'Depositary's Participants') and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers, banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the 'Indirect Participants' or the
'Depositary's Indirect Participants') that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
Pursuant to procedures established by the Depositary (i) upon deposit of
the Global Note, the Depositary will credit the accounts of Participants in
connection with the Notes with portions of the principal amount of the Global
Note and (ii) ownership of the Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer Notes will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder of the Global Note under
the Indenture. Except as provided below, owners of Notes will not be entitled to
have Notes registered in their names and will not be considered the owners or
Holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. None of the Company, the Guarantors or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Notes by the Depositary, or for maintaining,
supervising or reviewing any records of the Depositary relating to such Notes.
Payments in respect of the principal of, premium, if any, and interest on
any Notes registered in the name of the Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of the Global
Note Holder in its capacity as the registered Holder under the Indenture. Under
the terms of the Indenture, the Company and the Trustee may treat the persons in
whose names any Notes, including the Global Note, are registered as the owners
thereof for the purpose of receiving such payments and for any and all other
purposes whatsoever. Consequently, none of the Company or the Trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of Notes (including principal, premium, if any, and interest).
The Company believes, however, that it is currently the policy of the Depositary
to immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective beneficial interests in
the relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practice and will be the responsibility of the Depositary's
Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in definitive form. Upon any such issuance, the Trustee is
required to register such Notes in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). In
addition, if (i) the Company
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notifies the Trustee in writing that the Depositary is no longer willing or able
to act as a depositary and the Company is unable to locate a qualified successor
within 90 days or (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Notes in definitive form under
the Indenture, then, upon surrender by the Global Note Holder of the Global
Note, Notes in such form will be issued to each person that the Global Note
Holder and the Depositary identify as being the beneficial owner of the related
Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
THE EXCHANGE OFFER; REGISTRATION RIGHTS
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. The Company agrees for a period of 180 days from the
consummation of the Exchange Offer to make available a prospectus meeting the
requirements of the Securities Act to any broker-dealer for use in connection
with any resale of any New Notes. The Registration Statement of which this
Prospectus is a part constitutes the registration statement for the Exchange
Offer which is the subject of the Registration Rights Agreement. Upon the
closing of the Exchange Offer, subject to certain limited exceptions, Holders of
untendered Old Notes will not retain any rights under the Registration Rights
Agreement.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by contacting the Company at 90 Linden Place, P.O. Box 681,
Rochester, New York 14603, Attention: Secretary (Telephone: (716) 383-1850).
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
'Acquired Debt' means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
'Acquisition' means (i) the acquisition by PFAC of 90% or more of each
class of the capital stock of the Company and (ii) the Merger.
'Affiliate' of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and (ii) with respect to Pro-Fac and the
Company, any member of Pro-Fac that is a director of Pro-Fac or that has
beneficial ownership of more than 1% of the voting securities of Pro-Fac. 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.
'Attributable Debt' in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the actual rate
of interest implicit in such transaction) of the obligation of the lessee for
net rental payments during the remaining terms of the lease included in such
sale and leaseback transaction (including any period for which such lease has
been extended or may, at the option of the lessor, be extended).
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'Borrowing Base' means, as of any date, an amount equal to the sum of (i)
80% of the face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date and (ii) 50% of the book value of all inventory
owned by the Company and its Subsidiaries as of such date (calculated in each
case in accordance with the New Credit Agreement). To the extent that
information is not available as to the amount of accounts receivable or
inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
'Capital Lease Obligation' means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on the balance sheet in accordance
with GAAP.
'Capital Stock' means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, with respect to partnerships, partnership interests (whether general
or limited) and any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership.
'Cash Equivalents' means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States Government or
any agency or instrumentality thereof having remaining maturities of not more
than 12 months from the date of acquisition and rated at least 'A' or the
equivalent by either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, (iii) certificates of deposit and eurodollar time deposits with
remaining maturities of not more than 12 months from the date of acquisition,
bankers' acceptances with remaining maturities not more than 12 months and
overnight bank deposits, in each case with any lender party to the New Credit
Agreement or with any domestic commercial bank having capital and surplus in
excess of $250 million and a Keefe Bank Watch Rating of B or better, (iv)
repurchase Obligations with a term of not more than 30 days for underlying
securities of the types described in clauses (ii) and (iii) entered into with
any financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case with a
remaining maturity of not more than 12 months after the date of acquisition,
(vi) any security with a remaining maturity of not more than 12 months from the
date of acquisition backed by standby or direct pay letters of credit issued by
any bank satisfying the requirements of clause (iii) above, and (vii) any
money-market fund sponsored by any registered broker-dealer or mutual fund
distributor that invests solely in instruments of the types set forth above.
'Change of Control' means the occurrence of any of the following, other
than in connection with the Acquisition: (i) the sale, lease or transfer, in one
or a series of related transactions, of all or substantially all of Pro-Fac's or
the Company's assets to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), (ii) the consummation of any transaction the
result of which is that any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) owns, directly or indirectly, (A) more than 50% of
the voting power of the voting stock of Pro-Fac or the Company or (B) more than
30% of the voting power of the voting stock of the Company if Pro-Fac owns,
directly or indirectly, a lesser percentage than such Person or group of the
voting power of the voting stock of the Company, (iii) the first date on which
any Person or group (as defined above) shall have elected, or caused to be
elected, a sufficient number of its or their nominees to the Board of Directors
of Pro-Fac or the Company such that the nominees so elected (regardless of when
elected) shall collectively constitute a majority of the Board of Directors of
Pro-Fac or the Company, as the case may be, or (iv) for a period of 120
consecutive days, the number of Disinterested Directors on the Board of
Directors of the Company being less than the greater of (A) two and (B) the
number of directors of the Company who are Pro-Fac Directors. For purposes of
this definition, any transfer of an equity interest of an entity that was formed
for the purpose of acquiring voting stock of Pro-Fac or the Company shall be
deemed to be a transfer of such portion of the voting stock owned by such entity
as corresponds to the portion of the equity of such entity that has been so
transferred.
'Commercial Market Value' means Commercial Market Value determined in
accordance with the Pro-Fac Marketing Agreement.
'Consolidated Cash Flow' means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to the noncash portion of any
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extraordinary loss and any loss realized in connection with an Asset Sale (to
the extent such losses were deducted in computing such Consolidated Net Income),
plus (ii) the Consolidated Income Tax Expense of such Person for such period
(other than income tax expense (either positive or negative) attributable to
extraordinary gains or losses or gains or losses on Asset Sales), plus (iii) in
the case of the Company, the Pro-Fac share of earnings(loss) as determined in
accordance with the Pro-Fac Marketing Agreement, plus (iv) the Consolidated
Interest Expense of such Person for such period, plus (v) depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any such non-cash charge that results in an
accrual of a reserve for cash charges in any future period) of such Person for
such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income, in each case,
on a consolidated basis and determined in accordance with GAAP.
'Consolidated Income Tax Expense' means, with respect to any Person for any
period, the income tax expense of such Person and its Subsidiaries for such
period that was deducted in computing the Consolidated Net Income of such Person
for such period, determined on a consolidated basis in accordance with GAAP.
'Consolidated Interest Expense' means, without duplication, with respect to
any Person for any period, the sum of the interest expense on all Indebtedness
of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP and including, without limitation (i)
imputed interest on Capital Lease Obligations and Attributable Debt, (ii)
commissions, discounts and other fees and charges owed with respect to letters
of credit securing financial Obligations and bankers' acceptance financing,
(iii) the net costs associated with Hedging Obligations, (iv) amortization of
financing fees and expenses, (v) the interest portion of any deferred payment
Obligations, (vi) amortization of debt discount or premium, if any, (vii) all
other non-cash interest expense, (viii) capitalized interest, (ix) all interest
payable with respect to discontinued operations, and (x) all interest on any
Indebtedness of any other Person guaranteed by the referent Person or any of its
Subsidiaries to the extent paid by the referent Person or any such Subsidiary.
'Consolidated Net Income' means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided,
that (i) the Net Income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Subsidiary thereof, (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of such Net Income is not at the date of
determination permitted without any governmental approval (which has not been
obtained) or directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded;
provided, that in calculating Consolidated Net Income for the Company, any
charges recognized in connection with the Company's elimination of its Nalley's
U.S. Chips and Snacks line of business or the change of control of the Company,
in each case subsequent to June 25, 1994 and net of any related tax benefits,
shall be excluded.
'Consolidated Net Worth' means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock determined in accordance with GAAP,
less all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within 12 months after the acquisition of such business) subsequent to the date
of the Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person.
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'Consolidated Tangible Assets' means with respect to any Person as of any
date, the total assets of such Person and its Subsidiaries (excluding any assets
that would be classified as 'intangible assets' under GAAP) on a consolidated
basis at such date, as determined in accordance with GAAP, less all write-ups
subsequent to the date of the Indenture in the book value of any asset owned by
such Person or any of its Subsidiaries (except to the extent that any such
write-up was required by GAAP as a result of an acquisition by such Person or
any such Subsidiary accounted for as a purchase).
'Default' means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
'Disinterested Directors' means directors of the Company who are not
employees, shareholders (at the time of becoming directors) or otherwise
Affiliates (other than by reason of being a director of the Company) of either
Pro-Fac or the Company.
'Disqualified Stock' means any Capital Stock and all warrants, options or
other rights to acquire Capital Stock which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund Obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to a date that is one year
after the date on which the Notes mature.
'Equity Interests' means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into or exchangeable for Capital Stock).
'Fixed Charge Coverage Ratio' means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
(exclusive of amounts attributable to discontinued operations, as determined in
accordance with GAAP, or operations and businesses disposed of prior to the
Calculation Date (as defined below)) to the Fixed Charges of such Person for
such period (exclusive of amounts attributable to discontinued operations, as
determined in accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date, but only to the extent that the Obligations
giving rise to such Fixed Charges would no longer be Obligations contributing to
such Person's Fixed Charges subsequent to the Calculation Date). In the event
that the Company or any of its Subsidiaries incurs, assumes, guarantees or
repays any Indebtedness (other than revolving credit borrowings) or Attributable
Debt or issues preferred stock subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the 'Calculation Date'), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
repayment of Indebtedness or Attributable Debt, or such issuance or redemption
of preferred stock, as if the same had occurred at the beginning of the
applicable four-quarter reference period. For purposes of making the computation
referred to above, acquisitions that have been made by the referent Person or
any of its Subsidiaries, including all mergers and consolidations, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period; provided, however, that if any such
calculation requires the use of any quarter prior to the date of the Indenture,
such calculation for such quarter shall be made on a pro forma basis giving
effect to the Acquisition, including the financing thereof, as if the same had
occurred at the beginning of such four-quarter period.
'Fixed Charges' means, with respect to any Person for any period, the sum
of (a) the Consolidated Interest Expense of such Person and its Subsidiaries for
such period, and (b) the product of (i) all cash dividend payments (and non-cash
dividend payments in the case of a Person that is a Subsidiary) on any series of
preferred stock of such Person or a Subsidiary of such Person, times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
'GAAP' means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in
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such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
date of the Indenture.
'Hedging Obligations' means, with respect to any Person, the Obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or the value of foreign currencies.
'Indebtedness' means, with respect to any Person, (i) any indebtedness of
such Person (including Acquired Debt and Attributable Debt), whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing Capital Lease Obligations or the
balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any such indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
(ii) all indebtedness of others secured by a Lien on any asset of such Person
whether or not such indebtedness is assumed by such Person, and (iii) to the
extent not otherwise included, the guarantee of any indebtedness of any other
Person by such Person.
'Investments' means, with respect to any Person, all (i) investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including guarantees), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), (ii) purchases or other acquisitions for consideration of
Indebtedness, (iii) Equity Interests or other securities and (iv) other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
'Letter of Credit Facility' means that portion of the New Credit Agreement
that provides for the issuance of letters of credit, with an aggregate face
amount not in excess of $10.0 million at any time outstanding, naming the
Company as the account party.
'Lien' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
'Merger' means the merger under New York law of PFAC with and into the
Company, with the Company being the surviving entity.
'Net Income' means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries, and (ii) any extraordinary gain (but not
loss), together with any related provision for taxes on such extraordinary gain
(but not loss).
'Net Proceeds' means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness that is by its terms subordinated to the Notes) upon
sale of the asset or assets that are the subject of such Asset Sale, and any
reserve for adjustment in respect of the sale price of such asset or assets.
'New Credit Agreement' means the Credit Agreement by and among the Company
and Springfield Bank for Cooperatives in the form existing as of the Closing
Date, including any related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, in each
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case as amended, modified, renewed, restated, refunded, replaced or refinanced
in whole or in part from time to time.
'Obligations' means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
'Permitted Asset Sale Consideration' means securities and other non-cash
consideration acquired by the Company or any of its Subsidiaries as
consideration for the sale of assets or Equity Interests in an Asset Sale having
an aggregate fair market value (measured as of the date of acquisition) that
does not exceed 5% of the Consolidated Tangible Assets of the Company and its
Subsidiaries as of the most recently ended fiscal quarter for which financial
statements are available immediately preceding the date such consideration is
acquired. The fair market value of Permitted Asset Sale Consideration shall be
determined in good faith by the Company's Board of Directors on the date on
which it is acquired and no adjustments will be made for subsequent changes in
fair market value except that the amount deemed to be outstanding will be
reduced (but not below zero) to the extent of any cash received by the Company
or a Subsidiary upon disposition of such Permitted Asset Sale Consideration.
'Permitted Investments' means (i) any Investments in the Company or in a
Subsidiary of the Company; (ii) any Investments in Cash Equivalents; (iii)
Investments by the Company or any Subsidiary in a Person, if as a result of such
Investment (a) such Person becomes a Subsidiary of the Company that is engaged
in the same or a similar line of business to that which the Company and its
Subsidiaries were engaged in on the date of the Investment or (b) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Subsidiary of the Company that is engaged in the same or a similar line of
business to that which the Company and its Subsidiaries were engaged in on the
date of the Investment; (iv) Permitted Asset Sale Consideration; (v) loans by
the Company or any of its Subsidiaries to employees of the Company or any of its
Subsidiaries the proceeds of which are applied to purchase Capital Stock of the
Company; (vi) demand loans for working capital purposes from the Company to
Pro-Fac, not exceeding $10.0 million at any time outstanding, which will be
reduced to zero for a period of not less than 15 consecutive days in each fiscal
year; and (vii) any Investment in the Bank required under the New Credit
Agreement.
'Permitted Liens' means (i) Liens securing Indebtedness under the New
Credit Agreement that is permitted to be incurred pursuant to clauses
(i) -- (iv) of the second paragraph of the covenant described under the caption
' -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock'; (ii) Liens securing intercompany notes on assets that are required to be
pledged to secure borrowings under the New Credit Agreement; (iii) Liens in
favor of the Company; (iv) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (v) Liens on assets of
the Company and its Subsidiaries to secure Capital Lease Obligations, purchase
money obligations and industrial revenue bonds or similar securities permitted
to be incurred pursuant to the covenant described above under the caption
' -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock', provided that such Liens cover only the assets acquired with the
proceeds of such Capital Lease Obligations, purchase money obligations or
industrial revenue bonds or similar securities, as the case may be; (vi) Liens
existing on the date of the Indenture; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently prosecuted; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens created or pledges and deposits made in connection with workers'
compensation, unemployment insurance and other social security benefits incurred
by the Company or any Subsidiary of the Company; (ix) Liens imposed by law,
including, without limitation, mechanics', carriers', warehousemen's,
materialmen's, suppliers' and vendors' Liens created by the Company or any
Subsidiary in the ordinary course of business; (x) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property or minor irregularities of title incident thereto which do not, in the
aggregate, have a material adverse effect on the operation of the business of
the Company and its Subsidiaries taken as a whole; (xi) Liens imposed pursuant
to condemnation or eminent domain or substantially similar proceedings or in
connection with compliance with
114
<PAGE>
environmental laws or regulations; and (xii) Liens incurred in the ordinary
course of business of the Company or any Subsidiary of the Company with respect
to Obligations that do not exceed $2.0 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Subsidiary.
'Permitted Refinancing Indebtedness' means any Indebtedness of the Company
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, other Indebtedness of the Company;
provided that: (i) the principal amount and premium, if any, of such
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of expenses incurred in connection therewith); (ii) such Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iii) such Indebtedness is subordinated in
right of payment to the Notes on terms at least as favorable to the Holders of
Notes as those, if any, contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
'Pro-Fac Director' means any Person who, as a director, officer or other
designee of Pro-Fac, serves as a director of the Company.
'Pro-Fac Marketing Agreement' means the agreement between Pro-Fac and the
Company in the form existing as of the Closing Date, as such agreement may be
amended, restated, renewed, extended or replaced in accordance with the
Indenture.
'Restricted Investment' means an Investment other than a Permitted
Investment.
'Seasonal Working Capital Facility' means that portion of the New Credit
Agreement that provides for revolving Indebtedness of the Company, the proceeds
of which are to be used to finance the Company's operations.
'Senior Indebtedness' means all Indebtedness and other Obligations
specified below payable directly or indirectly by the Company or any Guarantor,
as the case may be, whether outstanding on the date of the Indenture or
thereafter created, incurred or assumed by the Company or such Guarantor: (i)
the principal of and interest on and all other Obligations related to the New
Credit Agreement (including without limitation all loans, letters of credit and
unpaid drawings with respect thereto and other extensions of credit under the
New Credit Agreement, and all expenses, fees, reimbursements, indemnities and
other amounts owing pursuant to the New Credit Agreement), (ii) amounts payable
in respect of any Hedging Obligations, (iii) all Indebtedness not prohibited by
the ' -- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock' covenant that is not expressly pari passu with, or subordinated
to, the Notes or the guarantees, as the case may be, (iv) all Indebtedness
represented by industrial revenue bonds and all Capital Lease Obligations, in
each case, outstanding on the date of the Indenture, (v) all amounts payable to
senior officers and directors of the Company in connection with the Acquisition
and (vi) all permitted renewals, extensions, refundings or refinancings thereof
permitted under the Indenture. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness will not include (i) any Indebtedness which by
the express terms of the agreement or instrument creating, evidencing or
governing the same is junior or subordinate in right of payment to any item of
Senior Indebtedness (it being understood that any agreements among creditors, as
to their priority positions with respect to collateral, shall not be included as
Indebtedness for purposes of this clause (i)), (ii) any trade payable arising
from the purchase of goods or materials or for services obtained in the ordinary
course of business or (iii) Indebtedness incurred (but only to the extent
incurred) in violation of the Indenture as in effect at the time of the
respective incurrence, provided that any Lender under the New Credit Agreement
with respect to such Indebtedness shall be permitted to rely conclusively on an
Officers' Certificate as to the permissibility of such Indebtedness under the
Indenture.
'Subsidiary' means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
115
<PAGE>
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
'Term Loan Facility' means that portion of the New Credit Agreement that
provides for up to $120.0 million of term Indebtedness of the Company, as
reduced by any mandatory commitment reductions pursuant to the terms of the New
Credit Agreement as in effect on the date of the Indenture, at least $90.0
million of the proceeds of which are to be used to finance in part the
Acquisition.
'Term Loans' means that portion of the New Credit Agreement that provides
for $80.0 million of term Indebtedness of the Company, as reduced by any
mandatory commitment reductions pursuant to the terms of the New Credit
Agreement as in effect on the date of the Indenture.
'Weighted Average Life to Maturity' means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an 'underwriter' within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed, in connection with the
Exchange Offer, to indemnify the Initial Investors against certain liabilities,
including liabilities under the Securities Act.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Company prior
to using the Prospectus in connection with the sale or transfer of New Notes,
and acknowledges and agrees that, upon receipt of notice from the Company of the
happening of any event which makes any statement in the Prospectus untrue in any
material respect or which requires the making of any changes in the Prospectus
in order to make the statements therein not misleading (which notice the Company
agrees to deliver promptly to such broker-dealer), such broker-dealer will
suspend use of the Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented prospectus to such broker-dealer.
116
<PAGE>
LEGAL MATTERS
The legality of the New Notes and the Guarantees to be issued in the
Exchange Offer will be passed upon for the Company by Howard, Darby & Levin, New
York, New York and Harris Beach & Wilcox, Rochester, New York.
EXPERTS
The consolidated financial statements and financial statement schedules of
Curtice-Burns Foods, Inc. and the financial statements and financial statement
schedules of Pro-Fac Cooperative, Inc. at June 25, 1994 and June 26, 1993 and
for each of the three years in the period ended June 25, 1994, included in the
Prospectus, have been so included in reliance on the reports of Price Waterhouse
LLP, independent accountants (which reports contain an explanatory paragraph
relative to disputes between Curtice-Burns Foods, Inc. and Pro-Fac Cooperative,
Inc.), given on the authority of said firm as experts in auditing and
accounting.
117
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Curtice-Burns Foods, Inc. and Consolidated Subsidiaries:
Report of Independent Accountants..................................................................... F-2
Consolidated Financial Statements for the years ended June 25, 1994, June 26, 1993 and June 26, 1992
Consolidated Statement of Operations and Retained Earnings....................................... F-3
Consolidated Balance Sheet....................................................................... F-4
Consolidated Statement of Cash Flows............................................................. F-5
Notes to Consolidated Financial Statements....................................................... F-6
Consolidated Financial Statements (Unaudited) for the three months ended September 24, 1994 and
September 25, 1993
Consolidated Statement of Operations and Retained Earnings....................................... F-25
Consolidated Balance Sheet....................................................................... F-26
Consolidated Statement of Cash Flows............................................................. F-27
Notes to Consolidated Financial Statements....................................................... F-28
Pro-Fac Cooperative, Inc.:
Report of Independent Accountants..................................................................... F-36
Financial Statements for the years ended June 25, 1994, June 26, 1993 and June 26, 1992
Statement of Net Proceeds........................................................................ F-37
Balance Sheet.................................................................................... F-38
Statement of Cash Flows.......................................................................... F-39
Statement of Changes in Shareholders' and Members' Capitalization................................ F-40
Notes to Financial Statements.................................................................... F-41
Financial Statements (Unaudited) for the three months ended September 24, 1994 and September 25, 1993
Statement of Net Proceeds........................................................................ F-53
Balance Sheet.................................................................................... F-54
Statement of Cash Flows.......................................................................... F-55
Notes to Financial Statements.................................................................... F-56
</TABLE>
The Company's obligations under the New Credit Agreement and the Notes are
guaranteed by Curtice-Burns Express, Inc., Curtice Burns Meat Snacks, Inc.,
Finger Lakes Packaging Company, Inc., Husman Snack Foods Company, Inc., Kennedy
Endeavors, Incorporated, Nalley's Canada Limited, Quality Snax of Maryland,
Inc., Seasonal Employers, Inc. and Pro-Fac Holding Company of Iowa, Inc., each a
wholly-owned subsidiary of the Company, in addition to Pro-Fac. All subsidiaries
of the Company, other than Curtice-Burns Express, Inc., Curtice Burns Meat
Snacks, Inc., Finger Lakes Packaging Company, Inc., Husman Snack Foods Company,
Inc., Kennedy Endeavors, Incorporated, Nalley's Canada Limited, Quality Snax of
Maryland, Inc., Seasonal Employers, Inc. and Pro-Fac Holding Company of Iowa,
Inc., are inactive, and consequently, maintain no assets or are active, but
maintain insignificant assets. Financial information of the Company and the
Subsidiary Guarantors is substantially the same as that presented in the
Consolidated Financial Statements of the Company.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
CURTICE-BURNS FOODS, INC.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and retained earnings and cash flows
present fairly, in all material respects, the financial position of
Curtice-Burns Foods, Inc. and its subsidiaries at June 25, 1994 and June 26,
1993, and the results of their operations and their cash flows for each of the
three fiscal years in the period ended June 25, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 2 and 4 to the consolidated financial statements,
several disputes currently exist between Pro-Fac Cooperative, Inc. and the
Company. The Company has requested arbitration to resolve the disputes with
Pro-Fac Cooperative, Inc. Additionally, two competing offers to acquire the
outstanding common stock of the Company have been made.
PRICE WATERHOUSE LLP
Rochester, New York
August 10, 1994 (Except as to Note 3, which is as of September 22, 1994)
F-2
<PAGE>
CURTICE-BURNS FOODS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS
EXCEPT SHARE DATA)
<S> <C> <C> <C>
Net sales.................................................................... $829,116 $878,627 $896,931
Costs and expenses:
Cost of sales........................................................... 592,621 632,663 652,347
Restructuring including net (gain) loss from division disposals......... (7,768) 61,037 --
Change in control expenses.............................................. 3,500 -- --
Other selling, administrative and general expenses...................... 186,934 207,119 201,327
Interest expense:
Interest expense on Pro-Fac related borrowings..................... 15,617 16,515 19,869
Interest expense on other debt..................................... 2,667 3,047 3,558
Less capitalized interest.......................................... (79) (12) (592)
-------- -------- --------
Total interest expense........................................ 18,205 19,550 22,835
-------- -------- --------
Total costs and expenses..................................................... 793,492 920,369 876,509
-------- -------- --------
Pre-tax earnings (loss) before dividing with Pro-Fac......................... 35,624 (41,742) 20,422
Pro-Fac share of (earnings) loss............................................. (16,849) 21,800 (9,505)
-------- -------- --------
Income (loss) before taxes................................................... 18,775 (19,942) 10,917
Provision for taxes.......................................................... (8,665) (3,895) (4,769)
-------- -------- --------
Net income (loss)............................................................ 10,110 (23,837) 6,148
Retained earnings at beginning of period..................................... 53,541 82,882 80,849
Less cash dividends declared ($.64, $.64, and $.48 per share,
respectively).............................................................. (5,530) (5,504) (4,115)
-------- -------- --------
Retained earnings at end of period........................................... $ 58,121 $ 53,541 $ 82,882
-------- -------- --------
-------- -------- --------
Net income (loss) per share.................................................. $ 1.17 $ (2.77) $ .71
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
CURTICE-BURNS FOODS, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 25, JUNE 26,
1994 1993
-------- --------
(DOLLARS IN
THOUSANDS
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash.................................................................................. $ 2,928 $ 6,516
Accounts receivable trade, less allowances for bad debts of $1,066 and $801,
respectively......................................................................... 57,640 63,160
Accounts receivable, other............................................................ 8,460 8,151
Income taxes refundable............................................................... 237 --
Current deferred taxes receivable..................................................... 10,487 7,561
Inventories --
Finished goods................................................................... 108,538 110,772
Raw materials and supplies....................................................... 46,721 58,704
-------- --------
Total inventories........................................................... 155,259 169,476
-------- --------
Prepaid manufacturing expense......................................................... 8,190 7,164
Prepaid expenses and other current assets............................................. 4,305 4,920
-------- --------
Total current assets........................................................ 247,506 266,948
Net property, plant and equipment leased from Pro-Fac...................................... 141,322 173,513
Other property, plant and equipment, net................................................... 26,194 18,939
Goodwill and other intangibles, less amounts financed and accumulated amortization of
$10,335 and $8,650, respectively......................................................... 24,909 26,546
Other assets............................................................................... 7,007 7,783
-------- --------
Total assets................................................................ $446,938 $493,729
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................................................... $ 62,335 $ 64,663
Due to Pro-Fac........................................................................ 9,447 9,113
Accrued employee compensation......................................................... 11,482 11,843
Other accrued expenses................................................................ 26,947 30,334
Income taxes payable.................................................................. -- 9,046
Current portion of obligations under Pro-Fac capital leases........................... 17,645 21,184
Current portion of obligations under other capital leases............................. 785 1,687
Current portion of Pro-Fac long-term debt............................................. 14,000 16,000
Current portion of other long-term debt............................................... 816 2,656
-------- --------
Total current liabilities................................................... 143,457 166,526
Long-term debt due Pro-Fac................................................................. 78,040 78,648
Long-term debt due others.................................................................. 1,021 6,389
Obligations under Pro-Fac capital leases................................................... 123,677 152,329
Obligations under other capital leases..................................................... 1,296 1,773
Deferred income taxes...................................................................... 14,958 9,362
Other non-current liabilities.............................................................. 3,591 3,027
-------- --------
Total liabilities........................................................... 366,040 418,054
-------- --------
Commitments and contingencies
Shareholders' equity:
Class A Common -- $.99 par value; 10,125,000 shares authorized; 6,628,430 and
6,568,518 outstanding, respectively.................................................. 6,562 6,503
Class B Common -- $.99 par value; 4,050,000 shares authorized; 2,056,876 and 2,060,702
outstanding, respectively............................................................ 2,036 2,040
Additional paid-in capital............................................................ 14,224 13,591
Retained earnings..................................................................... 58,121 53,541
Minimum pension liability adjustment.................................................. (45) --
-------- --------
Total shareholders' equity.................................................. 80,898 75,675
-------- --------
Total liabilities and shareholders' equity.................................. $446,938 $493,729
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CURTICE-BURNS FOODS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................................ $ 10,110 $(23,837) $ 6,148
Adjustments to reconcile net income to net cash provided by operating
activities --
Restructuring charges, including net (gain) loss from division
disposals............................................................ (7,768) 61,037 --
Amortization of goodwill and other intangibles......................... 1,685 2,538 2,742
Depreciation and amortization of capital assets........................ 22,322 25,432 24,414
Provision for losses on accounts receivable............................ 709 346 827
Deferred tax provision (benefit)....................................... 2,670 (10,642) 1,009
Change in assets and liabilities net of effects of disposals --
Accounts receivable.................................................... 5,704 (8,043) 7,823
Inventories............................................................ 250 4,738 9,162
Income taxes (refundable) payable...................................... (9,283) 11,617 (650)
Accounts payable and accrued expenses.................................. (7,313) 2,497 7,136
Due to Pro-Fac......................................................... 834 (1,654) (443)
Other assets and liabilities........................................... 2,055 (3,345) (5,491)
-------- -------- --------
Net cash provided by operating activities.............................. 21,975 60,684 52,677
-------- -------- --------
Cash flows from investing activities:
Proceeds from division disposals............................................ 42,097 -- --
Cash paid for intangibles................................................... (1,637) (26,898) (2,405)
Purchase of property, plant and equipment................................... (9,543) (8,360) (562)
Disposal of assets.......................................................... 1,900 3,817 6,176
Disposal of Pro-Fac assets.................................................. 714 4,923 1,661
Disposal of third party leases.............................................. 357 94 587
-------- -------- --------
Net cash provided by (used in) investing activities.................... 33,888 (26,424) 5,457
-------- -------- --------
Cash flows from financing activities:
Due to Pro-Fac.............................................................. (500) (16,000) (18,000)
Proceeds from issuance of Pro-Fac long-term debt............................ 40,378 33,348 201
Payments on Pro-Fac long-term debt.......................................... (42,986) (14,000) --
Payments on other long-term debt............................................ (7,208) (2,644) (3,108)
Payments on Pro-Fac capital leases.......................................... (42,193) (26,928) (23,827)
Payments on other capital leases............................................ (2,100) (2,642) (2,073)
Proceeds from sale of stock under stock option plans........................ 688 517 213
Stock repurchased........................................................... -- (17) (5,000)
Cash dividends paid......................................................... (5,530) (5,504) (5,540)
-------- -------- --------
Net cash used in financing activities.................................. (59,451) (33,870) (57,134)
-------- -------- --------
Net change in cash............................................................... (3,588) 390 1,000
Cash at beginning of year........................................................ 6,516 6,126 5,126
-------- -------- --------
Cash at end of year.............................................................. $ 2,928 $ 6,516 $ 6,126
-------- -------- --------
-------- -------- --------
Supplemental disclosure of cash flow information:
Cash paid during the year for --
Interest (net of amount capitalized)........................................ $ 18,623 $ 19,757 $ 22,636
-------- -------- --------
-------- -------- --------
Income taxes, net........................................................... $ 15,077 $ 1,909 $ 3,795
-------- -------- --------
-------- -------- --------
Supplemental schedule of non-cash investing and financing activities:
Capital lease obligations incurred.......................................... $ 10,723 $ 16,065 $ 19,897
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles including the following
major accounting policies:
FISCAL YEAR
Fiscal 1994 ended on June 25, 1994, and fiscal 1993 ended on June 26,
1993, the last Saturday in June. Prior years ended on the last Friday in
June. All future fiscal years will end on the last Saturday in June. The
years ended June 25, 1994, June 26, 1993, and June 26, 1992 each comprised
52 weeks.
CONSOLIDATION
The consolidated financial statements include the Company and its
wholly-owned subsidiaries after elimination of intercompany transactions
and balances. Certain items for fiscal 1993 and 1992 have been reclassified
to conform with fiscal 1994 presentations.
INVENTORIES
Inventories are stated at the lower of cost or market on the first-in,
first-out ('FIFO') method. Inventory reserves are recorded to reflect the
difference between FIFO cost and the market applicable to canned and frozen
fruit and vegetable inventories. These reserves amounted to $379,000,
$1,189,000 and $2,520,000 for fiscal 1994, 1993 and 1992, respectively.
MANUFACTURING OVERHEAD
Allocation of manufacturing overhead to finished goods produced is on
the basis of a production year; thus at the end of each fiscal year,
manufacturing costs incurred by seasonal plants subsequent to the previous
pack are deferred and included in the accompanying balance sheet under the
caption 'Prepaid manufacturing expense.'
PROPERTY, PLANT AND EQUIPMENT AND RELATED LEASE ARRANGEMENTS
Property, plant and equipment are depreciated over the estimated
useful lives of the assets using the straight-line method, half-year
convention, over 3 to 40 years.
Lease arrangements are capitalized when such leases convey
substantially all of the risks and benefits incidental to ownership. Such
leases include those assets title to which is held by Pro-Fac and utilized
by the Company under the terms of the Integrated Agreement (the
'Agreement') described in Note 4. Capital leases are amortized over either
the lease term or the life of the related assets, depending upon available
purchase options and lease renewal features.
INCOME TAXES
Income taxes are provided on income for financial reporting purposes.
Deferred income taxes resulting from temporary differences between
financial reporting and tax reporting are appropriately classified in the
balance sheet.
PENSION
The Company and its subsidiaries have several pension plans and
participate in various union pension plans which on a combined basis cover
substantially all employees. Charges to income with respect to plans
sponsored by the Company and its subsidiaries are based upon actuarially
F-6
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
determined costs. Pension liabilities are funded by periodic payments to
the various pension plan trusts.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In fiscal 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, 'Employers Accounting for Postretirement Benefits Other
than Pensions' which is further described in Note 9.
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS
In November 1992, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 112, 'Employers' Accounting for
Postemployment Benefits.'
This statement establishes accounting standards for employers who
provide benefits to former or inactive employees after employment but
before retirement. Postemployment benefits are all types of benefits
provided to former or inactive employees, their beneficiaries, and covered
dependents.
This Statement is effective for fiscal years beginning after December
15, 1993. Management believes that any change caused by this Statement will
not be material.
GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangible assets include the cost in excess of the
fair value of net tangible assets acquired in purchase transactions and
acquired non-competition agreements and trademarks net of the portion of
such intangibles financed by Pro-Fac in those transactions. Goodwill and
other intangible assets, stated at net of accumulated amortization, are
amortized on a straight-line basis over periods ranging to 40 years. The
Company periodically assesses whether there has been a permanent impairment
in the value of goodwill. This is accomplished by determining whether the
estimated undiscounted future cash flows from operating activities exceed
the carrying value of goodwill as of the assessment date. Should aggregate
future cash flows be less than the carrying value, a writedown would be
required, measured by the difference between the undiscounted future cash
flows and the carrying value of goodwill.
ENVIRONMENTAL EXPENDITURES
Environmental expenditures that pertain to current operations are
expensed or capitalized consistent with the Company's capitalization
policy. Expenditures that result from the remediation of an existing
condition caused by past operations that do not contribute to current or
future revenues are expensed. Liabilities are recorded when remedial
activities are probable and the cost can be reasonably estimated.
NOTE 2. POTENTIAL CHANGE OF CONTROL OF CURTICE-BURNS
On March 23, 1993, the Company announced that Agway Inc., which owns 99% of
Curtice-Burns' Class B shares and approximately 14% of Class A shares, was
considering the potential sale of its interest in the Company. At its meeting
held on August 9 and 10, 1993, the Curtice-Burns Board of Directors authorized
Curtice-Burns' management, with the advice of its investment bankers, to pursue
strategic alternatives for Curtice-Burns. These options include negotiations
with Pro-Fac relative to Pro-Fac gaining control of the business; the possible
sale of the entire equity of Curtice-Burns to a third party; and the
implementation of additional restructuring actions that may include
recapitalizing the Company to buy out Pro-Fac and possibly Agway. Under the
Agreement with Pro-Fac, title to substantially all of Curtice-Burns' fixed
assets is held by Pro-Fac, and Pro-Fac provides the major
F-7
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
portion of the financing of Curtice-Burns' operations. Under the Agreement,
Curtice-Burns has an option to purchase these assets from Pro-Fac at their book
value. However, Curtice-Burns and Pro-Fac are currently in arbitration
proceedings relating to, among other matters, whether or not Curtice-Burns has
the right to terminate the Agreement, the amount that would be due to Pro-Fac
upon such termination and when such termination would take effect. In connection
with any termination of the Agreement, Curtice-Burns would be required to repay
all debt owed to Pro-Fac.
The Company actively explored these alternatives during fiscal 1994. On
June 8, 1994, the Curtice-Burns Board of Directors voted to pursue a proposal
submitted by Dean Foods to acquire all the outstanding shares of Curtice-Burns
at a maximum cash price of $20.00 per share, subject to a number of
contingencies, including an agreement with Pro-Fac covering the termination of
the Integrated Agreement, an agreement with Hormel Foods Corporation for the
purchase of the Nalley's Fine Foods Division of Curtice-Burns, clearance of the
transaction by appropriate government agencies, negotiation of definitive
agreements and approval of any transaction by Curtice-Burns' shareholders.
As a result of Pro-Fac's unwillingness to enter into the agreement required
by Dean Foods, on July 11, 1994, Curtice-Burns commenced arbitration proceedings
against Pro-Fac under the Integrated Agreement. These arbitration proceedings
are discussed in more detail under 'Arbitration Proceedings with Pro-Fac' below.
ARBITRATION PROCEEDINGS WITH PRO-FAC
On July 11, 1994, Curtice-Burns commenced arbitration proceedings against
Pro-Fac under the Integrated Agreement by serving a Demand for Arbitration on
Pro-Fac. In the arbitration, Curtice-Burns is seeking, among other relief, a
declaration confirming its right to terminate the Integrated Agreement and to
purchase the assets owned by Pro-Fac but used by Curtice-Burns in the conduct of
its business upon tender of the then current book value thereof, determined in
accordance with generally accepted accounting principles, a declaration
confirming the effect of termination of the Integrated Agreement on the
obligations of Curtice-Burns under the Integrated Agreement and a declaration
confirming that Curtice-Burns does not have any obligations under the Integrated
Agreement to purchase crops except as set forth in the fiscal 1995 Profit Plan.
Curtice-Burns is also seeking an award of damages sustained by Curtice-Burns in
an amount to be determined by the arbitrators, but in no event less than the
difference in value between the Dean Foods $20.00 per share offer and the market
price per share of Curtice-Burns' common stock following any public announcement
that the Dean Foods acquisition proposal has been withdrawn.
On August 2, 1994, Curtice-Burns filed a petition in the Supreme Court of
New York for an order compelling Pro-Fac to proceed with the arbitration.
On August 4, 1994, Pro-Fac served Curtice-Burns with Pro-Fac's Response and
Counterdemand for Arbitration (the 'Response'). In the Response, Pro-Fac
asserted (1) that Pro-Fac is entitled to a 50% share of the profits from the
consummation of the pending acquisition proposal from Dean Foods, which share
Pro-Fac calculated to be greater than $5.75 per share of Curtice-Burns' common
stock; (2) that Curtice-Burns cannot terminate the Integrated Agreement at all
or not before, at the earliest, June 1996; (3) that the book value of Pro-Fac's
assets for the purposes of calculating the price at which Curtice-Burns may buy
those assets and terminate the Integrated Agreement should not take into account
specified writedowns by Curtice-Burns of those assets; (4) that Curtice-Burns is
in default under the Integrated Agreement for improper termination of crops; and
(5) that Curtice-Burns is in default under the Integrated Agreement for failing
to manage the business of Pro-Fac. Pro-Fac also claimed damages that it
estimated at more than $50 million. In the Response, Pro-Fac also generally
denied Curtice-Burns' allegations in its Demand for Arbitration.
On August 4, 1994, Pro-Fac submitted a proposal for acquisition of all the
outstanding stock of Curtice-Burns for $19.00 per share in cash, and upon
acceptance of the offer, Pro-Fac would relinquish its claims against
Curtice-Burns. The contingencies of the Pro-Fac offer involve shareholder
approval
F-8
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and financing. This was the second proposal submitted by Pro-Fac. The first was
for $16.87 per share, in cash, on June 8, 1994, which the Company rejected at
that time in favor of pursuing the Dean Foods offer.
The Company has expensed $3.5 million of legal, accounting, investment
banking and other expenses relative to the change in control issue. In
recognizing this expense, the Company allocated half of this amount to Pro-Fac
as a deduction to the profit split ($1.8 million). The allocation to Pro-Fac of
this charge is being disputed by Pro-Fac. See Notes 4 and 5.
The Company believes that Pro-Fac's allegations are without merit and
intends to resist them vigorously.
NOTE 3. RESTRUCTURING PROGRAM
THE CONCEPTUAL VISION AND STRATEGY
The restructuring program first initiated in fiscal 1993 was based on
Curtice-Burns' new vision of a company smaller in sales but more profitable, as
measured by return on sales and equity, and possessing the financial and
management resources sufficient to drive growth in carefully selected product
line markets in which the Company can prosper for the long term. Thus, the
strategy was to focus on a more limited number of product lines which now have a
strong, competitive position.
The Plan outlined in 1993 is to restructure the business to a more
profitable base. At the same time, the remaining businesses were to be managed
to optimize earnings growth by installing corporate-wide purchasing, and a
corporate-wide focus of capital spending.
The third leg of the strategy was to accelerate the Company's national
sales and distribution programs by executing new product programs in store-brand
retail dressings, salsa and chunky soups, and the 'More Fruit/More Flavor' pie
filling program.
EXECUTION OF THE PROGRAM
The first step of the restructuring program was to divest businesses that
were unprofitable or declining for the Company but would fit strategically with
other business portfolios. During fiscal 1993, the Company divested Lucca Frozen
Foods. A loss of approximately $2.7 million (before dividing with Pro-Fac and
before taxes) was recognized on this transaction. At the end of fiscal 1993, the
Company wrote down the assets and provided for the expenses to dispose of the
Hiland potato chips and meat snacks businesses during fiscal 1994. On November
22, 1993, Curtice-Burns sold certain assets of the Hiland potato chips business
for $2.0 million at closing, plus approximately $1.0 million paid in
installments over three months. On February 22, 1994, Curtice-Burns sold the
meat snacks business located in Denver, Colorado and Albany, Oregon to Oberto
Sausage Company of Kent, Washington. Under the agreement, Oberto has purchased
certain assets and assumed certain liabilities of the meat snacks operation,
excluding plant, equipment, and trademarks. Curtice-Burns will lease its Albany
Oregon manufacturing facility and equipment and license its trademarks, trade
names, etc. to Oberto until February 1995, at which time Oberto is contractually
obligated to purchase these assets. The sale of the Hiland potato chips and meat
snacks businesses did not result in any significant gain or loss in fiscal 1994
after giving effect to the restructuring charges recorded in fiscal 1993;
however, charges of $3.1 million were incurred in fiscal 1994 to adjust previous
estimates. In the fiscal year ended June 26, 1993, Curtice-Burns incurred losses
of $13.2 million from the meat snacks and Hiland potato chips businesses before
dividing such losses with Pro-Fac and before taxes.
On November 19, 1993, the Company sold the oats portion of the National
Oats business for $39.0 million. The oats business contributed approximately
$1.4 million of earnings in fiscal 1993 before dividing with Pro-Fac and before
taxes. The sale of the oats business resulted in an approximate $10.9
F-9
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
million gain. The popcorn portion of the National Oats Division was transferred
to the Comstock Michigan Fruit Division.
During fiscal 1993 and 1994, the Company also made staff reductions in
selected locations throughout the Company. A $1.0 million accrual relating to
such costs was recorded as part of the fiscal 1993 restructuring charge.
Thus, a major part of the restructuring plan was successfully executed
during fiscal 1994.
As reported above, Curtice-Burns incurred restructuring charges in fiscal
1993 of $61.0 million (before dividing such charges with Pro-Fac and before
taxes), which included the loss incurred on the sale of the Lucca frozen entree
business, anticipated losses on the sale of the meat snacks and Hiland
businesses, and other costs (primarily severance and losses prior to sale) in
conjunction with the restructuring program. Virtually all of this charge was a
revaluation of assets, rather than cash expense.
Having completed the first phase of the restructuring program in fiscal
1993, the second phase was approved by the Company's Board of Directors in
August 1994. In connection with the second phase, the company is evaluating
several alternatives regarding the Nalley's snack food business in the United
States, including its possible sale to a third party. A charge, not to exceed
$12.0 million before split with Pro-fac and before taxes, for this phase of the
restructuring program will be recorded during the first quarter of fiscal 1995.
With respect to the potential sale of the snack food business, the Company
has signed a letter of intent with Country Crisp Foods of Salt Lake City, Utah.
The letter of intent is subject to a number of conditions, including successful
financing by the purchaser and the negotiation of a definitive purchase
agreement. Country Crisp, a regional snack food company operating in the
inter-mountain states of Colorado, Utah, Wyoming, Idaho, Nevada and New Mexico,
will continue to market the Nalley's brand snacks under a licensing arrangement
with the Company. If this sale is finalized, it may result in a revision to the
aforementioned reserve.
NOTE 4. AGREEMENT WITH PRO-FAC
The Company has a contractual relationship with Pro-Fac under an Agreement
consisting of five sections: Operations Financing, Marketing, Facilities
Financing, Management, and Settlement, which extends to 1997, and provides for
two successive five-year renewals at the option of the Company.
The provisions of the Agreement include the financing of certain assets
utilized in the business of the Company and provide a sharing of income and
losses between Curtice-Burns and Pro-Fac. Should the Company terminate the
Agreement, the Company has the option of purchasing those assets financed by
Pro-Fac at their book value at that time.
Revenues received or paid by Pro-Fac from or to Curtice-Burns under the
Agreement for the years ended June 25, 1994, June 26, 1993, and June 26, 1992
include: commercial market value of crops delivered, $59,216,000, $59,800,000,
and $64,152,000, respectively; interest income, $15,617,000, $16,515,000, and
$19,869,000, respectively; and additional proceeds from profit and loss sharing
provisions (amounts in parenthesis indicate deductions from amounts otherwise
payable by Curtice-Burns to Pro-Fac as a result of loss sharing), $16,849,000,
($21,800,000), and $9,505,000, respectively. In addition, Pro-Fac received from
the Company amortization and financing payments of $43,830,000, $53,826,000, and
$26,232,000 for the years ending June 25, 1994, June 26, 1993, and June 26,
1992, respectively.
Should the resolution of the potential change of control of Curtice-Burns
(see Note 2) result in the Company exercising its option to purchase from
Pro-Fac the property and equipment and certain other assets used by the Company
in its business, the financing required to accomplish this (including the
repayment of debt) would be $267,718,000 as measured at the book value on June
25, 1994. Of this amount, $101,487,000 represents short- and long-term debt,
$24,909,000 relates to intangible assets, and $141,322,000 relates to fixed
assets. This $267,718,000 at June 25, 1994 compares to $303,820,000 at June
F-10
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
26, 1993, which was comprised of $103,761,000 of short- and long-term debt,
$26,546,000 relating to intangible assets and $173,513,000 relating to leased
fixed assets. This change of $36,102,000 during the year is the net of increases
and decreases in the amounts attributable to short- and long-term debt and
leased assets. The decrease in leased assets during fiscal 1994 is the result of
certain businesses that were sold (see Note 3) and depreciation exceeding
additions for the period, resulting in a net decrease of $32,191,000 in the
leased asset values for which Pro-Fac holds title.
In fiscal 1993 the Company wrote down assets associated with its Meat
Snacks and Hiland Potato Chip businesses (see Note 3). The total amount of such
writedown was $58,300,000, of which approximately $29,150,000 was allocated to
reduce the value of assets leased from Pro-Fac.
In the arbitration proceedings currently pending between Curtice-Burns and
Pro-Fac, Pro-Fac has asserted, among other matters, (1) that Pro-Fac is entitled
to a 50% share of the profits from the consummation of the pending acquisition
proposal from Dean Foods, which share Pro-Fac calculates to be greater than
$5.75 per share of Curtice-Burns' common stock; and (2) that the book value of
Pro-Fac's assets for the purposes of calculating the buyout price under the
Integrated Agreement should not take into account the writedown of the assets
associated with the Meat Snacks and Hiland Potato Chip businesses. See Note 2.
The Company and Pro-Fac have agreed that, in such arbitration, the effect of the
fiscal 1993 writedown of assets associated with the Company's Meat Snacks and
Hiland Potato Chip businesses will be treated as if such businesses had not been
sold. Also in dispute is Curtice-Burns allocation to Pro-Fac of one-half of the
change in control costs of $3.5 million, one-half of which were allocated to
Pro-Fac in fiscal 1994 pursuant to the provisions of the Agreement. See Note 2.
In March 1994, the Company advised Pro-Fac that, in view of the possibility
that the Company might be acquired by a third party, Pro-Fac should not rely on
Curtice-Burns to purchase any crops from Pro-Fac or its growers in calendar 1995
and beyond. In addition, the Company notified Pro-Fac that Curtice-Burns will
not commit to purchase a substantial portion of the crops historically purchased
from Pro-Fac in the 1995 growing season. As a result, Pro-Fac has given notice
to its affected members terminating Pro-Fac's obligation to purchase these crops
beginning next year. The affected Pro-Fac growers are principally Pro-Fac's New
York fruit and vegetable growers, Illinois and Nebraska popcorn growers, and
Northwest potato growers who represent more than half of Pro-Fac's membership
and have accounted for approximately $29.9 million or 50% of the total crops
delivered by Pro-Fac to Curtice-Burns in the past year. In the arbitration
proceedings currently pending between Curtice-Burns and Pro-Fac, Pro-Fac has
asserted, among other matters, that Curtice-Burns is in default under the
Integrated Agreement for improper termination of crops and has claimed damages
that Pro-Fac estimates at more than $50.0 million (see Note 2). The Company
believes that its only obligation to purchase crops from Pro-Fac is as set forth
in the Profit Plan as approved each year by the Boards of Directors of both
Pro-Fac and the Company. Because the most recent approved Profit Plan was for
fiscal year 1995 (which Plan corresponds to the 1994 calendar year crops), the
Company believes that it is not currently obligated to purchase any crops from
Pro-Fac for calendar year 1995 or later.
On August 3, 1994, Pro-Fac responded to the claim and served the Company
with a counter claim demanding arbitration.
NOTE 5. DEBT
SHORT-TERM DEBT
Short-term bank lines of credit are extended individually to both the
Company and Pro-Fac. They are interrelated so that both companies must
participate on a proportionate basis in the average borrowings under such lines.
At least 55% of such borrowing is attributable to Pro-Fac and advanced by the
Springfield Bank for Cooperatives and up to 45% is attributable to the Company
and advanced by a commercial bank syndicate consisting of six banks. The
combined line of credit at June 25, 1994 was $86,000,000. The revolving lines of
credit under such agreements have been renewed through November
F-11
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of 1994. Such lines expire annually unless renewed. Such renewals grant both
short-term and long-term lenders liens on substantially all assets of the
Company and Pro-Fac as collateral for borrowings under such agreements and other
long-term debt. Outstanding borrowings at June 25, 1994 were $11,500,000. The
maximum amount of short-term borrowings outstanding during the year were
$81,000,000. The approximate average short-term borrowings during fiscal 1994
were $51,516,000, of which $30,464,000 was borrowed from Pro-Fac through funds
advanced to Pro-Fac from the Springfield Bank for Cooperatives and $21,052,000
was borrowed from commercial banks. The approximate daily weighted average
interest rate on borrowings was 4.6% and the rate at June 25, 1994 was 5.5%. The
Company pays a one-fourth of one percent fee on the unused portion of the
commercial bank lines of credit and a one-eighth of one percent facility fee to
commercial banks participating in the credit agreement. There are no
compensating balance requirements.
LONG-TERM DEBT
In addition to the long-term and the short-term borrowings included in the
balance sheet as due to Pro-Fac, the Company guaranteed Pro-Fac debt at June 25,
1994 of $48,974,000 which was used primarily for financing the fixed and
intangible assets referred to in Note 4. The interest rate on Pro-Fac borrowings
was 6.7% at June 25, 1994. The other debt of $1,837,000, primarily Industrial
Revenue Bonds, carries rates ranging up to 11.0% at June 25, 1994.
Long-term debt maturities during each of the next five fiscal years are as
follows: 1995-$14,816,000; 1996-$14,343,000; 1997-$14,209,000; 1998-$14,206,000,
and 1999-$14,182,000. Provisions of the Agreement do, however, allow Pro-Fac,
with sufficient notice, to accelerate the repayment of debt.
Based on an estimated borrowing rate at fiscal year end 1994 of 8.0% for
long-term debt with similar terms and maturities, the fair value of the
Company's long-term debt outstanding is approximately $88,709,000 for Pro-Fac
related debt and $1,835,000 for other debt.
ADDITIONAL INFORMATION WITH RESPECT TO BORROWING ARRANGEMENTS
Because Pro-Fac guarantees the debt of the Company and the Company
guarantees the debt of Pro-Fac (substantially all of which is advanced to the
Company), management and lenders use combined pro forma financial statements to
assess the financial strength of the two companies. Specifically, the combined
statement of operations, balance sheet and statement of cash flows portray the
financial results, cash flows and equity of the Company and Pro-Fac. Management
believes that combined financial statements are useful because they provide
information concerning the Company's ability to continue present credit
arrangements and/or obtain additional borrowings in the future.
Certain borrowing agreements require that the companies maintain specified
levels with regard to working capital, current ratio, ratio of net worth to
assets, ratio of long-term debt to net worth, tangible net worth, net income,
coverage of interest, and fixed charges and the incurrence of additional debt.
The companies are in compliance with, or have obtained waivers for, restrictions
and requirements under the terms of the borrowing agreements. The revolving
lines of credit under such agreements have been renewed through November of
1994. Such renewals grant to both short-term and long-term lenders liens on
substantially all assets of the Company and Pro-Fac as collateral for borrowings
under such agreements.
Such combined financial statements are neither necessary for a fair
presentation of the financial position of the Company nor appropriate as primary
statements for the Company's shareholders or for Pro-Fac shareholders and
members because they combine earnings, assets and liabilities and cash flows
which are legally attributable to either the Company's shareholders or to
Pro-Fac shareholders and members, but not to both. Accordingly, the condensed
pro forma financial statements presented below are special purpose in nature and
should be used only within the context described.
F-12
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
JUNE 25, 1994
---------------------------------------------- JUNE 26, 1993
CURTICE- -------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------- ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales and revenues................................... $ 829.1 $94.4 $(94.4) $829.1 $ 878.6
Cost of sales........................................ 592.6 58.2 (58.2) 592.6 632.7
Restructuring, including net (gain) loss from
division disposals................................. (7.8) -- -- (7.8) 61.0
Change in control costs.............................. 3.5 -- -- 3.5 --
Other selling, administrative and general expenses... 187.0 .9 (2.0) 185.9 205.5
Interest expense..................................... 18.2 11.6 (15.6) 14.2 16.8
Pro-Fac share of earnings............................ 16.8 -- (16.8) -- --
------- ------- ------------ -------- -------------
Total cost and expenses.............................. 810.3 70.7 (92.6) 788.4 916.0
------- ------- ------------ -------- -------------
Income (loss) before taxes........................... 18.8 23.7 (1.8)(A) 40.7 (37.4)
(Provision) benefit for taxes........................ (8.7) .8 -- (7.9) (3.9)
------- ------- ------------ -------- -------------
Net income (loss).................................... $ 10.1 $24.5 $ (1.8)(A) $ 32.8 $ (41.3)
------- ------- ------------ -------- -------------
------- ------- ------------ -------- -------------
</TABLE>
- ------------
Note to combined pro forma condensed statement of operations:
(A) Amounts represent the balance of the fiscal 1994 share of earnings between
the Company and Pro-Fac which is currently under dispute. See discussion at
Notes 2 and 4.
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of operations.
F-13
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
JUNE 25, 1994
--------------------------------------------- JUNE 26, 1993
CURTICE- -------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------ ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets(A)(C)................................. $247.5 $ 46.7 $ (42.9) $251.3 $ 268.9
Property, plant and equipment, net(B)................ 167.5 -- -- 167.5 192.5
Investment in direct financing leases(C)............. -- 123.7 (123.7) -- --
Due from Curtice-Burns(D)............................ -- 78.0 (78.0) -- --
Goodwill and other intangibles....................... 24.9 24.9 -- 49.8 53.1
Other assets.................................... 7.0 22.7 -- 29.7 26.9
------ ------- ------------ -------- -------------
Total assets............................... $446.9 $296.0 $ (244.6) $498.3 $ 541.4
------ ------- ------------ -------- -------------
------ ------- ------------ -------- -------------
LIABILITIES AND NET WORTH
Current liabilities(A)(C)............................ $143.4 $ 44.6 $ (41.1) $146.9 $ 166.8
Lease obligations(C)................................. 125.0 -- (123.7) 1.3 1.8
Long-term debt --
Due Pro-Fac(D).................................. 78.0 -- (78.0) -- --
Due others(E)................................... 1.1 127.1 -- 128.2 174.4
Other liabilities.................................... 18.5 0.5 -- 19.0 12.8
------ ------- ------------ -------- -------------
Total liabilities.......................... 366.0 172.2 (242.8) 295.4 355.8
Shareholders' equity and members'
capitalization(F).................................. 80.9 123.8 (1.8)(G) 202.9 185.6
------ ------- ------------ -------- -------------
Total liabilities and net worth............ $446.9 $296.0 $ (244.6) $498.3 $ 541.4
------ ------- ------------ -------- -------------
------ ------- ------------ -------- -------------
</TABLE>
- ------------
Notes to combined balance sheet:
(A) Current assets of Pro-Fac consist principally of amounts due from
Curtice-Burns with respect to the Agreement described in Note 4. Such
amounts are eliminated for purposes of this balance sheet.
(B) Property, plant and equipment owned by Pro-Fac and leased to Curtice-Burns
on a financing basis had a net book value of $141.3 million at June 25,
1994.
(C) The majority of the lease obligations of Curtice-Burns are payable to
Pro-Fac and amount to $141.3 million at June 25, 1994, of which $17.6
million is payable currently. The related Curtice-Burns liability and
Pro-Fac receivable are eliminated for purposes of this balance sheet.
(D) Long-term borrowings by Curtice-Burns from Pro-Fac under the Agreement are
eliminated for purposes of this balance sheet.
(E) With respect to Pro-Fac, long-term debt due others represents term loans
payable to the Springfield Bank for Cooperatives (interest rate of 6.7% at
June 25, 1994).
(F) Shareholders' and members' capitalization of Pro-Fac at June 25, 1994
consists of common stock, $10.3 million; retained earnings allocated to
members ('retains'), $44.4 million; preferred stock, $64.4 million which
originates from conversion of 'retains' -- normally after five years -- and
which is redeemable at the option of Pro-Fac; and earned surplus
(unallocated and apportioned), $4.7 million.
(G) Amount represents the balance of the fiscal 1994 share of earnings between
the Company and Pro-Fac which is currently under dispute. See discussion at
Notes 2 and 4.
F-14
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
JUNE 25, 1994
--------------------------------------------- JUNE 26, 1993
CURTICE- -------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------ ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities... $ 21.9 $18.0 $ (0.9) $ 39.0 $42.2
Net cash provided by (used in) investing activities... 33.9 32.9 (44.4)(A) 22.4 (17.1)
Net cash (used in) provided by financing activities... (59.4) (50.9) 45.3 (65.0) (24.7)
------ ------- ------------ -------- ------
Net change in cash.................................... (3.6) -- -- (3.6) 0.4
Cash at beginning of year............................. 6.5 -- -- 6.5 6.1
------ ------- ------------ -------- ------
Cash at end of year................................... $ 2.9 $-- $-- $ 2.9 $ 6.5
------ ------- ------------ -------- ------
------ ------- ------------ -------- ------
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest (net of amount capitalized)............. $ 18.6 $12.1 $(15.6) $ 15.1 $17.3
------ ------- ------------ -------- ------
------ ------- ------------ -------- ------
Income taxes, net................................ $ 15.0 $(1.0) $-- $ 14.0 $ 2.9
------ ------- ------------ -------- ------
------ ------- ------------ -------- ------
Supplemental schedule of non-cash investing and
financing activities:
Capital lease obligations incurred............... $ 10.7 $-- $(10.0) $ 0.7 $ 3.0
------ ------- ------------ -------- ------
------ ------- ------------ -------- ------
Conversion of retains into preferred stock....... $ 4.9 $ 4.9 $ 5.9
------- -------- ------
------- -------- ------
Net proceeds allocated to members but retained by
the cooperative................................ $14.2 $ 14.2 $ 4.8
------- -------- ------
------- -------- ------
</TABLE>
- ------------
(A) Amount includes the balance of the fiscal 1994 share of earnings between
the Company and Pro-Fac which is currently under dispute. See discussion at
Notes 2 and 4.
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of cash flows.
F-15
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6. PROPERTY, PLANT AND EQUIPMENT AND RELATED OBLIGATIONS
The following is a summary of property, plant and equipment and related
obligations at June 25, 1994 and June 26, 1993.
<TABLE>
<CAPTION>
JUNE 25, 1994 JUNE 26, 1993
----------------------------------------- -----------------------------
LEASED FROM LEASED FROM
OWNED ------------------ OWNED ------------------
ASSETS PRO-FAC OTHERS TOTAL ASSETS PRO-FAC OTHERS
------- -------- ------ -------- ------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Land............................................ $ 6 $ 8,635 $ -- $ 8,641 $ 41 $ 9,673 $ --
Land improvements............................... 85 3,467 -- 3,552 85 3,693 --
Buildings....................................... 1,150 86,903 720 88,773 1,377 95,597 720
Machinery and equipment......................... 8,953 219,971 4,609 233,533 8,895 234,930 6,615
Construction in progress........................ 21,085 -- -- 21,085 18,778 -- --
Valuation allowance............................. -- (3,970) -- (3,970) (6,900) -- --
------- -------- ------ -------- ------- -------- ------
31,279 315,006 5,329 351,614 22,276 343,893 7,335
Less accumulated amortization................... 7,142 173,684 3,272 184,098 6,628 170,380 4,044
------- -------- ------ -------- ------- -------- ------
Net............................................. $24,137 $141,322 $2,057 $167,516 $15,648 $173,513 $3,291
------- -------- ------ -------- ------- -------- ------
------- -------- ------ -------- ------- -------- ------
Obligations under capital leases(1)............. $141,322 $2,081 $143,403 $173,513 $3,460
Less current portion............................ 17,645 785 18,430 21,184 1,687
-------- ------ -------- -------- ------
Long-term portion............................... $123,677 $1,296 $124,973 $152,329 $1,773
-------- ------ -------- -------- ------
-------- ------ -------- -------- ------
<CAPTION>
TOTAL
--------
<S> <C>
Land............................................ $ 9,714
Land improvements............................... 3,778
Buildings....................................... 97,694
Machinery and equipment......................... 250,440
Construction in progress........................ 18,778
Valuation allowance............................. (6,900)
--------
373,504
Less accumulated amortization................... 181,052
--------
Net............................................. $192,452
--------
--------
Obligations under capital leases(1)............. $176,973
Less current portion............................ 22,871
--------
Long-term portion............................... $154,102
--------
--------
</TABLE>
- ------------
(1) Represents the present value of net minimum lease payments calculated at the
Company's incremental borrowing rate at the inception of the leases, which
ranged from 6 to 9%.
- ----------------------------------------------------------
As of June 25, 1994, the Company leases seven facilities from Pro-Fac that
are not being utilized and are currently for sale. The net book value of these
properties is $11,898,000 at June 25, 1994.
The following is a schedule of future minimum lease payments together with
the present value of the minimum lease payments related to capitalized leases,
both as of June 25, 1994.
<TABLE>
<CAPTION>
CAPITALIZED LEASES
FISCAL YEAR ENDING LAST ------------------------------ OPERATING TOTAL FUTURE
SATURDAY IN JUNE PRO-FAC OTHER TOTAL LEASES COMMITMENT
- ------------------------------------------------------ -------- ------ -------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1995.................................................. $ 17,645 $1,207 $ 18,852 $ 5,175 $ 24,027
1996.................................................. 15,829 765 16,594 2,591 19,185
1997.................................................. 14,590 503 15,093 1,655 16,748
1998.................................................. 13,276 308 13,584 1,234 14,818
1999.................................................. 11,963 98 12,061 932 12,993
Later years........................................... 68,019 309 68,328 956 69,284
-------- ------ -------- --------- ------------
Net minimum lease payments(1)......................... 141,322 3,190 144,512 $12,543 $157,055
--------- ------------
--------- ------------
Less amount representing interest(1).................. -- 1,109 1,109
-------- ------ --------
Present value of minimum lease payments............... $141,322 $2,081 $143,403
-------- ------ --------
-------- ------ --------
</TABLE>
- ------------
(1) With respect to the Agreement with Pro-Fac (see Note 4), the net minimum
payments do not include interest since interest amounts are determined and
billed to Curtice-Burns based upon Pro-Fac's borrowing costs required to
finance the leased assets. With respect to other leases, interest has been
calculated at the Company's incremental borrowing rate at the inception of
the respective leases.
- ----------------------------------------------------------
Total rent expense related to operating leases (including lease
arrangements of less than one year which are not included in the previous table)
amounted to $11,721,000, $13,713,000, and $13,659,000, for fiscal years 1994,
1993 and 1992, respectively.
F-16
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7. INCOME TAXES
Taxes on income include the following:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------
1994 1993 1992
------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Federal --
Current.......................................................... $ 4,047 $10,132 $ 1,933
Deferred......................................................... 1,831 (7,407) 911
------- ------- --------
5,878 2,725 2,844
------- ------- --------
State and foreign --
Current.......................................................... 1,948 4,405 1,827
Deferred......................................................... 839 (3,235) 98
------- ------- --------
2,787 1,170 1,925
------- ------- --------
$ 8,665 $ 3,895 $ 4,769
------- ------- --------
------- ------- --------
</TABLE>
The deferred tax liabilities/assets consist of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Liabilities
Depreciation..................................................... $22,147 $19,854 $ 27,734
Non-compete agreements........................................... 513 620 1,336
Long-term receivables............................................ 1,416 885 --
Insurance accruals............................................... -- -- 317
Other............................................................ 486 592 1,178
------- ------- --------
24,562 21,951 30,565
------- ------- --------
Assets
Inventory reserves............................................... 319 796 3,124
Allowance for doubtful accounts.................................. 514 364 520
Reserve for restructuring........................................ 3,526 6,459 --
Capital loss carryforward........................................ 3,979 3,979 --
Accrued employee benefits........................................ 2,180 1,817 3,659
Insurance accruals............................................... 2,022 1,249 --
Pension accruals................................................. 2,971 2,179 1,749
Plant consolidation and closing expenses......................... 3,639 2,321 3,256
Alternative minimum income tax................................... -- 376 2,859
Other............................................................ 941 1,460 2,955
------- ------- --------
20,091 21,000 18,122
------- ------- --------
Net deferred liabilities......................................... (4,471) (951) (12,443)
Valuation allowance.............................................. -- (850) --
------- ------- --------
$(4,471) $(1,801) $(12,443)
------- ------- --------
------- ------- --------
</TABLE>
Federal income taxes have been reduced by $213,000 for job development
credits for fiscal 1992. The fiscal 1994 and 1993 credits have no significant
impact on federal income taxes. The Alternative Minimum Tax credit carryforwards
created in prior years have been fully utilized.
A valuation allowance was recorded in fiscal 1993 for that portion of the
capital loss carryforward where, it was more likely than not that, a tax benefit
would not be realized. However, based on activities during fiscal 1994, which
include the anticipated acquisition of the Company by a third party and the
disposal of certain divisions, management now believes that the utilization of
the complete capital loss
F-17
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
carryforward is more likely than not. Accordingly, the provision for the
valuation allowance was reversed in fiscal 1994.
The capital loss carryforward can be used to reduce future capital gains.
The amount expires in fiscal 1999.
A reconciliation of the Company's effective tax rate to the amount computed
by applying the federal income tax rates of 35 and 34% to income before taxes,
is as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------
1994 1993 1992
------ ------- ------
<S> <C> <C> <C>
Income tax provision (benefit), at 35% in 1994 and 34% in previous
years................................................................... $6,571 $(6,797) $3,712
State income taxes, net of federal income tax effect...................... 900 189 597
Goodwill.................................................................. 480 9,248 442
Valuation allowance....................................................... (850) 850 --
Tax credits............................................................... -- -- (141)
Statutory rate change..................................................... 480 -- --
Non-deductible legal and advisory expenses................................ 1,058 -- --
Other, net................................................................ 26 405 159
------ ------- ------
$8,665 $ 3,895 $4,769
------ ------- ------
------ ------- ------
Effective Tax Rate........................................................ 46.2% N/M* 43.7%
------ ------- ------
------ ------- ------
</TABLE>
- ------------
* The effective tax rate calculation for 1993 is not meaningful.
- ----------------------------------------------------------
On August 10, 1993, President Clinton signed into law a new income tax bill
which increased corporate income tax rates from 34% to 35%. Under the provisions
of SFAS 109 the Company recorded the impact of this rate increase during the
first quarter of fiscal 1994. The impact of this rate increase on the Company's
deferred tax assets and liabilities resulted in an increase to income tax
expense of approximately $480,000.
Although the Company reported a pretax loss for fiscal 1993, a tax
provision of $3,895,000 was recorded, primarily due to the non-deductible
writedown of goodwill recorded in conjunction with the Company's overall
restructuring plan.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' (SFAS
109) and the Company adopted the provisions of this standard effective as of
June 29, 1991. Under the liability method specified by SFAS 109, the deferred
tax liability is based on the difference between the financial statement and tax
basis of assets and liabilities as measured by the enacted tax rates which are
anticipated to be in effect when these differences reverse. The deferred tax
provision is the result of changes in the liability for deferred tax. There was
no cumulative effect of this change on prior years and no effect on the 1992
provision for income taxes for this accounting change as the Company was
previously accounting for income taxes in accordance with SFAS 96.
NOTE 8. CAPITAL STOCK
The rights and privileges of the holders of the two classes of common stock
are identical except as follows:
Class A shares are freely transferable. Holders of Class B shares
cannot transfer or sell such shares without first offering the shares to
the Company.
F-18
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Dividends may be paid on Class A shares without payment of dividends
on Class B shares; any dividends paid on Class B shares cannot exceed the
per share dividends on Class A shares.
The Class A shareholders vote for the election of 30% (rounded to the
nearest whole number) and the Class B shareholders vote for the election of
70% of the directors of the Company. As of June 25, 1994, Agway Inc. owned
through a subsidiary approximately 33.8% of the outstanding securities of
the Company, consisting of 899,447 shares or 13.6% of the Class A stock and
2,036,643 shares or 99.0% of the Class B stock. In fiscal 1993, Agway
informed the Company it was considering the potential sale of its interest
in the Company (see Note 2).
The Company had reserved 523,125 shares of Class A Common Stock for
its 1980 Non-Qualified Stock Option Plan. During fiscal 1982, by
shareholder vote, this plan and most of the outstanding options under the
plan were converted to an Incentive Stock Option Plan complying with the
regulations issued by the Internal Revenue Service under 1981 tax
legislation. The plan has expired so that no new options can be granted
from it but the remaining unexercised options can be exercised until ten
years from the day they were granted. The Company reserved 500,000 shares
of Class A Common Stock for its 1990 Incentive Stock Option Plan which was
approved by shareholders on November 15, 1990. Under these plans, options
have been granted to officers and key employees at prices equal to the fair
market value at the date of grant and are exercisable over a ten year
period. During the first five years, the options are exercisable at a rate
of 20% each year on a cumulative basis, except that those options granted
March 27, 1993, were not exercisable until March 27, 1994, at which time
40% were exercisable.
The following summarizes stock option transactions for fiscal years
1992 through 1994:
<TABLE>
<CAPTION>
1980 PLAN 1990 PLAN
----------------------------- -----------------------------
NUMBER OF NUMBER OF
SHARES PRICE PER SHARE SHARES PRICE PER SHARE
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at June 28, 1991................. 173,823 $ 7.11 - 24.63 97,700 $ 15.38
Granted................................. -- -- 150,000 10.25
Exercised............................... -- -- (3,141) 10.25
Canceled................................ (8,203) 20.58 - 22.67 (97,700) 15.38
--------- ---------------- --------- ----------------
Outstanding at June 26, 1992................. 165,620 7.11 - 24.63 146,859 10.25
Granted................................. -- -- 268,000 14.25 - 14.63
Exercised............................... (31,185) 7.11 - 12.17 (3,500) 10.25
Canceled................................ (13,901) 11.00 - 23.83 (3,120) 10.25
--------- ---------------- --------- ----------------
Outstanding at June 26, 1993................. 120,534 11.00 - 24.63 408,239 10.25 - 14.63
Granted................................. -- -- 1,400 12.63
Exercised............................... -- -- (5,650) 10.25
Canceled................................ (19,747) 17.67 - 24.63 (26,066) 10.25 - 14.63
--------- ---------------- --------- ----------------
Outstanding at June 25, 1994................. 100,787 $ 11.00 - 22.67 377,923 $ 10.25 - 14.63
--------- ---------------- --------- ----------------
--------- ---------------- --------- ----------------
Exercisable at June 25, 1994................. 98,965 $ 11.00 - 22.67 175,645 $ 10.25 - 14.63
--------- ---------------- --------- ----------------
--------- ---------------- --------- ----------------
</TABLE>
The Company had reserved 409,688 shares of Class A Common Stock for
issuance under the 1980 Installment Stock Purchase Plan, which was amended by
stockholder vote on November 12, 1981 to an Incentive Stock Option Plan. Under
this plan, 401,593 shares were issued and the plan expired as of June 28, 1991.
The Company has also reserved 150,000 shares of Class A Common Stock for
issuance under the 1990 Installment Stock Purchase Plan which was approved by
shareholders on November 15, 1990. Under this plan, 75,441 shares were issued,
and no shares had been subscribed as of June 25, 1994.
Under this stock purchase plan, each salaried employee and eligible
hourly-paid employee has been offered options equal in value to 10% of the
employee's annual base salary as of the date the option is
F-19
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
offered, at prices equal to the fair market value at the date of offer. The
employee has 45 days to subscribe and can exercise at that time or up to one
year later. The absence of stock subscriptions as of June 25, 1994, relates to a
decision by the Company to freeze this Plan until the potential change in
ownership of the Company is clarified or completed.
None of the options has been considered in the computation of weighted
average shares outstanding inasmuch as their inclusion would be insignificant.
The following summarizes changes in common stock, additional paid-in
capital and treasury stock for fiscal years 1992 through 1994:
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON ADDITIONAL
------------------- ------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
--------- ------ --------- ------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at June 28, 1991..................... 6,846,029 $6,778 2,063,282 $2,043 $ 17,600
Exchange of Class B stock for Class A
stock...................................... 2,430 3 (2,430) (3 ) --
Issued under Stock Option and Purchase
Plans...................................... 15,292 14 -- -- 199
Stock canceled in connection with
acquisition................................ (341,297) (338 ) -- -- (4,662)
--------- ------ --------- ------ ----------
Balance at June 26, 1992..................... 6,522,454 6,457 2,060,852 2,040 13,137
Exchange of Class B stock for Class A
stock...................................... 150 -- (150) -- --
Issued under Stock Option and Purchase
Plans...................................... 47,539 47 -- -- 470
Repurchased and canceled under terms of Stock
Option Plan................................ (1,625) (1 ) -- -- (16)
--------- ------ --------- ------ ----------
Balance at June 26, 1993..................... 6,568,518 6,503 2,060,702 2,040 13,591
Exchange of Class B stock for Class A
stock...................................... 3,826 4 (3,826) (4 ) --
Issued under Stock Option and Purchase
Plans...................................... 56,086 55 -- -- 633
--------- ------ --------- ------ ----------
Balance at June 25, 1994..................... 6,628,430 $6,562 2,056,876 $2,036 $ 14,224
--------- ------ --------- ------ ----------
--------- ------ --------- ------ ----------
</TABLE>
NOTE 9. PENSIONS, PROFIT SHARING, AND OTHER EMPLOYEE BENEFITS
PENSIONS
The Company has primarily noncontributory defined benefit plans covering
most employees. The benefits for these plans are based primarily on years of
service and employees' pay near retirement. The Company's funding policy is
consistent with the funding requirements of Federal law and regulations. Plan
assets consist principally of common stocks, corporate bonds and U.S. Government
obligations.
The Company also participates in several union sponsored pension plans;
however, it is not possible to determine the Company's relative share of the
accumulated benefit obligations or net assets for these plans.
F-20
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pension cost for fiscal years ended 1994, 1993 and 1992 includes the
following components:
<TABLE>
<CAPTION>
1994 1993 1992
----------------- ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Service cost -- benefits earned during
the period............................. $3,958 $3,927 $3,393
Interest cost on projected benefit
obligation............................. 6,815 6,259 5,951
Return on assets
Actual gain.............................. (2,044) (6,311) (6,446)
Deferred gain............................ (5,213) (842) (493)
------- ------- -------
Total gain.......................... (7,257) (7,153) (6,939)
Amortization of transition amount at June
29, 1985............................... (1,001) (1,001) (1,001)
Amortization of prior service cost....... 426 130 134
Recognition of curtailment gain.......... (874) -- --
Amortization of gain..................... 6 -- --
------ ------ ------
2,073 2,162 1,538
Union and other pension costs............ 593 555 427
------ ------ ------
Net pension cost......................... $2,666 $2,717 $1,965
------ ------ ------
------ ------ ------
</TABLE>
As a result of restructuring activities, the Plan assets and obligations
were remeasured as of November 22, 1993. The restructuring and the resulting
curtailment caused the projected benefit obligation to decrease by approximately
$874,000 and caused approximately $311,000 of previously unrecognized prior
service cost to be recognized immediately. This resulted in a net decrease in
annual pension cost of $563,000.
The pension plans' funded status was as follows:
<TABLE>
<CAPTION>
JUNE 25, 1994 JUNE 26, 1993 JUNE 26, 1992
------------- ------------- -------------
ACCUMULATED ASSETS EXCEED ASSETS EXCEED
BENEFITS ACCUMULATED ACCUMULATED
EXCEED ASSETS BENEFITS BENEFITS
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................ $ (71,302) $ (66,927) $ (57,234)
------------- ------------- -------------
------------- ------------- -------------
Accumulated benefit obligation....................... $ (76,649) $ (70,522) $ (62,997)
------------- ------------- -------------
------------- ------------- -------------
Projected benefit obligation.............................. $ (87,744) $ (85,277) $ (76,033)
Plan assets at fair value................................. 71,875 74,147 72,941
------------- ------------- -------------
Projected benefit obligation in excess of plan assets..... (15,869) (11,130) (3,092)
Unrecognized net loss..................................... 11,075 8,305 3,423
Unrecognized prior service cost........................... 1,088 1,693 1,701
Unrecognized net asset at year end........................ (4,408) (5,410) (6,411)
Liability for unfunded accumulated benefit obligation..... (1,401) -- --
------------- ------------- -------------
(9,515) (6,542) (4,379)
Union and other pension plans............................. (958) (711) (536)
------------- ------------- -------------
Pension liability at year end............................. $ (10,473) $ (7,253) $ (4,915)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
In 1994 the assumed discount rate, assumed long-term rate of return on plan
assets and the assumed long-term rate of compensation increase were 7.75%, 10.0%
and 4.50%, respectively. In 1993
F-21
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and 1992 the assumed discount rate, assumed long-term rate of return on plan
assets and the assumed long-term rate of compensation increase were 8.25%, 10.0%
and 6.0%, respectively.
Provisions of the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 87, 'Employers Accounting for Pensions' (SFAS
87), require the Company to record a minimum pension liability relating to
certain unfunded pension obligations, establish an intangible asset thereto and
reduce stockholders equity. At June 25, 1994, a minimum pension liability of
$1,401,000 was recorded as required by SFAS 87. A related intangible asset was
recorded for $1,356,000 and stockholders equity was reduced by $45,000. The
adjustment in the minimum pension liability at June 25, 1994 resulted mainly
from a decrease in the discount rate and the general performance of investment
markets.
PROFIT SHARING
Under the Deferred Profit Sharing Plan, the Company allocates to all
salaried employees a percentage of its earnings in excess of 7.0% of the
combined long-term debt and equity (as defined) of Pro-Fac and the Company. In
fiscal 1994, $1,171,000 was allocated to the Plan while no awards were allocated
in fiscal years 1993 and 1992.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Generally, other than pensions, the Company does not pay retirees' benefit
costs. Isolated exceptions exist, which have evolved from union negotiations,
early retirement incentives and existing retiree commitments from acquired
companies.
In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 106, 'Employers' Accounting for
Postretirement Benefits Other Than Pensions' (SFAS 106). SFAS 106, effective for
fiscal years beginning after December 15, 1992, requires employers to accrue the
cost of retiree health and other postretirement benefits during the working
careers of active employees and allows the transition obligation to be
recognized in net income either immediately or over 20 years.
The Company adopted SFAS 106 during the first quarter of fiscal 1994. The
Company has elected to amortize the unrecognized transition obligation over 20
years. The adoption of SFAS 106 is not considered material to the financial
statements as a whole.
The Company has not prefunded any of its retiree medical or life insurance
liabilities. Consequently there are no Plan assets held in a trust, and there is
no expected long-term rate of return assumption for purposes of determining the
annual expense.
F-22
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Plan's funded status was as follows:
<TABLE>
<CAPTION>
JUNE 25, 1994
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Fully eligible active participants.......................................... $ 202
Other active participants................................................... 288
Retirees.................................................................... 2,474
-------
Total.................................................................. 2,964
Less Plan assets at fair value.............................................. --
-------
Accumulated postretirement benefit obligation in excess of fair value of
assets.................................................................... (2,964)
Unrecognized transition obligation.......................................... 2,622
Unrecognized prior service cost............................................. --
Unrecognized losses......................................................... 6
-------
Accrued postretirement benefit cost......................................... $ (336)
-------
-------
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
JUNE 25, 1994
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Service cost..................................................................... $ 38
Interest cost.................................................................... 248
Actual return on assets.......................................................... --
Net amortization and deferral.................................................... 155
-------
Net periodic postretirement benefit cost......................................... $ 441
-------
-------
</TABLE>
Restructuring activities during the year resulted in a curtailment which
caused the Accumulated Postretirement Obligation to decrease by approximately
$878,000 and the Unrecognized Transition Obligation to decrease by approximately
$817,000. This resulted in a net decrease in the Net Postretirement Benefit Cost
of $92,000.
The weighted-average assumed discount rate used to measure the benefit
obligations was 8.25% at the beginning and 7.75% at the end of the fiscal year.
The annual rate of increase in the per capita cost of health care benefits
was assumed to be 15% for 1993. The rate was assumed to decrease gradually to
6.5% by the year 2006 and remain at that level thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation (APBO) and the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost as
follows:
<TABLE>
<CAPTION>
1% HIGHER
CURRENT TREND TREND
---------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
APBO................................................................ $2,964 $3,149
Service cost+interest cost.......................................... 286 301
</TABLE>
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS
In November 1992, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 112, 'Employers' Accounting for Postemployment
Benefits.'
F-23
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
This statement establishes accounting standards for employers who provide
benefits to former or inactive employees after employment but before retirement.
Postemployment benefits are all types of benefits provided to former or inactive
employees, their beneficiaries, and covered dependents.
This Statement is effective for fiscal years beginning after December 15,
1993. Management believes that any change caused by this Statement will not be
material.
NOTE 10. OTHER MATTERS
CONTINGENCIES
In conjunction with the sale of the National Oats Division by the Company,
Pro-Fac terminated the membership of the Harvest States Cooperatives ('Harvest
States') in Pro-Fac. Harvest States was the National Oats Division's only
supplier of oats. As a result of this action, Harvest States filed a claim
against Pro-Fac for, among other things, the receipt of payments for future oats
purchases after the sale of National Oats division through fiscal year 1995.
Under an agreement with Pro-Fac, the Company agreed to indemnify Pro-Fac as
to certain expenses arising out of the termination of the membership of Harvest
States in Pro-Fac. It was agreed that any settlement payments would be deemed an
expense of the Company under the division of earnings with Pro-Fac. The exact
amount of any potential settlement related to this issue cannot be estimated at
June 25, 1994, but management, upon input from counsel, does not believe that
this is a material exposure to the Company.
A grower has filed suit against the Company for damages resulting from
defective seed which was purchased from the Southern Frozen Foods division. The
lawsuit alleges that the defective seed resulted in the loss of crops and
acreage use for a growing season, and the grower is seeking $950,000 in damages.
Management believes this claim is without merit and intends to vigorously defend
its position. As the amount of damages is neither probable nor reasonably
estimable, no accrual for loss has been included in the fiscal 1994 financial
statements. In addition, management anticipates that all material costs of
settlement, if incurred, will be covered under its insurance policies.
COMMITMENTS
The Company's Southern Frozen Foods Division has guaranteed an approximate
$1.4 million loan for the City of Montezuma to renovate a sewage treatment plant
operated by Southern Frozen Foods on behalf of the City.
SUBSEQUENT EVENTS
Subsequent to year end, on July 1, 1994, Curtice-Burns declared a dividend
of $.16 per share to Class A and Class B shareholders of record on July 15,
1994. The dividend was paid on July 29, 1994.
In July 1994, a plant operated by the Company's Southern Frozen Foods
division, located in Montezuma, Georgia, was damaged by fire. The plant itself
is owned by Pro-Fac and leased to the Company under the terms of the Integrated
Agreement. Management is currently in the process of assessing the extent of
damage to the facility. All material costs associated with the facility repairs
and business interruption are anticipated to be covered under the Company's
insurance policies. The Springfield Bank for Cooperatives is loss payee on the
property insurance policy under the terms of the Security Agreement with
lenders. See Note 5.
NOTE 11. EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT
ACCOUNTANTS
On November 3, 1994, PF Acquisition Corp., a New York corporation and a
wholly owned subsidiary of Pro-Fac, consummated a merger with the Company. The
Company will continue as the surviving corporation and has, therefore, become a
wholly owned subsidiary of Pro-Fac. In conjunction with the consummation of this
merger, the disputes between the Company and Pro-Fac, as described in Notes 2
and 4, have been resolved.
F-24
<PAGE>
The interim financial statements contained herein are unaudited, but in the
opinion of the management of Curtice-Burns Foods, Inc. include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations for these periods. The results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full year.
CURTICE-BURNS FOODS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------
SEPTEMBER 24, SEPTEMBER 25,
1994 1993
------------- -------------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net sales.......................................................................... $ 176,847 $ 210,090
------------- -------------
Costs and expenses:
Cost of sales................................................................. 126,844 153,051
Restructuring expenses, including net (gain) loss from division disposals..... 8,415 --
Change in control expenses.................................................... 1,750 --
Gain on assets resulting from fire claim...................................... (6,469) --
Other selling, administrative and general expenses............................ 37,973 46,289
------------- -------------
Operating income......................................................... 8,334 10,750
------------- -------------
Interest expense:
Interest expense on Pro-Fac related borrowings........................... 4,247 4,124
Interest expense on other debt........................................... 862 754
Less capitalized interest................................................ (38) (24)
------------- -------------
Total interest expense.............................................. 5,071 4,854
------------- -------------
Pretax earnings before dividing with Pro-Fac....................................... 3,263 5,896
Pro-Fac share of earnings.......................................................... (1,493) (2,773)
------------- -------------
Income before taxes................................................................ 1,770 3,123
Provision for taxes................................................................ (1,437) (1,939)
------------- -------------
Net income......................................................................... 333 1,184
Retained earnings at beginning of period........................................... 58,121 53,541
Less cash dividends declared ($.16 per share)...................................... (1,390) (1,382)
------------- -------------
Retained earnings at end of period................................................. $ 57,064 $ 53,343
------------- -------------
------------- -------------
Net income per share............................................................... $ .04 $ .14
------------- -------------
------------- -------------
Average number of shares outstanding............................................... 8,690,005 8,635,291
------------- -------------
------------- -------------
Dividends per share................................................................ $ .16 $ .16
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
CURTICE-BURNS FOODS, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 24, JUNE 25, SEPTEMBER 25,
1994 1994 1993
------------- -------- -------------
(DOLLARS IN THOUSANDS
EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash......................................................... $ 7,293 $ 2,928 $ 7,598
Accounts receivable trade.................................... 65,120 57,640 73,589
Accounts receivable, other................................... 8,055 8,460 7,173
Income taxes refundable...................................... -- 237 --
Current deferred taxes receivable............................ 12,618 10,487 7,561
Inventories:
Finished goods.......................................... 177,952 108,538 167,038
Raw materials and supplies.............................. 44,488 46,721 49,809
------------- -------- -------------
Total inventories.................................. 222,440 155,259 216,847
------------- -------- -------------
Prepaid manufacturing expense................................ -- 8,190 --
Prepaid expenses and other current assets.................... 6,151 4,305 8,628
------------- -------- -------------
Total current assets............................... 321,677 247,506 321,396
Net property, plant and equipment leased from Pro-Fac............. 130,728 141,322 172,108
Other property, plant and equipment, net.......................... 29,560 26,194 19,169
Goodwill and other intangibles, net............................... 24,487 24,909 26,125
Other assets...................................................... 17,914 7,007 8,601
------------- -------- -------------
Total Assets....................................... $ 524,366 $446,938 $ 547,399
------------- -------- -------------
------------- -------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable................................................ $ 40,000 $ -- $ 34,000
Accounts payable............................................. 53,491 62,335 55,932
Due to Pro-Fac............................................... 49,304 9,447 41,308
Accrued employee compensation................................ 8,597 11,482 9,181
Other accrued expenses....................................... 33,409 26,947 31,941
Accrued manufacturing expense................................ 774 -- 2,059
Income taxes payable......................................... 1,288 -- 3,199
Current portion of obligations under Pro-Fac capital
leases...................................................... 17,645 17,645 21,184
Current portion of obligations under other capital leases.... 785 785 1,687
Current portion of Pro-Fac long-term debt.................... 14,000 14,000 16,000
Current portion of other long-term debt...................... 641 816 2,886
------------- -------- -------------
Total current liabilities.......................... 219,934 143,457 219,377
Long-term debt due Pro-Fac........................................ 88,952 78,040 80,848
Long-term debt due others......................................... 896 1,021 5,848
Obligations under Pro-Fac capital leases.......................... 113,083 123,677 150,924
Obligations under other capital leases............................ 1,296 1,296 1,773
Deferred income taxes............................................. 16,338 14,958 9,828
Other non-current liabilities..................................... 3,974 3,591 3,233
------------- -------- -------------
Total liabilities.................................. 444,473 366,040 471,831
------------- -------- -------------
Commitments and Contingencies
Shareholders' Equity:
Class A common -- $.99 par value; 10,125,000 shares
authorized; 6,633,129, 6,628,430 and 6,575,787 outstanding,
respectively................................................ 6,567 6,562 6,510
Class B common -- $.99 par value; 4,050,000 shares
authorized; 2,056,876, 2,056,876 and 2,060,702 outstanding,
respectively................................................ 2,036 2,036 2,040
Additional paid-in capital................................... 14,271 14,224 13,675
Retained earnings............................................ 57,064 58,121 53,343
Minimum pension liability.................................... (45) (45) --
------------- -------- -------------
Total shareholders' equity......................... 79,893 80,898 75,568
------------- -------- -------------
Total liabilities and shareholders' equity......... $ 524,366 $446,938 $ 547,399
------------- -------- -------------
------------- -------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
CURTICE-BURNS FOODS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
SEPTEMBER 24, SEPTEMBER 25,
1994 1993
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income.................................................................... $ 333 $ 1,184
Adjustments to reconcile net income to net cash provided by operating
activities --
Restructuring including net (gain)/loss from division disposals.......... 8,415 --
Gain on assets resulting from fire claim................................. (6,469) --
Amortization of goodwill and other intangibles........................... 422 421
Depreciation and amortization of capital assets.......................... 4,671 5,698
Deferred tax provision................................................... (751) 466
Change in assets and liabilities
Accounts receivable...................................................... (7,075) (9,451)
Inventories.............................................................. (67,181) (47,371)
Income taxes payable/refundable.......................................... 1,525 (5,847)
Accounts payable and accrued expenses.................................... (9,985) (563)
Due to Pro-Fac........................................................... 1,357 2,195
Other assets and liabilities............................................. 6,298 (4,320)
------------- -------------
Net cash used in operating activities......................................... (68,440) (57,588)
------------- -------------
Cash Flows From Investing Activities:
Purchase of property, plant and equipment..................................... (4,419) (4,584)
Disposal of assets............................................................ 44 61
------------- -------------
Net cash used in investing activities......................................... (4,375) (4,523)
------------- -------------
Cash Flows From Financing Activities:
Due to Pro-Fac................................................................ 38,500 32,200
Proceeds from issuance of short-term debt..................................... 40,000 34,000
Proceeds from issuance of long-term debt (Pro-Fac)............................ 10,912 --
Payments on long-term debt.................................................... (300) (311)
Payments on Pro-Fac capital leases............................................ (10,594) (1,405)
Proceeds from sale of stock under stock option plans.......................... 52 91
Cash dividends paid........................................................... (1,390) (1,382)
------------- -------------
Net cash provided by financing activities..................................... 77,180 63,193
------------- -------------
Net change in cash................................................................. 4,365 1,082
Cash at beginning of period........................................................ 2,928 6,516
------------- -------------
Cash at end of period.............................................................. $ 7,293 $ 7,598
------------- -------------
------------- -------------
Supplemental Disclosure of Cash Flow Information:
Cash paid/(received) during the period for --
Interest (net of amount capitalized)..................................... $ 4,661 $ 4,855
------------- -------------
------------- -------------
Income taxes, net........................................................ $ 557 $ 7,455
------------- -------------
------------- -------------
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Capital lease obligations incurred....................................... $ 934 $ 4,150
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. AGREEMENT WITH PRO-FAC COOPERATIVE, INC. ('PRO-FAC')
The Company has a contractual relationship with Pro-Fac under an Agreement
consisting of five sections: Operations Financing, Marketing, Facilities
Financing, Management, and Settlement, which extends to 1997, and provides for
two successive five-year renewals at the option of the Company.
The provisions of the Agreement include the financing of certain assets
utilized in the business of the Company and provide a sharing of income and
losses between Curtice-Burns and Pro-Fac. Should the Company terminate the
Agreement, the Company has the option of purchasing those assets financed by
Pro-Fac at their book value at that time.
Revenues received or paid by Pro-Fac from or to Curtice-Burns under the
Agreement for the quarters ended September 24, 1994 and September 25, 1993
include: commercial market value of crops delivered, $37,657,000 and
$42,327,000, respectively; interest income, $4,247,000 and $4,124,000,
respectively; and additional proceeds from profit sharing provisions, $1,493,000
and $2,773,000, respectively. In addition, Pro-Fac received from the Company
amortization and financing payments of $11,016,000 and 1,825,000 for the
quarters ending September 24, 1994 and September 25, 1993, respectively. See
discussion at Note 2 relative to disputed profit sharing allocation.
On September 27, 1994, the Company entered into a definitive merger
agreement with Pro-Fac for the acquisition by Pro-Fac of all the outstanding
stock of Curtice-Burns for $19.00 per share in cash.
NOTE 2. DEVELOPMENTS RELATED TO CHANGE OF CONTROL OF THE COMPANY
On March 23, 1993, the Company announced that Agway, which through its
wholly-owned subsidiary, AHI, owned approximately 99% of the Company's Class B
shares and approximately 14% of the Class A shares as of June 25, 1994, was
considering the potential sale of its interest in the Company. In August 1993,
the Company's Board of Directors authorized the Company's management, with the
advice of its investment bankers, to pursue strategic alternatives for the
Company. These options included (i) negotiations with Pro-Fac relative to
Pro-Fac gaining control of the business; (ii) the possible sale of the entire
equity of the Company to a third party; and (iii) the implementation of
additional restructuring actions that may include recapitalizing the Company to
buy out Pro-Fac. Under the Integrated Agreement, title to substantially all of
the Company's fixed assets is held by Pro-Fac, and Pro-Fac provides the major
portion of the financing of the Company's operations. Under the Integrated
Agreement, the Company has an option to purchase these assets from Pro-Fac at
their book value. However, there presently exists a disagreement with Pro-Fac as
to how such settlement amount would be calculated. Exercise of the buyout option
would result in the termination of the Integrated Agreement with Pro-Fac. In
such event, the Company would be required to repay all debt owed to Pro-Fac.
The Company actively explored these alternatives during fiscal 1994. On
June 8, 1994, the Company's Board of Directors voted to pursue a proposal
submitted by Dean Foods Company ('Dean Foods') to acquire all the outstanding
shares of common stock of the Company at a maximum cash price of $20.00 per
share, subject to a number of contingencies, including an agreement with Pro-Fac
covering the termination of the Integrated Agreement, an agreement with Hormel
Foods Corporation for the purchase of Nalley's (excluding Nalley's Canada Ltd.
and the Nalley's U.S. Chips and Snacks business) for $150.0 million, clearance
of the transaction by appropriate government agencies and negotiation of
definitive agreements.
On August 4, 1994, Pro-Fac submitted a proposal to the Board of Directors
of the Company to acquire the shares for cash in the amount of $19.00 per share.
Pro-Fac's proposal was subject to certain terms and conditions, including
receipt of approval of the Board of Directors and shareholders of the Company,
receipt of approval of a majority of Pro-Fac's members and receipt of sufficient
financing to consummate the acquisition. In September Pro-Fac modified its
proposal by removing several contingencies and indicating its interest in
purchasing the share pursuant to a tender offer.
F-28
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At its special meeting on September 27, 1994, the Board of Directors of the
Company accepted Pro-Fac's proposal. Pro-Fac and the Company entered into the
Merger Agreement on September 27, 1994. Pursuant to the Merger Agreement, the
Company notified Dean Foods that it had accepted Pro-Fac's proposal and was
terminating all negotiations with Dean Foods and other parties for the purchase
of all or part of the Company. Management expects such merger to be finalized in
the second quarter of fiscal 1995.
During fiscal 1994 and the first quarter of fiscal 1995, the Company
expensed $3.5 million and $1.8 million, respectively, of legal, accounting,
investment banking and other expenses relative to the change of control issue.
In recognizing these expenses, the Company allocated half of these amounts to
Pro-Fac as a deduction to the profit split. Pro-Fac has objected to this
allocation. This dispute has been resolved in conjunction with the merger.
On October 4, 1994, Pro-Fac initiated a tender offer for all of
Curtice-Burns outstanding stock at $19.00 per share. At the expiration of the
tender offer on November 2, 1994, 6,229,442 shares of Class A and 2,046,997
shares of Class B common stock (or approximately 94% and 99%, respectively of
the total number of outstanding shares of Class A and Class B common stock of
Curtice-Burns) had been validly tendered and not withdrawn. All such tendered
shares were accepted for payment by PF Acquisition Corp., a wholly-owned
subsidiary of Pro-Fac. On November 3, 1994, PF Acquisition Corp. merged into
Curtice-Burns, making Curtice-Burns a wholly-owned subsidiary of Pro-Fac.
Roy A. Myers, who has served as the general manager of Pro-Fac since 1987,
has been named president and chief executive officer of Curtice-Burns, replacing
J. William Petty, who has resigned. Pro-Fac and Curtice-Burns will continue to
operate under two separate boards. The Pro-Fac Board of Directors will remain
unchanged, and a new Curtice-Burns Board, consisting of seven directors, has
been appointed.
Financing for the offer was obtained through approximately $250.0 million
of seasonal and term senior bank financing from Springfield Bank for
Cooperatives and from the issuance of $160.0 million in senior subordinated debt
securities issued to qualified institutional buyers. The bonds will carry an
annual interest rate of 12 1/4%. In addition, Pro-Fac contributed approximately
$135.0 million in capital to complete the transaction.
NOTE 3. RESTRUCTURING PROGRAM
THE CONCEPTUAL VISION AND STRATEGY
The restructuring program first initiated in fiscal 1993 was based on
Curtice-Burns' new vision of a company smaller in sales but more profitable, as
measured by return on sales and equity, and possessing the financial and
management resources sufficient to drive growth in carefully selected product
line markets in which the Company can prosper for the long term. Thus, the
strategy was to focus on a more limited number of product lines which now have a
strong, competitive position.
The Plan outlined in 1993 is to restructure the business to a more
profitable base. At the same time, the remaining businesses were to be managed
to optimize earnings growth by installing corporate-wide purchasing, and a
corporate-wide focus of capital spending.
The third leg of the strategy was to accelerate the Company's national
sales and distribution programs by executing new product programs in store-brand
retail dressings, salsa and chunky soups, and the 'More Fruit/More Flavor' pie
filling program.
EXECUTION OF THE PROGRAM
The first step of the restructuring program was to divest businesses that
were unprofitable or declining for the Company but would fit strategically with
other business portfolios. During fiscal 1993, the Company divested Lucca Frozen
Foods. A loss of approximately $2.7 million (before dividing with
F-29
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pro-Fac and before taxes) was recognized on this transaction. At the end of
fiscal 1993, the Company wrote down the assets and provided for the expenses to
dispose of the Hiland potato chips and meat snacks businesses during fiscal
1994. On November 22, 1993, Curtice-Burns sold certain assets of the Hiland
Potato Chip business for $2.0 million at closing, plus approximately $1.0
million paid in installments over three months. On February 22, 1994,
Curtice-Burns sold the meat snacks business located in Denver, Colorado and
Albany, Oregon to Oberto Sausage Company of Kent, Washington. Under the
agreement, Oberto has purchased certain assets and assumed certain liabilities
of the meat snacks operation, excluding plant, equipment, and trademarks.
Curtice-Burns will lease its Albany Oregon manufacturing facility and equipment
and license its trademarks, trade names, etc. to Oberto until February 1995, at
which time Oberto is contractually obligated to purchase these assets. The sale
of the Hiland and meat snacks businesses did not result in any significant gain
or loss in fiscal 1994 after giving effect to the restructuring charges recorded
in fiscal 1993; however, charges of $3.1 million (before dividing with Pro-Fac
and before taxes) were incurred in fiscal 1994 to adjust previous estimates. In
the fiscal year ended June 26, 1993, Curtice-Burns incurred losses of $13.2
million from the meat snacks and Hiland potato chip businesses before dividing
such losses with Pro-Fac and before taxes.
On November 19, 1993, the Company sold the oats portion of the National
Oats business for $39.0 million. The oats business contributed approximately
$1.4 million of earnings in fiscal 1993 before dividing with Pro-Fac and before
taxes. The sale of the oats business resulted in an approximate $10.9 million
gain (before dividing with Pro-Fac and before taxes). The popcorn portion of the
National Oats Division was transferred to the Comstock Michigan Fruit Division.
During fiscal 1993 and 1994, the Company also made staff reductions in
selected locations throughout the Company. A $1.0 million accrual relating to
such costs was recorded as part of the fiscal 1993 restructuring charge.
Thus, a major part of the restructuring plan was successfully executed
during fiscal 1994.
As reported above, Curtice-Burns incurred restructuring charges in fiscal
1993 of $61.0 million (before dividing such charges with Pro-Fac and before
taxes), which included the loss incurred on the sale of the Lucca frozen entree
business, anticipated losses on the sale of the meat snacks and Hiland
businesses, and other costs (primarily severance and unexpected losses prior to
sale) in conjunction with the restructuring program. Virtually all of this
charge was a revaluation of assets, rather than cash expense.
Having completed the first phase of the restructuring program in fiscal
1993, the second phase was approved by the Company's Board of Directors in
August 1994. In connection with the second phase, the Company is evaluating
several alternatives regarding the Nalley's snack food business in the United
States, including its possible sale to a third party. A charge of $8.4 million
before split with Pro-Fac and before taxes, for this phase of the restructuring
program was recorded during the first quarter of fiscal 1995.
With respect to the potential sale of the snack food business, the Company
has signed a letter of intent with Country Crisp Foods of Salt Lake City, Utah.
The letter of intent is subject to a number of conditions, including successful
financing by the purchaser and the negotiation of a definitive purchase
agreement. Country Crisp, a regional snack food company operating in the
inter-mountain states of Colorado, Utah, Wyoming, Idaho, Nevada and New Mexico,
will continue to market the Nalley's brand snacks under a licensing arrangement
with the Company.
NOTE 4. DEBT
SHORT-TERM DEBT
Short-term bank lines of credit are extended individually to both the
Company and Pro-Fac. They are interrelated so that both companies must
participate on a proportionate basis in the average
F-30
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
borrowings under such lines. At least 55% of such borrowing is attributable to
Pro-Fac and advanced by the Springfield Bank for Cooperatives and up to 45% is
attributable to the Company and advanced by a commercial bank syndicate
consisting of six banks. The combined line of credit at September 24, 1994 was
$96,000,000. Such lines expire annually unless renewed. The revolving lines of
credit under such agreements have been renewed through November of 1994. Such
renewals provide for adjustments in interest rates and covenants and grant to
both short-term and long-term lenders, or entitle such lenders to obtain, liens
on substantially all assets of the Company and Pro-Fac as collateral for
borrowings under such agreements. Outstanding borrowings at September 24, 1994
were $90,000,000.
LONG-TERM DEBT
In addition to the long-term and the short-term borrowings included in the
balance sheet as due to Pro-Fac, the Company guaranteed Pro-Fac debt at
September 24, 1994 of $37,973,000 which was used primarily for financing the
fixed and intangible assets referred to in Note 1. The interest rate on Pro-Fac
borrowings was 6.8% at September 24, 1994. The other debt of $1,537,000 consists
of primarily industrial revenue bonds and carries rates ranging up to 11.0% at
September 24, 1994.
ADDITIONAL INFORMATION WITH RESPECT TO BORROWING ARRANGEMENTS
Because Pro-Fac guarantees the debt of the Company and the Company
guarantees the debt of Pro-Fac (substantially all of which is advanced to the
Company), management and lenders use combined pro forma financial statements to
assess the financial strength of the two companies. Specifically, the combined
statement of operations, balance sheet and statement of cash flows portray the
financial results, cash flows and equity of the Company and Pro-Fac. Management
believes that combined financial statements are useful because they provide
information concerning the Company's ability to continue present credit
arrangements and/or obtain additional borrowings in the future.
Certain borrowing agreements require that the companies maintain specified
levels with regard to working capital, current ratio, ratio of net worth to
assets, ratio of long-term debt to net worth, tangible net worth, net income,
coverage of interest, and fixed charges and the incurrence of additional debt.
The companies are in compliance with, or have obtained waivers for, restrictions
and requirements under the terms of the borrowing agreements. The revolving
lines of credit under such agreements have been renewed through November of
1994. Such renewals provide for adjustments in interest rates and covenants and
grant to both short-term and long-term lenders, or entitle such lenders to
obtain, liens on substantially all assets of the Company and Pro-Fac as
collateral for borrowings under such agreements.
Such combined financial statements are neither necessary for a fair
presentation of the financial position of the Company nor appropriate as primary
statements for the Company's shareholders or for Pro-Fac shareholders and
members because they combine earnings, assets and liabilities and cash flows
which are legally attributable to either the Company's shareholders or to
Pro-Fac shareholders and members, but not to both. Accordingly, the condensed
pro forma financial statements presented herein are special purpose in nature
and should be used only within the context described.
F-31
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------
SEPTEMBER 24, 1994 SEPTEMBER 25, 1993
---------------------------------------------- ------------------
CURTICE-
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales and revenues.............................. $ 176.8 $44.5 $(44.5) $176.8 $210.1
------- ------- ------------ -------- -------
Cost of sales................................... 126.8 37.7 (37.7) 126.8 153.1
Restructuring................................... 8.4 -- -- 8.4 --
Change of control costs......................... 1.8 -- -- 1.8 --
Insurance gain.................................. (6.5) -- -- (6.5) --
Selling, administrative and general expenses.... 38.0 0.2 (0.2) 38.0 46.1
Interest expense................................ 5.1 2.9 (4.2) 3.8 3.9
Pro-Fac share of earnings....................... 1.5 -- (1.5) -- --
------- ------- ------------ -------- -------
Total cost and expenses......................... 175.1 40.8 (43.6) 172.3 203.1
------- ------- ------------ -------- -------
Income before taxes............................. 1.7 3.7 (0.9)(A) 4.5 7.0
Provision for taxes............................. (1.4) -- -- (1.4) (2.3)
------- ------- ------------ -------- -------
Net income...................................... $ 0.3 $ 3.7 $ (0.9)(A) $ 3.1 $ 4.7
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
</TABLE>
- ------------
(A) Amounts represent the balance of the first quarter fiscal 1995 share of
earnings between the Company and Pro-Fac which is currently under dispute.
See discussion at Note 2.
------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of operations.
F-32
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------
SEPTEMBER 24, 1994 SEPTEMBER 25, 1993
---------------------------------------------- ------------------
CURTICE
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets(A)(C)........................ $ 321.7 $ 88.5 $ (83.6) $326.6 $324.0
Property, plant and equipment, net(B)....... 160.3 -- -- 160.3 191.3
Investment in direct financing leases(C).... -- 113.1 (113.1) -- --
Due from Curtice-Burns(D)................... -- 89.0 (89.0) -- --
Goodwill and other intangibles.............. 24.5 24.5 -- 49.0 52.2
Other assets................................ 17.9 23.0 -- 40.9 28.1
------- ------- ------------ -------- -------
Total assets........................... $ 524.4 $338.1 $ (285.7) $576.8 $595.6
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
LIABILITIES AND NET WORTH
Current liabilities(A)(C)................... $ 219.9 $ 88.5 $ (81.0) $227.4 $221.9
Lease obligations(C)........................ 114.4 -- (113.1) 1.3 1.8
Long-term debt --
Due Pro-Fac(D)............................ 89.0 -- (89.0) -- --
Due others(E)............................. 0.9 126.9 -- 127.8 173.9
Other liabilities........................... 20.3 0.6 -- 20.9 13.4
------- ------- ------------ -------- -------
Total liabilities...................... 444.5 216.0 (283.1) 377.4 411.0
Shareholders' equity and members'
capitalization(F).............................. 79.9 122.1 (2.6)(G) 199.4 184.6
------- ------- ------------ -------- -------
Total liabilities and net worth........ $ 524.4 $338.1 $ (285.7) $576.8 $595.6
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
</TABLE>
- ------------
Notes to combined balance sheet:
(A) Current assets of Pro-Fac consist principally of amounts due from
Curtice-Burns with respect to the Agreement described in Note 1. Such
amounts are eliminated for purposes of this balance sheet.
(B) Property, plant and equipment to which Pro-Fac holds title and leases
to Curtice-Burns on a financing basis had a net book value of $130.7
million at September 24, 1994.
(C) The majority of the lease obligations of Curtice-Burns are payable to
Pro-Fac and amount to $130.7 million at September 24, 1994 of which
$17.6 million is payable currently. The related Curtice-Burns liability
and Pro-Fac receivable are eliminated for purposes of this balance
sheet.
(D) Long-term borrowings by Curtice-Burns from Pro-Fac under the Agreement
are eliminated for purposes of this balance sheet.
(E) With respect to Pro-Fac, long-term debt due others represents term
loans payable to the Springfield Bank for Cooperatives (interest rate
of 6.8% at September 24, 1994).
(F) Shareholders' and members' capitalization of Pro-Fac at September 25,
1993 consists of common stock, $10.2 million; retained earnings
allocated to members ('retains'), $42.9 million; preferred stock, $65.6
million which originates from conversion of 'retains' -- normally after
five years -- and which is redeemable at the option of Pro-Fac; and
earned surplus, $3.4 million.
(G) Amount represents the balance of the fiscal 1994 and first quarter
fiscal 1995 share of earnings between the Company and Pro-Fac which is
currently under dispute. See discussion at Note 2.
F-33
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------
SEPTEMBER 24, 1994 SEPTEMBER 25, 1993
------------------------------------------------- ------------------
CURTICE
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash (used in)/provided by operating
activities................................ $ (68.4) $ 8.1 $ (1.8)(A) $(62.1) $(51.9)
Net cash (used in)/provided by investing
activities................................ (4.4) (40.9 ) 40.6(A) (4.7) (5.0)
Net cash provided by/(used in) financing
activities................................ 77.2 32.9 (38.8) 71.3 58.0
------- ------- ------------ ---------- -------
Net change in cash.......................... 4.4 0.1 -- 4.5 1.1
Cash at beginning of period................. 2.9 -- -- 2.9 6.5
------- ------- ------------ -------- -------
Cash at end of period....................... $ 7.3 $ 0.1 $ -- $ 7.4 $ 7.6
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest (net of amount capitalized)... $ 4.6 $ 2.7 $ (4.2) $ 3.1 $ 3.9
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
Income taxes, net...................... $ .6 $ -- $ -- $ 0.6 $ 7.5
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Capital lease obligations incurred..... $ 0.9 $ -- $ (0.9) $ -- $ --
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
Conversion of retains to preferred
stock................................ $ -- $ 1.2 $ -- $ 1.2 $ --
------- ------- ------------ -------- -------
------- ------- ------------ -------- -------
</TABLE>
- ------------
(A) Amounts include the balance of the first quarter fiscal 1995 share of
earnings between the Company and Pro-Fac which is currently under dispute.
See discussion at Note 2.
------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of cash flows.
NOTE 5. LEASES
Lease arrangements are capitalized when such leases convey substantially
all of the risks and benefits incident to ownership. Such leases include those
assets furnished by Pro-Fac Cooperative, Inc. under the Agreement described in
Note 1. Capital leases are amortized over either the lease term or the life of
the related asset, depending upon available purchase options and lease renewal
features.
NOTE 6. OTHER MATTERS
CONTINGENCIES
In conjunction with the sale of the National Oats Division by the Company,
Pro-Fac terminated the membership of the Harvest States Cooperatives ('Harvest
States') in Pro-Fac. Harvest States was the National Oats Division's only
supplier of oats. As a result of this action, Harvest States filed a claim
F-34
<PAGE>
CURTICE-BURNS FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
against Pro-Fac for, among other things, the receipt of payments for future oats
purchases after the sale of National Oats division through fiscal year 1995.
Under an agreement with Pro-Fac, the Company agreed to indemnify Pro-Fac as
to certain expenses arising out of the termination of the membership of Harvest
States in Pro-Fac. It was agreed that any settlement payments would be deemed an
expense of the Company under the division of earnings with Pro-Fac. The exact
amount of any potential settlement related to this issue cannot be estimated at
September 24, 1994, but management, upon input from counsel, does not believe
that this is a material exposure to the Company.
A grower has filed suit against the Company for damages resulting from
defective seed which was purchased from the Southern Frozen Foods division. The
lawsuit alleges that the defective seed resulted in the loss of crops and
acreage use for a growing season, and the grower is seeking $950,000 in damages.
Management believes this claim is without merit and intends to vigorously defend
its position. As the amount of damages is neither probable nor reasonably
estimable, no accrual for loss has been included in the financial statements. In
addition, management anticipates that all material costs of settlement, if
incurred, will be covered under its insurance policies.
COMMITMENTS
The Company's Southern Frozen Foods Division has guaranteed an approximate
$1.4 million loan for the City of Montezuma to renovate a sewage treatment plant
operated by Southern Frozen Foods on behalf of the City.
FIRE CLAIM
In July 1994, a plant operated by the Company's Southern Frozen Foods
division, located in Montezuma, Georgia, was damaged by fire. The plant itself
is owned by Pro-Fac and leased to the Company under the terms of the Integrated
Agreement. All material costs associated with the facility repairs and business
interruption are anticipated to be covered under the Company's insurance
policies. During the first quarter of fiscal 1995, a $6.5 million gain (before
dividing with Pro-Fac and before taxes) was recorded representing the insurance
proceeds for the replacement value in excess of the depreciated book value of
the building and equipment destroyed in this fire.
F-35
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members, Shareholders and
Board of Directors of
PRO-FAC COOPERATIVE, INC.
In our opinion, the accompanying balance sheets and the related statements
of net proceeds, of cash flows and of changes in shareholders' and members'
capitalization present fairly, in all material respects, the financial position
of Pro-Fac Cooperative, Inc. at June 25, 1994 and June 26, 1993, and the results
of its operations and its cash flows for each of the three fiscal years in the
period ended June 25, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Cooperative's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Several disputes currently exist between Curtice-Burns Foods, Inc. and the
Cooperative. Both Curtice-Burns Foods, Inc. and the Cooperative have requested
arbitration to resolve these matters. In addition, on September 27, 1994, the
Cooperative's offer to acquire the outstanding common stock of Curtice-Burns
Foods, Inc. was recommended for shareholders' approval by the Board of Directors
of Curtice-Burns Foods, Inc. The outcome of such transactions could affect the
Integrated Agreement with the Cooperative. These matters are described in Note 2
to the financial statement.
PRICE WATERHOUSE LLP
Rochester, New York
September 28, 1994
F-36
<PAGE>
PRO-FAC COOPERATIVE, INC.
STATEMENT OF NET PROCEEDS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Proceeds from sale of crops to Curtice-Burns Foods, Inc.
Established commercial market value:
Delivered during production season (April through March in each period)...... $ 59,216 $ 59,800 $ 64,152
Adjust to fiscal year basis....................................................... (979) (65) (718)
-------- -------- --------
Deliveries during the period........................................................... 58,237 59,735 63,434
Proceeds (loss) under the Integrated Agreement......................................... 18,599 (21,800) 9,505
Interest income........................................................................ 15,630 17,090 19,869
Patronage dividend from Springfield Bank for Cooperatives.............................. 1,927 1,857 1,411
-------- -------- --------
Total revenues.................................................................... 94,393 56,882 94,219
-------- -------- --------
Costs and Expenses
Established commercial market value paid to or accrued for the accounts of members
during the period..................................................................... 58,237 59,735 63,434
Interest expense....................................................................... 11,587 13,753 17,179
Administrative expenses................................................................ 871 892 852
-------- -------- --------
Total costs and expenses.......................................................... 70,695 74,380 81,465
-------- -------- --------
Excess (deficiency) of revenues before taxes, dividends and allocation of net proceeds from
current operations........................................................................ 23,698 (17,498) 12,754
Benefit for taxes........................................................................... 844 -- 1,151
-------- -------- --------
Net income (loss) (proceeds before dividends)............................................... 24,542 (17,498) 13,905
Dividends on common and preferred stock..................................................... (4,390) (4,548) (4,437)
-------- -------- --------
Net proceeds (loss)......................................................................... 20,152 (22,046) 9,468
Allocation (to) from earned surplus......................................................... (2,856) 27,917 (155)
-------- -------- --------
Net proceeds available to members from current operations................................... 17,296 5,871 9,313
Additional distribution of 1991 net proceeds................................................ -- -- 3,727
-------- -------- --------
Total net proceeds available to members........................................... $ 17,296 $ 5,871 $ 13,040
-------- -------- --------
-------- -------- --------
Net proceeds available to members as a percent of commercial market value:
From current operations................................................................ 29.21% 9.82% 14.52%
From additional distribution of 1991 net proceeds...................................... -- -- 5.81%
Allocation of net proceeds available to members
Distribution from current operations:
Payable to members currently (20%, 20% and 25%, respectively, of qualified
proceeds available to members)................................................... $ 3,109 $ 1,052 $ 2,253
Allocated to members but retained by the Cooperative:
Qualified retains................................................................. 12,437 4,209 6,760
Non-qualified retains............................................................. 1,750 610 300
-------- -------- --------
17,296 5,871 9,313
-------- -------- --------
Additional distribution of 1991 net proceeds:
Cash................................................................................... -- -- 932
Qualified Retains...................................................................... -- -- 2,795
-------- -------- --------
-- -- 3,727
-------- -------- --------
Total allocation of net proceeds available to members............................. $ 17,296 $ 5,871 $ 13,040
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE>
PRO-FAC COOPERATIVE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 25, JUNE 26,
1994 1993
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................................. $ 10 $ 19
Accounts receivable.............................................................................. 68 25
Receivable from Curtice-Burns Foods, Inc......................................................... 11,197 9,113
Current portion of long-term loans receivable from Curtice-Burns Foods, Inc...................... 14,000 16,000
Current portion of investment in direct financing leases......................................... 17,645 21,184
Current portion of investment in Springfield Bank for Cooperatives............................... 1,324 1,172
Income taxes refundable.......................................................................... -- 70
Prepaid expenses................................................................................. 2,464 693
-------- --------
Total current assets........................................................................ 46,708 48,276
Long-term portion of investment in direct financing leases............................................ 123,677 152,329
Long-term loans receivable from Curtice-Burns Foods, Inc.............................................. 78,040 78,648
Long-term portion of investment in Springfield Bank for Cooperatives.................................. 19,632 16,814
Deferred tax benefit.................................................................................. 2,623 2,010
Finance receivable related to intangibles............................................................. 24,909 26,545
Other assets.......................................................................................... 462 262
-------- --------
Total assets................................................................................ $296,051 $324,884
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' AND MEMBERS' CAPITALIZATION
Current liabilities:
Notes payable.................................................................................... $ 11,500 $ 12,000
Accounts payable................................................................................. 617 1,019
Accrued interest................................................................................. 2,536 3,019
Federal and state income taxes payable........................................................... 668 --
Current portion of long-term debt................................................................ 14,000 16,000
Amounts due members.............................................................................. 15,327 14,525
-------- --------
Total current liabilities................................................................... 44,648 46,563
Long-term debt........................................................................................ 127,134 168,000
Other non-current liabilities......................................................................... 504 417
-------- --------
Total liabilities........................................................................... 172,286 214,980
-------- --------
Commitments and contingencies
Shareholders' and members' capitalization:
Retained earnings allocated to members........................................................... 36,924 29,446
Non-qualified allocation to members.............................................................. 7,454 5,704
Capital Stock --
Preferred, par value $25.00, authorized -- 5,000,000 and shares; issued and
outstanding -- 2,576,720 and 2,378,807, respectively........................................ 64,418 59,470
Common, par value $5.00, authorized -- 5,000,000 shares
</TABLE>
<TABLE>
<CAPTION>
JUNE 25, JUNE 26,
1994 1993
--------- ---------
<S> <C> <C> <C> <C>
Shares issued............................................................... 2,056,878 2,690,430
Shares subscribed........................................................... 9,270 24,788
--------- ---------
Total subscribed and issued....................................... 2,066,148 2,715,218
Less subscriptions receivable in installments............................... (9,270) (24,788)
--------- ---------
2,056,878 2,690,430 10,284 13,455
--------- ---------
--------- ---------
Earned surplus (unallocated and apportioned)................................ 4,685 1,829
-------- --------
Total shareholders' and members' capitalization................... 123,765 109,904
-------- --------
Total liabilities and capitalization.............................. $296,051 $324,884
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE>
PRO-FAC COOPERATIVE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income/(loss)........................................................ $ 24,542 $(17,498) $ 13,905
Less amounts payable to members currently................................ (3,109) (1,052) (2,253)
-------- -------- --------
21,433 (18,550) 11,652
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in undistributed earnings of Springfield.......................... (1,541) (1,486) (1,129)
(Benefit)/provision for deferred taxes................................... (613) 207 307
Change in assets and liabilities:
Accounts receivable...................................................... (43) 618 (552)
Accounts payable and accrued expenses.................................... (885) 309 (1,117)
Amounts due to members................................................... 802 (2,277) 372
Federal and state taxes payable.......................................... 738 (1,180) 265
Other assets and liabilities............................................. (1,895) (319) 591
-------- -------- --------
Net cash provided by/(used in) operating activities...................... 17,996 (22,678) 10,389
-------- -------- --------
Cash flows from investing activities:
Due from Curtice-Burns, net.............................................. 524 (1,694) 18,242
Return from/(investment in) direct financing leases...................... 32,191 13,785 6,002
Investment in Springfield Bank........................................... (1,429) (1,937) (1,691)
Cash received from the finance receivable related to intangibles......... 1,636 26,898 2,405
-------- -------- --------
Net cash provided by investing activities................................ 32,922 37,052 24,958
-------- -------- --------
Cash flows from financing activities:
Payments on short-term debt.............................................. (500) (16,000) (18,000)
Proceeds from long-term debt............................................. 120 20,000 --
Payments on long-term debt............................................... (42,986) (14,025) (14,027)
Repurchases of common stock, net of issuances............................ (3,171) 358 1,088
Payments for the repurchase of preferred stock........................... -- (165) --
Cash dividends paid...................................................... (4,390) (4,548) (4,437)
-------- -------- --------
Net cash used in financing activities.................................... (50,927) (14,380) (35,376)
-------- -------- --------
Net decrease in cash.......................................................... (9) (6) (29)
Cash at beginning of year..................................................... 19 25 54
-------- -------- --------
Cash at end of year........................................................... $ 10 $ 19 $ 25
-------- -------- --------
-------- -------- --------
Supplemental disclosure of cash flow information
Cash paid or received during the year for:
Interest............................................................ $ 12,068 $ 14,050 $ 18,349
-------- -------- --------
-------- -------- --------
Income taxes, net................................................... $ (970) $ 970 $ (1,711)
-------- -------- --------
-------- -------- --------
Supplemental schedule of non-cash investing and financing activities
Conversion of retains to preferred stock................................. $ 4,948 $ 5,934 $ 5,739
-------- -------- --------
-------- -------- --------
Net proceeds allocated to members but retained by the Cooperative........ $ 14,187 $ 4,819 $ 9,855
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE>
PRO-FAC COOPERATIVE, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' AND MEMBERS' CAPITALIZATION
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Retained earnings allocated to members:
Qualified retains:
Balance at beginning of period..................................... $ 29,446 $ 29,950 $ 24,128
Additional distribution of 1991 net proceeds....................... -- -- 2,795
Net proceeds allocated to members.................................. 12,437 4,209 6,760
Converted to preferred stock....................................... (4,948) (4,702) (3,719)
Cash paid in lieu of fractional shares............................. (11) (11) (14)
-------- -------- --------
Balance at end of period..................................................... 36,924 29,446 29,950
-------- -------- --------
Non-qualified retains:
Balance at beginning of period.......................................... 5,704 6,645 9,178
Distribution of 1987, 1986 and 1985 non-qualified retains:
Cash paid.......................................................... -- (319) (813)
Converted to preferred stock....................................... -- (1,232) (2,020)
Net proceeds allocated to members.................................. 1,750 610 300
-------- -------- --------
Balance at end of period..................................................... 7,454 5,704 6,645
-------- -------- --------
Total retains allocated to members at end of period.......................... 44,378 35,150 36,595
-------- -------- --------
Preferred stock:
Balance at beginning of period.......................................... 59,470 53,701 47,962
Converted from earnings retained for preferred stock.................... 4,948 4,702 3,719
Conversion of 1987, 1986 and 1985 non-qualified retains................. -- 1,232 2,020
Repurchased and canceled................................................ -- (165) --
-------- -------- --------
Balance at end of period..................................................... 64,418 59,470 53,701
-------- -------- --------
Common stock:
Balance at beginning of period.......................................... 13,455 13,097 12,009
Repurchased, net of issued.............................................. (3,171) 358 1,088
-------- -------- --------
Balance at end of period..................................................... 10,284 13,455 13,097
-------- -------- --------
Earned surplus (unallocated and apportioned):
Balance at beginning of period.......................................... 1,829 29,746 33,318
Additional distribution of 1991 net proceeds............................ -- -- (3,727)
Net proceeds arising from after tax undistributed income/(loss)......... 2,856 (27,917) 155
-------- -------- --------
Balance at end of period..................................................... 4,685 1,829 29,746
-------- -------- --------
Total shareholders' and members' capitalization.................... $123,765 $109,904 $133,139
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-40
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles including the following major
accounting policies:
Fiscal Year -- Fiscal 1994 ended on June 25, 1994, and fiscal 1993
ended on June 26, 1993, the last Saturday in June. All future fiscal years
will end on the last Saturday in June. The fiscal year ended on the last
Friday in June in fiscal 1992. The years ended June 25, 1994, June 26,
1993, and June 26, 1992 each comprised 52 weeks.
Leases -- The Cooperative leases its property, plant, equipment and
intangibles to Curtice-Burns Foods, Inc. ('Curtice-Burns') under an
agreement described in Note 2. Such leases are recorded under the financing
method of accounting. See further discussion in Note 4.
Investment in Springfield Bank for Cooperatives ('Springfield' or 'the
Bank') -- The Cooperative's investment in Springfield is comprised of
revolving securities which are presently being redeemed by the Bank on the
basis of a six-year cycle. These securities are not physically issued by
the Bank, but the Cooperative is notified as to their monetary value. The
investment is carried on the Cooperative's books at cost (the cash
purchases of securities each year in an amount equal to a percentage of the
annual interest paid by the Cooperative on its borrowings from the Bank)
plus the Cooperative's share of the undistributed earnings of the Bank
(that portion of patronage refunds not distributed currently in cash).
The current portion of the investment represents securities which are
expected to be redeemed by the Bank during the subsequent fiscal year.
Income Taxes -- In February 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 109,
'Accounting for Income Taxes,' ('SFAS 109') with retro-active adoption
permitted. The Cooperative has adopted the provisions of this standard as
of June 29, 1991. Deferred income taxes arise from the issuance of
non-qualified retains (see Note 5). Income taxes are recorded under the
liability method specified by SFAS 109 in 1992, 1993 and 1994.
Finance receivable relating to goodwill and other intangibles -- Under
the provisions of the Agreement with Curtice-Burns, the Cooperative has
provided financing for a portion of the goodwill and other intangible
assets which represent the excess of the fair value of net tangible assets
acquired in purchase transactions. The decrease in the receivable related
to intangibles in fiscal 1993 is attributable to the restructuring efforts
initiated by Curtice-Burns (see Note 8).
Reclassification -- Certain items for fiscal 1993 and 1992 have been
reclassified to conform with 1994 presentations.
Earnings Per Share Data Omitted -- Net income or net proceeds per
share amounts are not presented because earnings are not distributed to
members in proportion to their common stock holdings. For example,
patronage related earnings (representing those earnings derived from
patronage-sourced business) are distributed to members in proportion to the
dollar value of deliveries under Pro-Fac contracts rather than based on the
number of shares of common stock held.
NOTE 2. AGREEMENT WITH CURTICE-BURNS FOODS, INC.
Pro-Fac has a contractual relationship with Curtice-Burns under an
Agreement ('the Agreement') consisting of five sections: Operations Financing,
Marketing, Facilities Financing, Management, and Settlement, which extends to
1997 and provides for two successive five-year renewals at the option of
Curtice-Burns.
The provisions of the Agreement include the financing of certain assets
utilized in the business of Curtice-Burns and provide a sharing of income and
losses between Curtice-Burns and Pro-Fac. Should
F-41
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Curtice-Burns terminate the Agreement, Curtice-Burns has the option of
purchasing those assets financed by Pro-Fac at the book value at that time.
Revenues received from Curtice-Burns under the Agreement for the years
ended June 25, 1994, June 26, 1993, and June 26, 1992, include: commercial
market value of crops delivered, $59,216,000, $59,800,000, and $64,152,000,
respectively; interest income, $15,617,000, $16,515,000, and $19,869,000,
respectively; and additional proceeds from profit sharing provisions,
$18,599,000 gain, $21,800,000 loss, and $9,505,000 gain, respectively. In
addition, Pro-Fac received financing amortization payments of $43,830,000,
$53,826,000, and $26,232,000 for the years ended June 25, 1994, June 26, 1993,
and June 26, 1992, respectively.
In March 1994, Curtice-Burns advised Pro-Fac that in view of the
possibility that Curtice-Burns might be acquired by a third party, Pro-Fac
should not rely on Curtice-Burns to purchase any crops from Pro-Fac or its
growers in calendar 1995 and beyond. In addition, Curtice-Burns notified Pro-Fac
that Curtice-Burns will not commit to purchase a substantial portion of the
crops historically purchased from Pro-Fac in the 1995 growing season. As a
result, Pro-Fac has given notice to its affected members terminating Pro-Fac's
obligation to purchase these crops beginning next year. The affected Pro-Fac
growers are principally Pro-Fac's New York fruit and vegetable growers, Illinois
and Nebraska popcorn growers, and Northwest potato growers who represent more
than half of Pro-Fac's membership and have accounted for approximately $29.9
million or 50% of the total crops delivered by Pro-Fac to Curtice-Burns in the
past year. In the arbitration proceedings currently pending between
Curtice-Burns and Pro-Fac, Pro-Fac has asserted, among other matters, that
Curtice-Burns is in default under the Integrated Agreement for improper
termination of crops and has claimed damages that Pro-Fac estimates at more than
$50.0 million. Curtice-Burns believes that its only obligation to purchase crops
from Pro-Fac is as set forth in the Profit Plan as approved each year by the
Boards of Directors of both Pro-Fac and Curtice-Burns. Because the most recent
approved Profit Plan was for fiscal year 1995 (which Plan corresponds to the
1994 calendar year crops), Curtice-Burns believes that it is not currently
obligated to purchase any crops from Pro-Fac for calendar year 1995 or later.
Management believes these matters will be resolved in conjunction with the
Merger Agreement described above.
POTENTIAL CHANGE OF CONTROL OF CURTICE-BURNS
On March 23, 1993, the Curtice-Burns announced that Agway Inc., which owns
99% of Curtice-Burns' Class B shares and approximately 14% of Class A shares,
was considering the potential sale of its interest in Curtice-Burns. At its
meeting held on August 9 and 10, 1993, the Curtice-Burns Board of Directors
authorized Curtice-Burns' management, with the advice of its investment bankers,
to pursue strategic alternatives for Curtice-Burns. These options included
negotiations with Pro-Fac relative to Pro-Fac gaining control of the business;
the possible sale of the entire equity of Curtice-Burns to a third party; and
the implementation of additional restructuring actions that may include
recapitalizing Curtice-Burns to buy out Pro-Fac. Under the Agreement with
Pro-Fac, title to substantially all of Curtice-Burns' fixed assets is held by
Pro-Fac, and Pro-Fac provides the major portion of the financing of
Curtice-Burns' operations. Under the Agreement Curtice-Burns has an option to
purchase these assets from Pro-Fac at their book value. However, there presently
exists a disagreement with Pro-Fac as to how such settlement amount would be
calculated. Exercise of the option would result in the termination of the
Agreement with Pro-Fac. In such event, Curtice-Burns would be required to repay
all debt owed to Pro-Fac.
On June 8, 1994, the Curtice-Burns Board of Directors voted to pursue an
offer from Dean Foods Company for a maximum of $20.00 per share which was
contingent upon Curtice-Burns buying Pro-Fac's assets at book value and upon the
sale of the Nalley's Fine Foods Division and the Nalley's Canada, Ltd.
subsidiary, both excluding the chips and snack businesses, to Hormel Foods
Corporation.
On September 27, 1994, Pro-Fac and Curtice-Burns entered into a Merger
Agreement pursuant to which Pro-Fac will purchase all of the shares of Class A
common stock and Class B common stock of
F-42
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Curtice-Burns for $19.00 per share, or approximately $167.0 million in the
aggregate. Pro-Fac will immediately commence a tender offer for all of the
shares to be followed, if successful, by a merger of a subsidiary of Pro-Fac
into Curtice-Burns. Pro-Fac has advised Curtice-Burns that it expects to
complete its tender offer on or about November 1, 1994.
In connection with the proposed purchase of Curtice-Burns, Pro-Fac has
obtained the commitment of the Springfield Bank to provide up to $200.0 million
in long-term financing and up to $86 million in seasonal financing. In addition,
Pro-Fac intends to issue up to $160.0 million principal amount of senior
subordinated debt privately placed through Dillon, Read & Co. Inc. Upon
completion of the merger transaction, Pro-Fac would have an equity investment of
$133.0 million in Curtice-Burns, most of which was existing financing to
Curtice-Burns under the Integrated Agreement.
During fiscal 1994, Curtice-Burns expensed $3.5 million of legal,
accounting and other expenses relative to the change in control issue and
allocated half of those expenses to Pro-Fac. Pro-Fac has disputed this
allocation and the financial statements do not reflect the charge as management
believes it should not be included as a component of the fiscal 1994 earnings
split. Resolution of this dispute is anticipated in conjunction with the Merger
Agreement described above.
NOTE 3. DEBT
SHORT-TERM DEBT
Short-term borrowings are made by the Cooperative under a seasonal line of
credit with Springfield which currently provides for borrowings up to
$46,000,000. Outstanding borrowings at June 25, 1994 amounted to $11,500,000 at
5.5%. The maximum amount of short-term borrowings outstanding during the 52-week
period ended June 25, 1994 was $46,000,000. The approximate average aggregate
short-term borrowings were: fiscal 1994 -- $30,464,000, fiscal
1993 -- $39,444,000, fiscal 1992 -- $47,764,000 The approximate daily weighted
average interest rates were: fiscal 1994 -- 4.6%, fiscal 1993 -- 4.6% and fiscal
1992 -- 6.2%.
The Cooperative's short-term borrowings are loaned to Curtice-Burns under
the same conditions and at the same rates as the Cooperative obtained from its
lenders. Provisions of the Agreement between the two companies do however, allow
Pro-Fac, with sufficient notice to Curtice-Burns, to accelerate the repayment of
outstanding debt.
LONG-TERM DEBT
The Cooperative's long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 25, JUNE 26,
1994 1993
------------ ------------
<S> <C> <C>
Term loans due Springfield:
Interest rate of 6.7% and 6.2% at June 25, 1994 and June 26, 1993,
respectively.................................................... $141,014,000 $184,000,000
Other debt............................................................. 120,000 --
------------ ------------
141,134,000 184,000,000
Less current portion.............................................. 14,000,000 16,000,000
------------ ------------
$127,134,000 $168,000,000
------------ ------------
------------ ------------
</TABLE>
The term loans due Springfield are payable as follows: $14.0 million
annually fiscal 1995 through fiscal 2002; $12.0 million in fiscal 2003; $10.0
million in fiscal 2004 and $7.0 million in fiscal 2005. The term loans are
collateralized by fixed assets and the Cooperative's investment in Springfield
(see Note 1). In addition, Curtice-Burns guarantees all of the Cooperative's
bank debt and the Cooperative guarantees Curtice-Burns' short-term notes payable
to commercial banks and certain other debt. The total lines of credit available
to the companies for seasonal borrowings expire annually unless extended or
renewed. Curtice-Burns had no short-term notes payable to commercial banks at
June 25, 1994,
F-43
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 26, 1993 or June 26, 1992. Other Curtice-Burns debt which Pro-Fac
guarantees amounted to $106,000 at June 25, 1994 and $6,294,000 at June 26,
1993.
Pro-Fac's other debt of $120,000 is payable in nine installments from
fiscal 1996 to fiscal 2005. The rate on this debt is 4%.
Based on an estimated borrowing rate at 1994 fiscal year end of 8.0% for
long-term debt with similar terms and maturities, the fair value of the
Cooperative's long-term debt outstanding is approximately $136,779,000 at June
25, 1994.
ADDITIONAL INFORMATION WITH RESPECT TO BORROWING ARRANGEMENTS
Because Pro-Fac's income is largely determined by the income of
Curtice-Burns and because Pro-Fac guarantees the debt of Curtice-Burns and
Curtice-Burns guarantees the debt of Pro-Fac (substantially all of which is
advanced to Curtice-Burns), management and lenders use combined pro forma
financial statements to assess the financial strength of the two companies.
Specifically, the combined statement of operations, balance sheet and statement
of cash flows portray the financial results, cash flows and equity of
Curtice-Burns and Pro-Fac. Management believes that combined financial
statements are useful because they provide information concerning Pro-Fac's
ability to continue present credit arrangements and/or obtain additional
borrowings in the future.
Certain borrowing agreements require that the companies maintain specified
levels with regard to working capital, tangible net worth, fixed charges and the
incurrence of additional debt. The Cooperative is in compliance with, or has
obtained waivers for, restrictions and requirements under the terms of the
borrowing agreements.
Such financial statements are neither necessary for a fair presentation of
the financial position of Pro-Fac nor appropriate as primary statements for
Curtice-Burns' shareholders or for Pro-Fac shareholders and members because they
combine earnings, assets and liabilities and cash flows which are legally
attributable to either Curtice-Burns' shareholders or to Pro-Fac shareholders
and members, but not to both. Accordingly, the condensed pro forma financial
statements presented below are special purpose in nature and should be used only
within the context described.
F-44
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
JUNE 25, 1994 JUNE 26, 1993
----------------------------------------------- -------------
CURTICE-
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales and revenues..................................... $829.1 $94.4 $(94.4) $829.1 $ 878.6
Cost of sales.......................................... 592.6 58.2 (58.2) 592.6 632.7
Restructuring, including net (gain) loss from division
disposals............................................ (7.8) -- -- (7.8) 61.0
Change in control costs................................ 3.5 -- -- 3.5 --
Other selling, administrative and general expenses..... 187.0 0.9 (2.0) 185.9 205.5
Interest expense....................................... 18.2 11.6 (15.6) 14.2 16.8
Pro-Fac share of earnings.............................. 16.8 -- (16.8) -- --
-------- ------- ------------ -------- -------------
Total cost and expenses........................... 810.3 70.7 (92.6) 788.4 916.0
-------- ------- ------------ -------- -------------
Income (loss) before taxes............................. 18.8 23.7 (1.8)(A) 40.7 (37.4)
(Provision) benefit for taxes.......................... (8.7) 0.8 -- (7.9) (3.9)
-------- ------- ------------ -------- -------------
Net income (loss)...................................... $ 10.1 $24.5 $ (1.8)(A) $ 32.8 $ (41.3)
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
</TABLE>
- ------------
(A) Amounts represent the balance of the fiscal 1994 share of earnings between
Curtice-Burns and Pro-Fac which is currently under dispute. See discussion
at Note 2.
------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of operations.
F-45
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
JUNE 25, 1994 JUNE 26, 1993
----------------------------------------------- -------------
CURTICE-
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets(A)(C)................................... $247.5 $ 46.7 $ (42.9) $251.3 $ 268.9
Property, plant and equipment, net(B).................. 167.5 -- -- 167.5 192.5
Investment in direct financing leases(C)............... -- 123.7 (123.7) -- --
Due from Curtice-Burns(D).............................. -- 78.0 (78.0) -- --
Goodwill and other intangibles......................... 24.9 24.9 -- 49.8 53.1
Other assets........................................... 7.0 22.7 -- 29.7 26.9
-------- ------- ------------ -------- -------------
Total assets................................. $446.9 $296.0 $ (244.6) $498.3 $ 541.4
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
LIABILITIES AND NET WORTH
Current liabilities(A)(C).............................. $143.4 $ 44.6 $ (41.1) $146.9 $ 166.8
Lease obligations(C)................................... 125.0 -- (123.7) 1.3 1.8
Long-term debt --
Due Pro-Fac(D).................................... 78.0 -- (78.0) -- --
Due others(E)..................................... 1.1 127.1 128.2 174.4
Other liabilities...................................... 18.5 0.5 -- 19.0 12.8
-------- ------- ------------ -------- -------------
Total liabilities...................................... 366.0 172.2 (242.8) 295.4 355.8
Shareholders' equity and members' capitalization(E).... 80.9 123.8 (1.8)(F) 202.9 185.6
-------- ------- ------------ -------- -------------
Total liabilities and net worth.............. $446.9 $296.0 $ (244.6) $498.3 $ 541.4
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
</TABLE>
- ------------
Notes to combined balance sheet:
(A) Current assets of Pro-Fac consist principally of amounts due from
Curtice-Burns with respect to the Agreement described in Note 2. Such
amounts are eliminated for purposes of this balance sheet.
(B) Property, plant and equipment owned by Pro-Fac (with net book value $141.3
million at June 25, 1994) is leased to Curtice-Burns on a financing basis.
Such leased assets are reclassified as property, plant and equipment for
purposes of this balance sheet.
(C) The majority of Curtice-Burns' lease obligations are payable to Pro-Fac and
amount to $141.3 million at June 25, 1994, of which $17.6 million is
payable currently. The related Curtice-Burns liability and Pro-Fac
receivable are eliminated for purposes of this balance sheet.
(D) Long-term borrowings by Curtice-Burns from Pro-Fac under the Agreement are
eliminated for purposes of this balance sheet.
(E) Shareholders' equity of Curtice-Burns consists of Class A common stock,
$6.6 million; Class B common stock, $2.0 million; additional paid-in
capital, $14.2 million; and retained earnings, $58.1 million.
(F) Amount represents the balance of the fiscal 1994 share of earnings between
Curtice-Burns and Pro-Fac which is currently under dispute. See discussion
at Note 2.
F-46
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
JUNE 25, 1994 JUNE 26, 1993
----------------------------------------------- -------------
CURTICE-
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities............ $ 21.8 $ 18.0 $ (0.9) $ 38.9 $ 42.2
Net cash provided by (used in) investing
activities......................................... 33.9 32.9 (44.4) 22.4(A) (17.1)
Net cash (used in) provided by financing
activities......................................... (59.4) (50.9 ) 45.3 (65.0) (24.7)
-------- ------- ------------ -------- -------------
Net change in cash................................... (3.7) -- -- (3.7) 0.4
Cash at beginning of year............................ 6.5 -- -- 6.5 6.1
Cash at end of year.................................. $ 2.8 $ -- $-- $ 2.8 $ 6.5
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest (net of amount capitalized)............ $ 18.6 $ 12.1 $(15.6) $ 15.1 $ 17.3
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
Income taxes, net............................... $ 15.0 $ (1.0 ) $-- $ 14.0 $ 2.9
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Capital lease obligations incurred.............. $ 10.7 $ -- $(10.0) $ 0.7 $ 3.0
-------- ------- ------------ -------- -------------
-------- ------- ------------ -------- -------------
Conversion of retains into preferred stock...... $ 4.9 $ 4.9 $ 5.9
------- -------- -------------
------- -------- -------------
Net proceeds allocated to members but retained by the
Cooperative........................................ $ 14.2 $ 14.2 $ 4.8
------- -------- -------------
------- -------- -------------
</TABLE>
- ------------
(A) Amount represents the balance of the fiscal 1994 share of earnings between
Curtice-Burns and Pro-Fac which is currently under dispute. See discussion
at Note 2.
-------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of cash flows.
NOTE 4. LEASES
At June 25, 1994 and June 26, 1993 Pro-Fac had investments in financing
leases of $141,322,000 and $173,513,000, respectively, of which $17,645,000 and
$21,184,000, were due currently.
Minimum rent payments to be received during each of the next five fiscal
years are as follows: 1995-$17,645,000; 1996-$15,829,000; 1997-$14,590,000;
1998-$13,276,000; and 1999-$11,963,000. The minimum rent payments do not include
executory costs, since such costs are paid directly by Curtice-Burns and they do
not include interest, since interest amounts are determined and billed to
Curtice-Burns based upon Pro-Fac's borrowing costs required to finance the
leased assets.
NOTE 5. TAXES ON INCOME
In December 1991, the national office of the Internal Revenue Service
issued a technical advice memorandum ('TAM') concluding that virtually all of
Pro-Fac's income arises from patronage sources. As a result of the TAM, in
January 1992 an additional distribution of patronage proceeds for fiscal 1991
was made to members in the amount of $3,727,000. Patronage proceeds available
for distribution are
F-47
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
determined by the Board of Directors each year, as stipulated in the Bylaws. As
the longer term effects of the TAM are further researched and analyzed, it is
possible that the Board may calculate future patronage proceeds available for
distribution utilizing a different formula than that used for 1992 and 1993.
A summary of taxable income (loss) and the related (benefit) provision for
income taxes for fiscal 1994, 1993 and 1992 follows.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Taxable income (loss):
Excess (deficiency) of revenues before taxes, dividends and allocation of
net proceeds........................................................... $ 23,698 $(17,498) $ 12,754
Less patronage income to be allocated to members for current period...... (15,546) (5,261) (13,040)
Less cash dividends paid on capital stock................................ (4,390) (4,548) --
Less utilization of net operating loss carryforwards..................... (3,857) -- --
Additional fiscal 1991 distribution...................................... -- -- 3,727
Difference between book and tax methodologies............................ 95 52 996
-------- -------- --------
Taxable income (loss) to the Cooperative............................ $ 0 $(27,255) $ 4,437
-------- -------- --------
-------- -------- --------
Provision (benefit) for income taxes:
Federal:
Current............................................................. $ 267 $ 207 $ (1,560)
Deferred............................................................ (613) (207) 307
-------- -------- --------
(346) -- (1,253)
State............................................................... (498) -- 102
-------- -------- --------
$ (844) $ -- $ (1,151)
-------- -------- --------
-------- -------- --------
Effective tax rate (percent):
Federal.................................................................. 34.0% (34.0)% 34.0%
Loss for which no benefit was recorded................................... -- 34.0 --
Utilization of net operating loss carryforward........................... (34.0) -- --
State (net of federal tax benefit)....................................... 0.4 -- 1.6
Other.................................................................... (4.0) -- 0.7
-------- -------- --------
Sub-total...................................................... (3.6) -- 36.3
Tax benefits resulting from the IRS Technical Advice Memorandum............... -- -- (62.3)
-------- -------- --------
Total..................................................... (3.6)% --% (26.0)%
-------- -------- --------
-------- -------- --------
</TABLE>
In August of 1993, the Internal Revenue Service issued a determination
letter which concluded that the Cooperative is exempt from federal income tax to
the extent provided by Section 521 of the Internal Revenue Code, 'Exemption of
Farmers' Cooperatives from Tax.' Unlike a non-exempt cooperative, a tax-exempt
cooperative is entitled to deduct cash dividends it pays on its capital stock in
computing its taxable income. This exempt status is retroactive to fiscal year
1986 and is anticipated to apply to future years as long as there is no
significant change in the way in which the Cooperative operates. In conjunction
with this ruling, the Cooperative has filed for tax refunds for fiscal years
1986 to 1990 in the amount of approximately $5.8 million and interest payments
of approximately $3.4 million. In addition, it is anticipated that the
Cooperative will file for tax refunds for fiscal years 1991 and 1992 in the
amount of approximately $3.1 million and interest payments of approximately $0.4
million. No such refund amounts have been reflected in the Cooperative's
financial statements as of June 25, 1994. It is anticipated that the refund
amounts will be recognized upon receipt.
F-48
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A benefit has not been recorded for the net operating loss carryforward
resulting from 1993 operations due to the uncertainties surrounding utilization
in future years.
Deferred tax assets have been established for the future tax benefit of the
redemption on non-qualified retains.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' ('SFAS
109') and the Cooperative has adopted the provisions of this standard as of June
29, 1991. There was no effect on the 1992 provision for income taxes for this
accounting change as the Cooperative was previously accounting for income taxes
in accordance with SFAS 96.
NOTE 6. CAPITALIZATION
Preferred Stock -- Preferred stock originates from the conversion at par
value of retains. Preferred stock is non-voting, except that the holders of
preferred and common stock would be entitled to vote as separate classes on
certain matters which would affect or subordinate the rights of the class. The
preferred stock is segregated by the original year of issue in the records of
the Cooperative.
The Cooperative is entitled to redeem or retire all or any portion of its
outstanding preferred stock, at par value, upon 90 days notice.
Common Stock -- The common stock purchased by members is related to the
crop delivery of each member. Regardless of the number of shares held, each
member has one vote.
Common stock may be transferred to another grower only with approval of the
Pro-Fac Board of Directors. If a member ceases to be a producer of agricultural
products which he markets through the Cooperative, then he must sell his common
stock to another grower acceptable to the Cooperative. If no such grower is
available to purchase the stock, then the member must provide one year's advance
written notice of his intent to withdraw, after which the Cooperative must
purchase his common stock at par value. (See Note 7 for common stock dividend
information.)
Due to the uncertainty surrounding the potential change of control of
Curtice-Burns and its implications to the Integrated Agreement, the Board of
Directors, during 1994, approved a moratorium on all transactions involving
common stock and waived the restriction on the utilization of agent farmers to
satisfy supply commitments. As a Merger Agreement between the Cooperative and
Curtice-Burns was entered into on September 27, 1994, it is anticipated that the
Board of Directors will re-evaluate the above described restrictions.
At June 25, 1994 and June 26, 1993, there were outstanding subscriptions,
at par value, for 9,270 and 24,788 shares of common stock, respectively. These
shares are issued as subscription payments are received.
Retained Earnings Allocated to Members ('Retains') -- Retains arise from
patronage income and are allocated to the accounts of members within 8.5 months
of the end of each fiscal year.
Qualified Retains -- Qualified retains are freely transferable and normally
mature into preferred stock in December of the fifth year after allocation.
Qualified retains are taxable income to the member in the year the allocation is
made.
Non-Qualified Retains -- Non-qualified retains may not be sold or
purchased. The present intention of the Board of Directors is that the
non-qualified retains allocation be redeemed in five years through partial
payment in cash and issuance of preferred stock. The non-qualified retains will
not be taxable to the member until the year of conversion. Non-qualified retains
may be subject to later adjustment if such is deemed necessary by the Board of
Directors because of events which may occur after the retains were allocated.
F-49
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Earned Surplus (Unallocated and Apportioned) -- Earned surplus consists of
accumulated income after distribution of earnings allocated to members,
dividends and after state and federal income taxes. Earned surplus is reinvested
in the business in the same fashion as retains. (See Note 5.)
Stabilization Program -- Each year a portion of the earnings is available
for the commercial market value stabilization program. The amount designated for
the program is determined at the discretion of the Board of Directors based upon
the amount needed to accumulate the maximum authorized, which is 15% of the
previous year's commercial market value of crops delivered. In a year when
revenues are insufficient to pay 100% of commercial market value, the
stabilization program, with Board approval, will provide for extra payments to
be made up to the amount previously designated for the program. The amount
designated to the program was $8,970,000 at June 25, 1994.
Market for Pro-Fac Securities -- There is no established market for trading
Pro-Fac common stock. All trades have been arranged on a private basis between
buyers and sellers.
Transfers of preferred stock and qualified retained earnings can be
arranged on a regular basis through the Buffalo offices of First Albany
Corporation or Trubee, Collins and Company, registered securities broker
dealers. Transfers of preferred stock can also be arranged on a regular basis
through the Erie, Pennsylvania office of Advest, registered securities broker
dealer. There can be no assurance this market will have the necessary volume of
transactions to continue in the future.
NOTE 7. DIVIDENDS ON CAPITAL STOCK
Dividends on preferred and common stock are declared at the discretion of
the Board of Directors and are paid out of legally available funds. Preferred
shareholders are entitled to a dividend of up to 12% of the par value of the
stock if declared by the Board. Pursuant to New York State laws, applicable to
agricultural cooperatives, dividends have been declared and paid subsequent to
the fiscal year to which they relate. In fiscal 1994 and 1993, dividends on
preferred stock were paid at a rate of 6.25 and 7.25%, respectively, of the par
value and dividends on common stock were paid at a rate of 5% of the par value.
Subsequent to June 25, 1994, the Cooperative declared a cash dividend of
6.75% of the par value of preferred stock and 5.5% of the par value of the
common stock, payable on July 15, 1994. These dividends amounted to $4,914,000
and will appear in the fiscal 1995 Statement of Net Proceeds.
NOTE 8. RESTRUCTURING PROGRAM
THE CONCEPTUAL VISION AND STRATEGY
The restructuring program first initiated in fiscal 1993 was based on
Curtice-Burns' new vision of a company smaller in sales but more profitable, as
measured by return on sales and equity, and possessing the financial and
management resources sufficient to drive growth in carefully selected product
line markets in which Curtice-Burns can prosper for the long term. Thus, the
strategy was to focus on a more limited number of product lines which now have a
strong, competitive position.
The Plan outlined in 1993 is to restructure the business to a more
profitable base. At the same time, the remaining businesses were to be managed
to optimize earnings growth by installing corporate-wide purchasing, and a
corporate-wide focus of capital spending.
The third leg of the strategy was to accelerate Curtice-Burns' national
sales and distribution programs by executing new product programs in store-brand
retail dressings, salsa and chunky soups and the 'More Fruit/More Flavor' pie
filling program.
F-50
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
EXECUTION OF THE PROGRAM
The first step of the restructuring program was to divest businesses that
were unprofitable or declining for Curtice-Burns but would fit strategically
with other business portfolios. During fiscal 1993, Curtice-Burns divested Lucca
Frozen Foods. A loss of approximately $2.7 million (before dividing with Pro-Fac
and before taxes) was recognized on this transaction. At the end of fiscal 1993,
Curtice-Burns wrote down the assets and provided for the expenses to dispose of
the Hiland potato chips and meat snacks businesses during fiscal 1994. On
November 22, 1993, Curtice-Burns sold certain assets of the Hiland potato chips
business for $2.0 million at closing, plus approximately $1.0 million paid in
installments over three months. On February 22, 1994, Curtice-Burns sold the
meat snacks business located in Denver, Colorado and Albany, Oregon to Oberto
Sausage Company of Kent, Washington. Under the agreement, Oberto has purchased
certain assets and assumed certain liabilities of the meat snacks operation,
excluding plant, equipment, and trademarks. Curtice-Burns will lease its Albany
Oregon manufacturing facility and equipment and license its trademarks, trade
names, etc. to Oberto until February 1995, at which time Oberto is contractually
obligated to purchase these assets. The sale of the Hiland potato chips and meat
snacks businesses did not result in any significant gain or loss in fiscal 1994
after giving effect to the restructuring charges recorded in fiscal 1993;
however, charges of $3.1 million were incurred in fiscal 1994 to adjust previous
estimates. In the fiscal year ended June 26, 1993, Curtice-Burns incurred losses
of $13.2 million from the meat snacks and Hiland potato chips businesses before
dividing such losses with Pro-Fac and before taxes.
On November 19, 1993, Curtice-Burns sold the oats portion of the National
Oats business for $39 million. The oats business contributed approximately $1.4
million of earnings in fiscal 1993 before dividing with Pro-Fac and before
taxes. The sale of the oats business resulted in an approximate $10.9 million
gain. The popcorn portion of the National Oats Division was transferred to the
Comstock Michigan Fruit Division.
During fiscal 1993 and 1994, Curtice-Burns also made staff reductions in
selected locations throughout Curtice-Burns. A $1.0 million accrual relating to
such costs was recorded as part of the fiscal 1993 restructuring charge.
Thus, a major part of the restructuring plan was successfully executed
during fiscal 1994.
As reported above, Curtice-Burns incurred restructuring charges in fiscal
1993 of $61.0 million (before dividing such charges with Pro-Fac and before
taxes), which included the loss incurred on the sale of the Lucca frozen entree
business, anticipated losses on the sale of the meat snacks and Hiland potato
chips businesses, and other costs (primarily severance and losses prior to sale)
in conjunction with the restructuring program. Virtually all of this charge was
a revaluation of assets, rather than cash expense.
Having completed the first phase of the restructuring program in fiscal
1993, the second phase was approved by Curtice-Burns' Board of Directors in
August 1994. In connection with the second phase, the company is evaluating
several alternatives regarding the Nalley's snack food business in the United
States, including its possible sale to a third party. A charge, not to exceed
$12.0 million, before the split with Pro-Fac and before taxes, for this phase of
the restructuring program will be recorded during the first quarter of fiscal
1995.
With respect to the potential sale of the snack food business,
Curtice-Burns has signed a letter of intent with Country Crisp Foods of Salt
Lake City, Utah. The letter of intent is subject to a number of conditions,
including successful financing by the purchaser and the negotiation of a
definitive purchase agreement. Country Crisp, a regional snack food company
operating in the inter-mountain states of Colorado, Utah, Wyoming, Idaho, Nevada
and New Mexico, will continue to market the Nalley's brand snacks under a
licensing arrangement with Curtice-Burns. If this sale is finalized, it may
result in a revision to the aforementioned reserve.
F-51
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9. OTHER MATTERS
HARVEST STATES COOPERATIVE
In conjunction with the sale of the National Oats division by
Curtice-Burns, Pro-Fac terminated the membership of the Harvest States
Cooperatives ('Harvest States') in Pro-Fac. Harvest States was the National Oats
divisions's only supplier of oats. As a result of this action, Harvest States
filed a claim against Pro-Fac for, among other things, the receipt of payments
for future oats purchases after the sale of National Oats division through
fiscal year 1995.
Under an agreement with Curtice-Burns, Curtice-Burns agreed to indemnify
Pro-Fac as to certain expenses arising out of the termination of the membership
of Harvest States in Pro-Fac. It was agreed that any settlement payments would
be deemed an expense of Curtice-Burns under the division of earnings with
Pro-Fac. The exact amount of any potential settlement related to this issue
cannot be estimated at June 25, 1994, but management does not believe that this
is a material exposure to Curtice-Burns.
SUBSEQUENT EVENTS
In July 1994, a plant operated by Curtice-Burns's Southern Frozen Foods
division, located in Montezuma, Georgia, was damaged by fire. The plant itself
is owned by Pro-Fac and leased to Curtice-Burns under the terms of the
Integrated Agreement. Management is currently in the process of assessing the
extent of damage to the facility. All material costs associated with the
facility repairs and business interruption are anticipated to be covered under
Curtice-Burns's insurance policies. The Springfield Bank for Cooperatives is
loss payee on the property insurance policy under the terms of the Security
Agreement with lenders. See Note 5.
On September 27, 1994, Pro-Fac and Curtice-Burns entered into a Merger
Agreement pursuant to which Pro-Fac will purchase all of the shares of Class A
common stock and Class B common stock of Curtice-Burns for $19.00 per share, or
approximately $167.0 million in the aggregate. Pro-Fac will immediately commence
a tender offer for all of the shares to be followed, if successful, by a merger
of a subsidiary of Pro-Fac into Curtice-Burns. Pro-Fac has advised Curtice-Burns
that it expects to complete its tender offer on or about November 1, 1994.
NOTE 10. EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT
ACCOUNTANTS
On November 3, 1994, PF Acquisition Corp., a New York corporation and a
wholly owned subsidiary of Pro-Fac, consummated a merger with Curtice-Burns.
Curtice-Burns will continue as the surviving corporation and has, therefore,
become a wholly owned subsidiary of Pro-Fac. In conjunction with the
consummation of this merger, the disputes between Curtice-Burns and Pro-Fac as
described in Note 2 have been resolved.
F-52
<PAGE>
The interim financial statements contained herein are unaudited, but in the
opinion of the management of Pro-Fac Cooperative, Inc. include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations for these periods. The results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full year.
PRO-FAC COOPERATIVE, INC.
STATEMENT OF NET PROCEEDS
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------
SEPTEMBER 24, SEPTEMBER 25,
1994 1993
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Revenues:
Proceeds from sale of crops to Curtice-Burns Foods, Inc.
Estimated commercial market value delivered during the period............ $37,657 $42,327
Additional proceeds under the Integrated Agreement....................... 2,368 2,773
Interest income.......................................................... 4,247 4,124
Patronage dividend from Springfield Bank for Cooperatives................ 275 350
------------- -------------
Total revenues...................................................... 44,547 49,574
------------- -------------
Costs and expenses:
Estimated commercial market value paid to or accrued for the accounts of
members during the period.................................................... 37,657 42,327
Interest expense.............................................................. 2,939 3,168
Administrative expenses....................................................... 222 203
------------- -------------
Total costs and expenses............................................ 40,818 45,698
------------- -------------
Excess of revenues before taxes, dividends and allocation of net proceeds.......... 3,729 3,876
Provision for taxes on income...................................................... (25) (409)
------------- -------------
Net income (proceeds before dividends)............................................. 3,704 3,467
Dividends on common and preferred stock............................................ (4,914) (4,390)
------------- -------------
Net proceeds....................................................................... (1,210) (923)
Allocation from earned surplus..................................................... 1,210 923
------------- -------------
Net proceeds available to members.................................................. $-- $--
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-53
<PAGE>
PRO-FAC COOPERATIVE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 24, JUNE 25,
1994 1994
------------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash................................................................................. $ 113 $ 10
Accounts receivable.................................................................. 140 68
Receivable from Curtice-Burns Foods, Inc............................................. 51,929 11,197
Current portion of long-term loans receivable from Curtice-Burns Foods, Inc.......... 14,000 14,000
Current portion of investment in direct financing leases............................. 17,645 17,645
Current portion of investment in Springfield Bank for Cooperatives................... 1,308 1,324
Income taxes refundable..............................................................
Prepaid expenses..................................................................... 3,437 2,464
------------- --------
Total current assets............................................................ 88,572 46,708
Long-term portion of investment in direct financing leases............................... 113,083 123,677
Long-term loans receivable from Curtice-Burns Foods, Inc................................. 88,952 78,040
Long-term portion of investment in Springfield Bank for Cooperatives..................... 19,968 19,632
Deferred tax benefit..................................................................... 2,623 2,623
Finance receivable related to intangibles................................................ 24,486 24,909
Other assets............................................................................. 450 462
------------- --------
Total assets.................................................................... $ 338,134 $296,051
------------- --------
------------- --------
Liabilities and Shareholders' and Members Capitalization
Current liabilities:
Notes payable........................................................................ $ 50,000 $ 11,500
Accounts payable..................................................................... 2,288 617
Accrued interest..................................................................... 2,802 2,536
Federal and state income taxes payable............................................... 697 668
Current portion of long-term debt.................................................... 14,000 14,000
Amounts due members.................................................................. 18,762 15,327
------------- --------
Total current liabilities....................................................... 88,549 44,648
Long-term debt........................................................................... 126,925 127,134
Other non-current liabilities............................................................ 521 504
------------- --------
Total liabilities............................................................... 215,995 172,286
------------- --------
Commitments
Shareholders' and members' capitalization:
Retained earnings allocated to members............................................... 36,912 36,924
Non-qualified allocation to members.................................................. 5,979 7,454
Capital Stock --
Preferred, par value $25, authorized -- 5,000,000 shares; issued and
outstanding -- 2,378,807, 2,378,807 and 2,148,050, respectively............... 65,590 64,418
Common, par value $5, authorized -- 5,000,000 shares
<CAPTION>
SEPTEMBER 25,
1993
-------------
<S> <C>
Current assets:
Cash................................................................................. $ 16
Accounts receivable.................................................................. 25
Receivable from Curtice-Burns Foods, Inc............................................. 41,308
Current portion of long-term loans receivable from Curtice-Burns Foods, Inc.......... 16,000
Current portion of investment in direct financing leases............................. 21,184
Current portion of investment in Springfield Bank for Cooperatives................... 1,371
Income taxes refundable..............................................................
Prepaid expenses..................................................................... 1,154
-------------
Total current assets............................................................ 81,058
Long-term portion of investment in direct financing leases............................... 150,924
Long-term loans receivable from Curtice-Burns Foods, Inc................................. 80,848
Long-term portion of investment in Springfield Bank for Cooperatives..................... 17,183
Deferred tax benefit..................................................................... 2,010
Finance receivable related to intangibles................................................ 26,125
Other assets............................................................................. 257
-------------
Total assets.................................................................... $ 358,405
-------------
-------------
Liabilities and Shareholders' and Members Capitalization
Current liabilities:
Notes payable........................................................................ $ 42,000
Accounts payable..................................................................... 712
Accrued interest..................................................................... 3,049
Federal and state income taxes payable............................................... 342
Current portion of long-term debt.................................................... 16,000
Amounts due members.................................................................. 18,876
-------------
Total current liabilities....................................................... 80,979
Long-term debt........................................................................... 168,000
Other non-current liabilities............................................................ 431
-------------
Total liabilities............................................................... 249,410
-------------
Commitments
Shareholders' and members' capitalization:
Retained earnings allocated to members............................................... 29,435
Non-qualified allocation to members.................................................. 5,704
Capital Stock --
Preferred, par value $25, authorized -- 5,000,000 shares; issued and
outstanding -- 2,378,807, 2,378,807 and 2,148,050, respectively............... 59,470
Common, par value $5, authorized -- 5,000,000 shares
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 24, JUNE 25, SEPTEMBER 25,
1994 1994 1993
------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Shares issued................................ 2,036,655 2,056,878 2,695,885
Shares subscribed............................ 9,270 9,270 18,038
------------- --------- -------------
Total subscribed and issued.............. 2,045,925 2,066,148 2,713,923
Less subscriptions receivable in
installments............................... (9,270) (9,270) (18,038)
------------- --------- -------------
2,036,655 2,256,878 2,695,885 10,183 10,284
------------- --------- -------------
------------- --------- -------------
Earned surplus............................... 3,475 4,685
------------- --------
Total shareholders' and members'
capitalization........................ 122,139 123,765
------------- --------
Total liabilities and
capitalization.................... $ 338,134 $296,051
------------- --------
------------- --------
<CAPTION>
<S> <C>
Shares issued................................
Shares subscribed............................
Total subscribed and issued..............
Less subscriptions receivable in
installments...............................
13,479
Earned surplus............................... 907
-------------
Total shareholders' and members'
capitalization........................ 108,995
-------------
Total liabilities and
capitalization.................... $ 358,405
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-54
<PAGE>
PRO-FAC COOPERATIVE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------
SEPTEMBER 24, SEPTEMBER 25,
1994 1993
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................... $ 3,704 $ 3,467
Change in assets and liabilities:
Accounts receivable........................................................... (72) --
Accounts payable and accrued expenses......................................... 1,937 (277)
Amounts due to members........................................................ 3,435 4,351
Federal and state taxes payable/refundable.................................... 29 412
Other assets and liabilities.................................................. (944) (452)
------------- -------------
Net cash provided by operating activities..................................... 8,089 7,501
------------- -------------
Cash flows from investing activities:
Due from Curtice-Burns, net................................................... (51,644) (34,395)
Return from direct investment in financing leases............................. 10,594 1,405
Investment in Springfield Bank................................................ (320) (568)
Cash received from the finance receivable related to intangibles.............. 423 420
------------- -------------
Net cash used in investing activities......................................... (40,947) (33,138)
------------- -------------
Cash flows from financing activities:
Proceeds from short-term debt................................................. 38,500 30,000
Payments on long-term debt.................................................... (209) --
Repurchase of common stock, net of issuances.................................. (101) 24
Cash portion of non-qualified conversion...................................... (304) --
Cash paid in lieu of fractional shares........................................ (11) --
Cash dividends paid........................................................... (4,914) (4,390)
------------- -------------
Net cash provided by financing activities..................................... 32,961 25,634
------------- -------------
Net change in cash................................................................. 103 (3)
Cash at beginning of period........................................................ 10 19
------------- -------------
Cash at end of period.............................................................. $ 113 $ 16
------------- -------------
------------- -------------
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest................................................................. $ 2,677 $ 3,146
------------- -------------
------------- -------------
Income taxes, net........................................................ $ 54 $ (3)
------------- -------------
------------- -------------
Supplemental schedule of non-cash investing and financing activities:
Conversion of retains to preferred stock...................................... $ 1,172 $--
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-55
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. AGREEMENT WITH CURTICE-BURNS FOODS, INC.
Pro-Fac has a contractual relationship with Curtice-Burns under an
Agreement ('the Agreement') consisting of five sections: Operations Financing,
Marketing, Facilities Financing, Management and Settlement, which extends to
1997 and provides for two successive five-year renewals at the option of
Curtice-Burns.
The provisions of the Agreement include the financing of certain assets
utilized in the business of Curtice-Burns and provide a sharing of income and
losses between Curtice-Burns and Pro-Fac. Should Curtice-Burns terminate the
Agreement, Curtice-Burns has the option of purchasing those assets financed by
Pro-Fac at the book value at that time.
Revenues received from Curtice-Burns under the Agreement for the quarters
ended September 24, 1994 and September 25, 1993 include: commercial market value
of crops delivered, $37,675,000 and $42,327,000, respectively; interest income,
$4,247,000 and $4,124,000, respectively; and additional proceeds from profit
sharing provisions, $2,368,000 and $2,773,000, respectively. In addition,
Pro-Fac received financing amortization payments of $11,016,000 and $1,825,000
for the quarters ended September 24, 1994 and September 25, 1993, respectively.
See discussion below relative to disputed profit sharing.
DEVELOPMENTS RELATED TO CHANGE OF CONTROL OF CURTICE-BURNS
On March 23, 1993, Curtice-Burns announced that Agway, which through its
wholly-owned subsidiary, AHI, owned approximately 99% of Curtice-Burns' Class B
shares and approximately 14% of the Class A shares as of June 25, 1994, was
considering the potential sale of its interest in Curtice-Burns. In August 1993,
Curtice-Burns Board of Directors authorized Curtice-Burns management, with the
advice of its investment bankers, to pursue strategic alternatives for
Curtice-Burns. These options included (i) negotiations with Pro-Fac relative to
Pro-Fac gaining control of the business; (ii) the possible sale of the entire
equity of Curtice-Burns to a third party; and (iii) the implementation of
additional restructuring actions that my include recapitalizing Curtice-Burns to
buy out Pro-Fac. Under the Integrated Agreement, title to substantially all of
Curtice-Burns fixed assets is held by Pro-Fac, and Pro-Fac provides the major
portion of the financing of Curtice-Burns operations. Under the Integrated
Agreement, Curtice-Burns has an option to purchase these assets from Pro-Fac at
their book value. However, there presently exists a disagreement with Pro-Fac as
to how such settlement amount would be calculated. Exercise of the buyout option
would result in the termination of the Integrated Agreement with Pro-Fac. In
such event, Curtice-Burns would be required to repay all debt owed to Pro-Fac.
Curtice-Burns actively explored these alternatives during fiscal 1994. On
June 8, 1994, Curtice-Burns Board of Directors voted to pursue a proposal
submitted by Dean Foods Company ('Dean Foods') to acquire all the outstanding
shares of common stock of Curtice-Burns at a maximum cash price of $20.00 per
share, subject to a number of contingencies, including an agreement with Pro-Fac
covering the termination of the Integrated Agreement, an agreement with Hormel
Foods Corporation for the purchase of Nalley's (excluding Nalley's Canada Ltd.
and the Nalley' U.S. Chips and Snacks business) for $150.0 million, clearance of
the transaction by appropriate government agencies and negotiation of definitive
agreements.
On August 4, 1994, Pro-Fac submitted a proposal to the Board of Directors
of Curtice-Burns to acquire the shares for cash in the amount of $19.00 per
share. Pro-Fac's proposal was subject to certain terms and conditions, including
receipt of approval of the Board of Directors and shareholders of Curtice-Burns,
receipt of approval of a majority of Pro-Fac's members and receipt of sufficient
financing to consummate the acquisition. In September Pro-Fac modified its
proposal by removing several contingencies and indicating its interest in
purchasing the share pursuant to a tender offer.
F-56
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
At its special meeting on September 27, 1994, the Board of Directors of
Curtice-Burns accepted Pro-Fac's proposal. Pro-Fac and Curtice-Burns entered
into the Merger Agreement on September 27, 1994. Pursuant to the Merger
Agreement, Curtice-Burns notified Dean Foods that it had accepted Pro-Fac's
proposal and was terminating all negotiations with Dean Foods and other parties
for the purchase of all or part of Curtice-Burns. Management expects such merger
to finalized in the second quarter of fiscal 1995.
During fiscal 1994 and the first quarter of fiscal 1995, Curtice-Burns
expensed $3.5 million and $1.8 million, respectively, of legal, accounting,
investment banking and other expenses relative to the change of control issue.
In recognizing these expenses, Curtice-Burns allocated half of this amount to
Pro-Fac as a deduction to the profit split. Pro-Fac has objected to this
allocation. This dispute will terminate upon completion of the merger.
On October 4, 1994, Pro-Fac initiated a tender offer for all of
Curtice-Burns outstanding stock at $19.00 per share. At the expiration of the
tender offer on November 2, 1994, 6,229,442 shares of Class A and 2,046,997
shares of Class B common stock (or approximately 94% and 99%, respectively of
the total number of outstanding shares of Class A and Class B common stock of
Curtice-Burns) had been validly tendered and not withdrawn. All such tendered
shares were accepted for payment by PF Acquisition Corp., a wholly-owned
subsidiary of Pro-Fac. On November 3, 1994, PF Acquisition Corp. merged into
Curtice-Burns, making Curtice-Burns a wholly-owned subsidiary of Pro-Fac.
Roy A. Myers, who has served as the general manager of Pro-Fac since 1987,
has been named president and chief executive officer of Curtice-Burns, replacing
J. William Petty, who has resigned. Pro-Fac and Curtice-Burns will continue to
operate under two separate boards. The Pro-Fac Board of Directors will remain
unchanged, and a new Curtice-Burns Board, consisting of seven directors, has
been appointed.
Financing for the offer was obtained through $250.1 million of seasonal and
term senior bank financing from Springfield Bank for Cooperatives and from the
issuance of $160.0 million in senior subordinated debt securities issued to
qualified institutional buyers. The bonds will carry an annual interest rate of
12 1/4%. In addition, Pro-Fac contributed $134.6 million in capital to complete
the transaction.
NOTE 2. RESTRUCTURING PROGRAM
THE CONCEPTUAL VISION AND STRATEGY
The restructuring program first initiated in fiscal 1993 was based on
Curtice-Burns new vision of a company smaller in sales but more profitable, as
measured by return on sales and equity, and possessing the financial and
management resources sufficient to drive growth in carefully selected product
line markets in which Curtice-Burns can prosper for the long term. Thus, the
strategy was to focus on a more limited number of product lines which now have a
strong, competitive position.
The Plan outlined in 1993 is to restructure the business to a more
profitable base. At the same time, the remaining businesses were to be managed
to optimize earnings growth by installing corporate-wide purchasing, and a
corporate-wide focus of capital spending.
The third leg of the strategy was to accelerate Curtice-Burns national
sales and distribution programs by executing new product programs in store-brand
retail dressings, salsa and chunky soups, and the 'More Fruit/More Flavor' pie
filling program.
EXECUTION OF THE PROGRAM
The first step of the restructuring program was to divest businesses that
were unprofitable or declining for Curtice-Burns but would fit strategically
with other business portfolios. During fiscal 1993, Curtice-Burns divested Lucca
Frozen Foods. A loss of approximately $2.7 million (before dividing with
F-57
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Pro-Fac and before taxes) was recognized on this transaction. At the end of
fiscal 1993, Curtice-Burns wrote down the assets and provided for the expenses
to dispose of the Hiland potato chips and meat snacks businesses during fiscal
1994. On November 22, 1993, Curtice-Burns sold certain assets of the Hiland
Potato Chip business for $2.0 million at closing, plus approximately $1.0
million paid in installments over three months. On February 22, 1994,
Curtice-Burns sold the meat snacks business located in Denver, Colorado and
Albany, Oregon to Oberto Sausage Company of Kent, Washington. Under the
agreement, Oberto has purchased certain assets and assumed certain liabilities
of the meat snacks operation, excluding plant, equipment, and trademarks.
Curtice-Burns will lease its Albany Oregon manufacturing facility and equipment
and license its trademarks, trade names, etc. to Oberto until February 1995, at
which time Oberto is contractually obligated to purchase these assets. The sale
of the Hiland and meat snacks businesses did not result in any significant gain
or loss in fiscal 1994 after giving effect to the restructuring charges recorded
in fiscal 1993; however, charges of $3.1 million (before dividing with Pro-Fac
and before taxes) were incurred in fiscal 1994 to adjust previous estimates. In
the fiscal year ended June 26, 1993, Curtice-Burns incurred losses of $13.2
million from the meat snacks and Hiland potato chip businesses before dividing
such losses with Pro-Fac and before taxes.
On November 19, 1993, Curtice-Burns sold the oats portion of the National
Oats business for $39.0 million. The oats business contributed approximately
$1.4 million of earnings in fiscal 1993 before dividing with Pro-Fac and before
taxes. The sale of the oats business resulted in an approximate $10.9 million
gain (before dividing with Pro-Fac and before taxes). The popcorn portion of the
National Oats Division was transferred to the Comstock Michigan Fruit Division.
During fiscal 1993 and 1994, Curtice-Burns also made staff reductions in
selected locations throughout Curtice-Burns. A $1.0 million accrual relating to
such costs was recorded as part of the fiscal 1993 restructuring charge.
Thus, a major part of the restructuring plan was successfully executed
during fiscal 1994.
As reported above, Curtice-Burns incurred restructuring charges in fiscal
1993 of $61.0 million (before dividing such charges with Pro-Fac and before
taxes), which included the loss incurred on the sale of the Lucca frozen entree
business, anticipated losses on the sale of the meat snacks and Hiland
businesses, and other costs (primarily severance and unexpected losses prior to
sale) in conjunction with the restructuring program. Virtually all of this
charge was a revaluation of assets, rather than cash expense.
Having completed the first phase of the restructuring program in fiscal
1993, the second phase was approved by Curtice-Burns Board of Directors in
August 1994. In connection with the second phase, Curtice-Burns is evaluating
several alternatives regarding the Nalley's snack food business in the United
States, including its possible sale to a third party. A charge of $8.4 million
before split with Pro-Fac and before taxes, for this phase of the restructuring
program was recorded during the first quarter of fiscal 1995.
With respect to the potential sale of the snack food business,
Curtice-Burns has signed a letter of intent with Country Crisp Foods of Salt
Lake City, Utah. The letter of intent is subject to a number of conditions,
including successful financing by the purchaser and the negotiation of a
definitive purchase agreement. Country Crisp, a regional snack food company
operating in the inter-mountain states of Colorado, Utah, Wyoming, Idaho, Nevada
and New Mexico, will continue to market the Nalley's brand snacks under a
licensing arrangement with Curtice-Burns.
F-58
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3. DEBT
SHORT-TERM DEBT
Short-term borrowings are made by the Cooperative under a seasonal line of
credit with Springfield which currently provides for borrowings up to
$56,000,000. Outstanding borrowings at September 24, 1994 amounted to
$50,000,000.
The Cooperative's short-term borrowings are loaned to Curtice-Burns under
the same conditions and at the same rates as the Cooperative obtained from its
lenders. Provisions of the Agreement between the two companies do however, allow
Pro-Fac, with sufficient notice to Curtice-Burns, to accelerate the repayment of
outstanding debt.
LONG-TERM DEBT
The Cooperative's long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 25,
1994 1993
------------- -------------
<S> <C> <C>
Term loans due Springfield:
Interest rate of 6.8% and 6.3% at 9/24/94 and 9/25/93,
respectively.................................................... $ 140,805,000 $ 184,000,000
Other debt........................................................ 120,000 --
------------- -------------
140,925,000 184,000,000
Less current portion......................................... 14,000,000 16,000,000
------------- -------------
$ 126,925,000 $ 168,000,000
------------- -------------
------------- -------------
</TABLE>
The term loans are collateralized by virtually all the assets of
Curtice-Burns and Pro-Fac. In addition, Curtice-Burns guarantees all of the
Cooperative's bank debt and the Cooperative guarantees Curtice-Burns' short-term
notes payable to commercial banks and certain other debt. The total lines of
credit available to the companies for seasonal borrowings expire annually unless
extended or renewed. Curtice-Burns had short-term notes payable to commercial
banks at September 24, 1994 and September 25, 1993 of $40,000,000 and
$34,000,000, respectively.
ADDITIONAL INFORMATION WITH RESPECT TO BORROWING ARRANGEMENTS
Because Pro-Fac's income is largely determined by the income of
Curtice-Burns and because Pro-Fac guarantees the debt of Curtice-Burns and
Curtice-Burns guarantees the debt of Pro-Fac (substantially all of which is
advanced to Curtice-Burns), management and lenders use combined pro forma
financial statements to assess the financial strength of the two companies.
Specifically, the combined statement of operations, balance sheet and statement
of cash flows portray the financial results, cash flows and equity of
Curtice-Burns and Pro-Fac. Management believes that combined financial
statements are useful because they provide information concerning Pro-Fac's
ability to continue present credit arrangements and/or obtain additional
borrowings in the future.
Certain borrowing agreements require that the companies maintain specified
levels with regard to working capital, tangible net worth, fixed charges and the
incurrence of additional debt. The Cooperative is in compliance with, or has
obtained waivers for, restrictions and requirements under the terms of the
borrowing agreements.
Such financial statements are neither necessary for a fair presentation of
the financial position of Pro-Fac nor appropriate as primary statements for
Curtice-Burns' shareholders or for Pro-Fac shareholders and members because they
combine earnings, assets and liabilities and cash flows which are legally
attributable to either Curtice-Burns' shareholders or to Pro-Fac shareholders
and members, but not to both. Accordingly, the condensed pro forma financial
statements presented herein are special purpose in nature and should be used
only within the context described.
F-59
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
SEPTEMBER 24, 1994
-------------------------------------------------- SEPTEMBER 25, 1993
CURTICE- ------------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales and revenues......................... $176.8 $44.5 $(44.5) $176.8 $210.1
-------- ------- ------------ -------- -------
Cost of sales.............................. 126.8 37.7 (37.7) 126.8 153.1
Restructuring.............................. 8.4 -- -- 8.4 --
Change of control costs.................... 1.8 -- -- 1.8 --
Insurance gain............................. (6.5) -- -- (6.5) --
Selling, administrative and general
expenses................................. 38.0 0.2 (0.2) 38.0 46.1
Interest expense........................... 5.1 2.9 (4.2) 3.8 3.9
Pro-Fac share of earnings.................. 1.5 -- (1.5) -- --
-------- ------- ------------ -------- -------
Total cost and expenses............... 175.1 40.8 (43.6) 172.3 203.1
-------- ------- ------------ -------- -------
Income before taxes........................ 1.7 3.7 (0.9)(A) 4.5 7.0
Provision for taxes........................ (1.4) -- -- (1.4) (2.3)
-------- ------- ------------ -------- -------
Net income................................. $ 0.3 $ 3.7 $ (0.9)(A) $ 3.1 $ 4.7
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
</TABLE>
- ------------
(A) Amounts represent the balance of the first quarter fiscal 1995 share of
earnings between Curtice Burns and Pro-Fac which is currently under
dispute. See discussion at Note 1.
- ----------------------------------------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of operations.
F-60
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
SEPTEMBER 24, 1994
-------------------------------------------------- SEPTEMBER 25, 1993
CURTICE- ------------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets(A)(C).................. $321.7 $ 88.5 $ (83.6) $326.6 $324.0
Property, plant and equipment,
net(B).............................. 160.3 -- -- 160.3 191.3
Investment in direct financing
leases(C)........................... -- 113.1 (113.1) -- --
Due from Curtice-Burns(D)............. -- 89.0 (89.0) -- --
Goodwill and other intangibles........ 24.5 24.5 -- 49.0 52.2
Other assets.......................... 17.9 23.0 -- 40.9 28.1
-------- ------- ------------ -------- -------
Total assets..................... $524.4 $338.1 $ (285.7) $576.8 $595.6
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
LIABILITIES AND NET WORTH
Current liabilities(A)(C)............. $219.9 $ 88.5 $ (81.0) $227.4 $221.9
Lease obligations(C).................. 114.4 -- (113.1) 1.3 1.8
Long-term debt --
Due Pro-Fac(D)................... 89.0 -- (89.0) -- --
Due others....................... 0.9 126.9 -- 127.8 173.9
Other liabilities..................... 20.3 0.6 -- 20.9 13.4
-------- ------- ------------ -------- -------
Total liabilities................ 444.5 216.0 (283.1) 377.4 411.0
Shareholders' equity and members'
capitalization(E)................... 79.9 122.1 (2.6)(F) 199.4 184.6
-------- ------- ------------ -------- -------
Total Liabilities and Net
Worth.......................... $524.4 $338.1 $ (285.7) $576.8 $595.6
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
</TABLE>
- ------------
Notes to combined balance sheet:
(A) Current assets of Pro-Fac consist principally of amounts due from
Curtice-Burns with respect to the Agreement described in Note 1. Such
amounts are eliminated for purposes of this balance sheet.
(B) Property, plant and equipment to which Pro-Fac holds title (with net book
value of $130.7 million at September 24, 1994) is leased to Curtice-Burns
on a financing basis. Such leased assets are reclassified as property,
plant and equipment for purposes of this balance sheet.
(C) The majority of Curtice-Burns' lease obligations are payable to Pro-Fac and
amount to $130.7 million at September 24, 1994, of which $17.6 million is
payable currently. The related Curtice Burns liability and Pro-Fac
receivable are eliminated for purposes of this balance sheet.
(D) Long-term borrowings by Curtice-Burns from Pro-Fac under the Agreement are
eliminated for purposes of this balance sheet.
(E) Shareholders' equity of Curtice-Burns consists of Class A common stock,
$6.6 million; Class B common stock, $2.0 million; additional paid-in
capital, $14.3 million, and retained earnings, $57.0 million.
(F) Amount represents the balance of the fiscal 1994 and first quarter fiscal
1995 share of earnings between Curtice-Burns and Pro-Fac which is currently
under dispute. See discussion at Note 1.
F-61
<PAGE>
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED PRO FORMA CONDENSED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
SEPTEMBER 24, 1994
-------------------------------------------------- SEPTEMBER 25, 1993
CURTICE- ------------------
BURNS PRO-FAC ELIMINATIONS COMBINED COMBINED
-------- ------- ------------ -------- ------------------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash (used in)/provided by operating
activities............................... $(68.4) $ 8.1 $ (1.8)(A) $(62.1) $(51.9)
Net cash (used in)/provided by investing
activities............................... (4.4) (40.9 ) 40.6(A) (4.7) (5.0)
Net cash provided by/(used in) financing
activities............................... 77.2 32.9 (38.8) 71.3 58.0
-------- ------- ------------ -------- -------
Net change in cash......................... 4.4 0.1 -- 4.5 1.1
Cash at beginning of period................ 2.9 -- -- 2.9 6.5
-------- ------- ------------ -------- -------
Cash at end of period...................... $ 7.3 $ 0.1 $-- $ 7.4 $ 7.6
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest (net of amount
capitalized)........................ $ 4.6 $ 2.7 $ (4.2) $ 3.1 $ 3.9
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
Income taxes, net..................... $ .6 $ -- $-- $ 0.6 $ 7.5
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Capital lease obligations incurred.... $ 0.9 $ -- $ (0.9) $-- -$-
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
Conversion of retains to preferred
stock............................... $-- $ 1.2 $-- $ 1.2 -$-
-------- ------- ------------ -------- -------
-------- ------- ------------ -------- -------
</TABLE>
- ------------
(A) Amounts include the balance of the first quarter fiscal 1995 share of
earnings between Curtice Burns and Pro-Fac which is currently under
dispute. See discussion at Note 1.
- ----------------------------------------------------------
Transactions between Curtice-Burns and Pro-Fac have been eliminated for
purposes of this combined statement of cash flows.
NOTE 4 -- OTHER MATTERS
FAVORABLE TAX RULING
In August of 1993, the Internal Revenue Service issued a determination
letter which concluded that the Cooperative is exempt from federal income tax to
the extent provided by Section 521 of the Internal Revenue Code, 'Exemption of
Farmers' Cooperatives from Tax.' Unlike a non-exempt cooperative, a tax-exempt
cooperative is entitled to deduct cash dividends it pays on its capital stock in
computing its taxable income. This exempt status is retroactive to fiscal year
1986 and is anticipated to apply to future years as long as there is no
significant change in the way in which the Cooperative operates. In conjunction
with this ruling, the Cooperative has filed for tax refunds for fiscal years
1986 to 1990 in the amount of approximately $5.8 million and interest payments
of approximately $3.4 million. In addition, it is anticipated that the
Cooperative will file for tax refunds for fiscal years 1991 and 1992 in the
amount of approximately $3.1 million and interest payments of approximately $0.4
million. No such refund amounts have been reflected in the Cooperative's
financial statements as of September 24, 1994. It is anticipated that the refund
amounts will be recognized upon receipt.
F-62
<PAGE>
_____________________________ _____________________________
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
---------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Summary........................................ 3
Risk Factors................................... 13
The Company.................................... 19
The Acquisition................................ 21
Use of Proceeds................................ 23
The Exchange Offer............................. 23
Capitalization................................. 32
Selected Historical Consolidated Financial Data
of the Company............................... 34
Selected Historical Financial Data of
Pro-Fac...................................... 37
Pro Forma Financial Data of the Company........ 38
Pro Forma Financial Data of Pro-Fac and the
Company...................................... 45
Management's Discussion and Analysis of
Financial Condition and Results of Operations
of the Company............................... 52
Management's Discussion and Analysis of
Financial Condition and Results of Operations
of Pro-Fac................................... 66
Business....................................... 69
Management..................................... 79
Executive Compensation......................... 83
Certain Transactions........................... 86
Security Ownership of Certain Beneficial
Owners and Management........................ 90
Description of Certain Indebtedness............ 92
Description of the Notes....................... 93
Plan of Distribution........................... 116
Legal Matters.................................. 117
Experts........................................ 117
Index to Financial Statements.................. F-1
</TABLE>
_____________________________ _____________________________
CURTICE-BURNS FOODS, INC.
------------------
OFFER TO EXCHANGE ITS
12 1/4% SENIOR SUBORDINATED
NOTES DUE 2005
FOR ANY AND ALL OF ITS
OUTSTANDING 12 1/4% SENIOR
SUBORDINATED NOTES DUE 2005
-------------------------
PROSPECTUS
-------------------------
_____________________________ _____________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 722 of the New York Business Corporation Law (the 'New
York Corporation Law') Article V of the By-laws of the Company, a copy of which
is filed as Exhibit 3.4 to this Registration Statement, provides that the
Company shall indemnify any person made, or threatened to be made, a party to
any action or proceeding, whether civil or criminal, by reason of the fact that
he, his testator or intestate is or was a director, officer or employee of the
Company or serves or served any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity at the request
of the Company against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily incurred
as a result of such action or proceeding or any appeal thereon to the full
extent permitted by the New York Corporation Law. Expenses incurred in defending
a civil or criminal action or proceeding shall be paid by the Registrant in
advance of the final disposition of such action or proceeding to the extent, if
any, authorized by the Board in accordance with the provisions of the New York
Corporation Law, upon receipt of an undertaking by or on behalf of the director,
officer or employee to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in the
by-laws or to repay such amount to the extent the expenses so advanced by the
Company or allowed by a court exceed the indemnification to which he is
entitled. The Company shall provide such other indemnification to the directors
and officers of the Company as may, from time to time, be provided pursuant to
resolutions duly adopted by the Board of Directors of the Company.
Section 726 of the New York Corporation Law allows the Company to purchase
and maintain insurance to indemnify (i) the Company for any obligation which it
incurs as a result of the indemnification of directors and officers, (ii)
directors and officers in instances in which they may be indemnified by the
Company, and (iii) directors and officers in instances in which they may not
otherwise be indemnified by the Company provided the contract of insurance
covering such directors and officers provides, in a manner acceptable to the
superintendent of insurance of the State of New York, for a retention amount and
for co-insurance. Notwithstanding the foregoing, no such insurance may provide
for any payment, other than cost of defense, to or on behalf of any director or
officer (i) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled or (ii) in relation to any risk the insurance of which is
prohibited under the insurance law of the State of New York.
Pursuant to Section 402(b) of the New York Corporation Law, paragraph 10 of
the Certificate of Incorporation of the Company, a copy of which is filed as
Exhibit 3.3 to the Registration Statement, provides that no director of the
Company shall be personally liable to the Company or its shareholders for
damages for any breach of duty in such capacity except where a judgment or other
final adjudication adverse to said 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
Corporation Law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------------------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of September 27, 1994 among Pro-Fac Cooperative, Inc.
('Pro-Fac'), PF Acquisition Corp. ('PFAC') and Curtice-Burns Foods, Inc. ('Curtice- Burns').
3.1 -- Certificate of Incorporation of Pro-Fac.
3.2 -- Bylaws of Pro-Fac.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------------------------------
<C> <S>
3.3 -- Certificate of Incorporation of Curtice-Burns.
3.4 -- Bylaws of Curtice-Burns.
3.5* -- Certificate of Incorporation of Curtice-Burns Express, Inc. ('Express').
3.6* -- Bylaws of Express.
3.7* -- Certificate of Incorporation of Finger Lakes Packaging Company, Inc. ('Finger Lakes').
3.8* -- Bylaws of Finger Lakes.
3.9* -- Certificate of Incorporation of Curtice-Burns Meat Snacks, Inc. ('Meat Snacks').
3.10* -- Bylaws of Meat Snacks.
3.11* -- Certificate of Incorporation of Quality Snax of Maryland, Inc. ('Snax').
3.12* -- Bylaws of Snax.
3.13* -- Certificate of Incorporation of Kennedy Endeavors, Incorporated ('Kennedy').
3.14* -- Bylaws of Kennedy.
3.15* -- Certificate of Incorporation of Husman Snack Foods Co., Inc. ('Husman').
3.16* -- Bylaws of Husman.
3.17* -- Certificate of Incorporation of Seasonal Employers, Inc. ('Seasonal').
3.18* -- Bylaws of Seasonal.
3.19* -- Certificate of Incorporation of Nalley's Canada Limited ('Nalley's').
3.20* -- Bylaws of Nalley's.
3.21* -- Certificate of Incorporation of Pro-Fac Holding Company of Iowa, Inc. ('Pro-Fac Iowa').
3.22* -- Bylaws of Pro-Fac Iowa.
4.1 -- Indenture, dated as of November 3, 1994 (the 'Indenture'), among PFAC, Pro-Fac and IBJ Schroder Bank &
Trust Company ('IBJ'), as Trustee, as amended by First Supplemental Indenture, dated as of November 3,
1994, each with respect to Curtice-Burns' 12 1/4% Senior Subordinated Notes due 2005 (the 'Notes').
4.2 -- Purchase Agreement, dated as of November 3, 1994, among Pro-Fac, PFAC and each of the purchasers named
on the signature pages thereof (the 'Purchasers').
4.3 -- Registration Rights Agreement, dated as of November 3, 1994, by and among PFAC, Pro-Fac, each of the
subsidiary guarantors named on the signature pages thereof (the 'Subsidiary Guarantors') and the
Purchasers.
4.4 -- Term Loan, Term Loan Facility and Seasonal Loan Agreement, dated as of November 3, 1994, among
Springfield Bank for Cooperatives (the 'Bank'), Curtice-Burns and PFAC.
4.5 -- Borrower Security Agreement, dated as of November 3, 1994, among the Bank, Curtice-Burns and PFAC.
4.6 -- Trademark Collateral Assignment and Security Agreement, dated as of November 3, 1994, between
Curtice-Burns and the Bank.
4.7 -- Patent Collateral Assignment and Security Agreement, dated as of November 3, 1994, between
Curtice-Burns and the Bank.
4.8 -- Parent Guaranty, dated as of November 3, 1994, by Pro-Fac in favor of the Bank.
4.9 -- Parent Security Agreement, dated as of November 3, 1994 between Pro-Fac and the Bank.
4.10 -- Subsidiaries Guaranty, dated as of November 3, 1994, by the Subsidiary Guarantors in favor of the Bank.
4.11 -- Subsidiaries Security Agreement, dated as of November 3, 1994, among the Subsidiary Guarantors and the
Bank.
4.12 -- Mortgage, Open End Mortgage, Deed of Trust, Trust Deed, Deed to Secure Debt, Purchase Money Mortgage,
Assignment, Security Agreement and Financing Statement dated November 3, 1994 among PFAC, Curtice-Burns
and the Bank.
5.1* -- Opinion and Consent of Howard, Darby & Levin.
5.2* -- Opinion and Consent of Harris, Beach & Wilcox.
10.1 -- Marketing and Facilitation Agreement, dated as of November 3, 1994, between Pro-Fac and Curtice-Burns.
10.2 -- Management Incentive Plan, as amended.
10.3 -- Supplemental Executive Retirement Plan, as amended.
10.4 -- Key Executive Severance Plan, as amended.
10.5 -- Master Salaried Retirement Plan, as amended.
10.6 -- Non-Qualified Profit Sharing Plan, as amended.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------------------------------
<C> <S>
10.7 -- Excess Benefit Retirement Plan.
10.8 -- Agreement, dated as of September 27, 1994, among Pro-Fac, PFAC and Agway Holdings, Inc.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
21.1 -- List of Subsidiaries.
23.1 -- Consent of Price Waterhouse LLP, independent accountants, relating to the financial statements of
Pro-Fac.
23.2 -- Consent of Price Waterhouse LLP, independent accountants, relating to the consolidated financial
statements of Curtice-Burns.
23.3 -- Consent of Howard, Darby & Levin (included in Exhibit 5.1).
23.4 -- Consent of Harris, Beach & Wilcox (included in Exhibit 5.2).
24.1 -- Power of Attorney (included in Part II of the Registration Statement).
25.1 -- Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939 of IBJ, as
Trustee under the Indenture relating to the Notes.
27.1 -- Financial Data Schedule of Pro-Fac.
27.2 -- Financial Data Schedule of Curtice-Burns.
99.1* -- Form of Transmittal Letter (including Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9).
99.2* -- Form of Notice of Guaranteed Delivery.
99.3* -- Form of Instructions to Registered Holder and/or Book-Entry Transfer Facility Participant from Owner.
</TABLE>
- ------------
* To be filed by amendment.
(b) Financial Statement Schedules.
(1) The Company
<TABLE>
<CAPTION>
SCH. REF. SCHEDULE DESCRIPTION
-------------- -------------------------------------------------------------------------------------------
<S> <C>
Schedule V Property, Plant and Equipment.
Schedule VI Reserve for Amortization of Property, Plant and Equipment.
Schedule VIII Valuation and Qualifying Accounts.
Schedule IX Short Term Borrowings.
Schedule X Supplementary Income Statement Information.
</TABLE>
(2) Pro-Fac
<TABLE>
<CAPTION>
SCH. REF. SCHEDULE DESCRIPTION
-------------- -------------------------------------------------------------------------------------------
<S> <C>
Schedule II Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other
Than Related Parties.
Schedule IV Indebtedness of and to Related Parties -- Not Current.
Schedule IX Short Term Borrowings.
</TABLE>
All other schedules of the Company and Pro-Fac for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required, are inapplicable or have been disclosed in the
notes to the consolidated financial statements and therefore have been omitted.
ITEM 22. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
II-3
<PAGE>
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(4) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
CURTICE-BURNS FOODS, INC.
By /s/ ROY A. MYERS
...................................
ROY A. MYERS
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
We, the undersigned, directors and officers of CURTICE-BURNS FOODS, INC.,
do hereby severally constitute and appoint Roy A. Myers and William D. Rice and
each or either of them, our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and agents,
and each or either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROY A. MYERS President and Chief Executive Officer and November 17, 1994
......................................... Director
(ROY A. MYERS)
/s/ WILLIAM D. RICE Senior Vice President, Secretary and November 17, 1994
......................................... Treasurer
(WILLIAM D. RICE)
/s/ ROBERT V. CALL, JR. Director November 17, 1994
.........................................
(ROBERT V. CALL, JR.)
/s/ BRUCE R. FOX Director November 17, 1994
.........................................
(BRUCE R. FOX)
/s/ CORNELIUS D. HARRINGTON Director November 17, 1994
.........................................
(CORNELIUS D. HARRINGTON)
/s/ STEVEN D. KOINZAN Director November 17, 1994
.........................................
(STEVEN D. KOINZAN)
/s/ WILLIAM B. MCKNIGHT, JR. Director November 17, 1994
.........................................
(WILLIAM B. MCKNIGHT, JR.)
/s/ FRANK M. STOTZ Director November 17, 1994
.........................................
(FRANK M. STOTZ)
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
PRO-FAC COOPERATIVE, INC.
By /s/ ROBERT V. CALL, JR.
...................................
ROBERT V. CALL, JR.
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of PRO-FAC COOPERATIVE, INC.,
do hereby severally constitute and appoint Roy A. Myers and William D. Rice and
each or either of them, our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and agents,
and each or either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROBERT V. CALL, JR. President and Director November 17, 1994
.........................................
(ROBERT V. CALL, JR.)
/s/ BRUCE R. FOX Treasurer and Director November 17, 1994
.........................................
(BRUCE R. FOX)
/s/ DALE W. BURMEISTER Director November 17, 1994
.........................................
(DALE W. BURMEISTER)
/s/ GLEN LEE CHASE Director November 17, 1994
.........................................
(GLEN LEE CHASE)
/s/ TOMMY R. CRONER Director November 17, 1994
.........................................
(TOMMY R. CRONER)
/s/ ALBERT P. FAZIO Director November 17, 1994
.........................................
(ALBERT P. FAZIO)
/s/ STEVEN D. KOINZAN Director November 17, 1994
.........................................
(STEVEN D. KOINZAN)
/s/ KENNETH A. MATTINGLY Director November 17, 1994
.........................................
(KENNETH A. MATTINGLY)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ ALLAN D. MITCHELL Director November 17, 1994
.........................................
(ALLAN D. MITCHELL)
/s/ ALLAN W. OVERHISER Director November 17, 1994
.........................................
(ALLAN W. OVERHISER)
/s/ PAUL E. ROE Director November 17, 1994
.........................................
(PAUL E. ROE)
/s/ EDWARD L. WHITAKER Director November 17, 1994
.........................................
(EDWARD L. WHITAKER)
</TABLE>
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
CURTICE-BURNS EXPRESS, INC.
By /s/ ROY A. MYERS
...................................
ROY A. MYERS
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of CURTICE-BURNS EXPRESS, INC.,
do hereby severally constitute and appoint Roy A. Myers and William D. Rice and
each or either of them, our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and agents,
and each or either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROY A. MYERS President and Director November 17, 1994
.........................................
(ROY A. MYERS)
/s/ WILLIAM D. RICE Treasurer November 17, 1994
.........................................
(WILLIAM D. RICE)
</TABLE>
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
CURTICE BURNS MEAT SNACKS, INC.
By /s/ ROY A. MYERS
...................................
ROY A. MYERS
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of CURTICE-BURNS MEAT SNACKS,
INC., do hereby severally constitute and appoint Roy A. Myers and William D.
Rice and each or either of them, our true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or either of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROY A. MYERS President November 17, 1994
.........................................
(ROY A. MYERS)
/s/ WILLIAM D. RICE Treasurer and Secretary November 17, 1994
.........................................
(WILLIAM D. RICE)
</TABLE>
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF LYONS, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
FINGER LAKES PACKAGING COMPANY, INC.
By /s/ RONALD FITHEN
...................................
RONALD FITHEN
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of FINGER LAKES PACKAGING CO.,
INC., do hereby severally constitute and appoint Roy A. Myers and William D.
Rice and each or either of them, our true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or either of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ RONALD FITHEN President November 17, 1994
.........................................
(RONALD FITHEN)
/s/ WILLIAM D. RICE Vice President, Secretary and November 17, 1994
......................................... Director
(WILLIAM D. RICE)
/s/ ROY A. MYERS Director November 17, 1994
.........................................
(ROY A. MYERS)
</TABLE>
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
HUSMAN SNACK FOODS COMPANY, INC.
By /S/ ROY A. MYERS
...................................
ROY A. MYERS
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of HUSMAN SNACK FOODS COMPANY,
INC., do hereby severally constitute and appoint Roy A. Myers and William D.
Rice and each or either of them, our true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or either of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROY A. MYERS President and Director November 17, 1994
.........................................
(ROY A. MYERS)
/s/ WILLIAM D. RICE Vice President, Treasurer, Secretary and November 17, 1994
......................................... Director
(WILLIAM D. RICE)
</TABLE>
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF VANCOUVER, PROVINCE OF
BRITISH COLUMBIA, CANADA, ON NOVEMBER 17, 1994.
NALLEY'S CANADA LIMITED
By /s/ JOHN FROSTAD
...................................
JOHN FROSTAD
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of NALLEY'S CANADA LIMITED, do
hereby severally constitute and appoint Roy A. Myers and William D. Rice and
each or either of them, our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and agents,
and each or either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ JOHN FROSTAD President and Director November 17, 1994
.........................................
(JOHN FROSTAD)
/s/ WILLIAM D. RICE Vice President and Secretary November 17, 1994
.........................................
(WILLIAM D. RICE)
/s/ DAVID PHILLIPPE BROWN Director November 17, 1994
.........................................
(DAVID PHILLIPPE BROWN)
/s/ HENRY STEVENSON HOWE Director November 17, 1994
.........................................
(HENRY STEVENSON HOWE)
/s/ PATRICK D. LINDENBACH Director November 17, 1994
.........................................
(PATRICK D. LINDENBACH)
/s/ WILLIAM J. MCFETRIDGE Director November 17, 1994
.........................................
(WILLIAM J. MCFETRIDGE)
/s/ ROY A. MYERS Director November 17, 1994
.........................................
(ROY A. MYERS)
</TABLE>
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF TACOMA, STATE OF
WASHINGTON ON NOVEMBER 17, 1994.
KENNEDY ENDEAVORS, INCORPORATED
By /s/ HELEN WHATMOUGH
...................................
HELEN WHATMOUGH
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of KENNEDY ENDEAVORS,
INCORPORATED, do hereby severally constitute and appoint Roy A. Myers and
William D. Rice and each or either of them, our true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments or post-effective amendments to this
Registration Statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys and agents, and each or either of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ HELEN WHATMOUGH President November 17, 1994
.........................................
(HELEN WHATMOUGH)
/s/ WILLIAM D. RICE Vice President, Secretary and November 17, 1994
......................................... Director
(WILLIAM D. RICE)
/s/ ROY A. MYERS Director November 17, 1994
.........................................
(ROY A. MYERS)
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
QUALITY SNAX OF MARYLAND, INC.
BY /S/ ROY A. MYERS
...................................
ROY A. MYERS
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of QUALITY SNAX OF MARYLAND,
INC., do hereby severally constitute and appoint Roy A. Myers and William D.
Rice and each or either of them, our true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or either of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROY A. MYERS President and Director November 17, 1994
.........................................
(ROY A. MYERS)
/s/ WILLIAM D. RICE Vice President, Treasurer, Secretary and November 17, 1994
......................................... Director
(WILLIAM D. RICE)
</TABLE>
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
SEASONAL EMPLOYERS, INC.
By: /s/ WILLIAM FITZGERALD
...................................
WILLIAM FITZGERALD
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of SEASONAL EMPLOYERS, INC., do
hereby severally constitute and appoint Roy A. Myers and William D. Rice and
each or either of them, our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and agents,
and each or either of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ WILLIAM FITZGERALD President November 17, 1994
.........................................
(WILLIAM FITZGERALD)
/s/ WILLIAM D. RICE Vice President, Treasurer, Secretary and November 17, 1994
......................................... Director
(WILLIAM D. RICE)
/s/ ROY A. MYERS Director November 17, 1994
.........................................
(ROY A. MYERS)
</TABLE>
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON NOVEMBER 17, 1994.
PRO-FAC HOLDING COMPANY OF IOWA, INC.
BY /S/ ROBERT V. CALL, JR.
...................................
ROBERT V. CALL, JR.
PRESIDENT
POWER OF ATTORNEY
We, the undersigned, directors and officers of PRO-FAC HOLDING COMPANY OF
IOWA, INC., do hereby severally constitute and appoint Roy A. Myers and William
D. Rice and each or either of them, our true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or either of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ ROBERT V. CALL, JR. President and Director November 17, 1994
.........................................
(ROBERT V. CALL, JR.)
/s/ WILLIAM D. RICE Treasurer November 17, 1994
.........................................
(WILLIAM D. RICE)
/s/ ROY A. MYERS Director November 17, 1994
.........................................
(ROY A. MYERS)
/s/ THOMAS R. KALCHIK Director November 17, 1994
.........................................
(THOMAS R. KALCHIK)
</TABLE>
II-16
<PAGE>
SCHEDULE V
CURTICE-BURNS FOODS, INC.
PROPERTY, PLANT AND EQUIPMENT
(OWNED AND LEASED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 25, 1994
--------------------------------------------------------------
BALANCE AT
BEGINNING OF BALANCE AT END
YEAR ADDITIONS RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land............................................ $ 9,714,000 $ 122,000 $ (1,195,000) $ 8,641,000
Land improvements............................... 3,778,000 88,000 (314,000) 3,552,000
Buildings....................................... 97,694,000 2,431,000 (11,352,000) 88,773,000
Machinery and equipment......................... 250,440,000 15,319,000 (32,226,000) 233,533,000
Construction in process......................... 18,778,000 2,307,000 -- 21,085,000
Valuation Allowance............................. (6,900,000) -- 2,930,000 (3,970,000)
-------------- ------------- --------------- --------------
Total...................................... $ 373,504,000 $ 20,267,000 $ (42,157,000) $ 351,614,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 26, 1993
--------------------------------------------------------------
BALANCE AT
BEGINNING OF BALANCE AT END
YEAR ADDITIONS RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land............................................ $ 10,552,000 $ -- $ (838,000) $ 9,714,000
Land improvements............................... 3,703,000 75,000 -- 3,778,000
Buildings....................................... 97,721,000 3,034,000 (3,061,000) 97,694,000
Machinery and equipment......................... 249,961,000 13,349,000 (12,870,000) 250,440,000
Construction in process......................... 9,140,000 10,967,000 (1,329,000) 18,778,000
Valuation Allowance............................. -- -- (6,900,000) (6,900,000)
-------------- ------------- --------------- --------------
Total...................................... $ 371,077,000 $ 27,425,000 $ (24,998,000) $ 373,504,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 26, 1992
--------------------------------------------------------------
BALANCE AT
BEGINNING OF BALANCE AT END
YEAR ADDITIONS RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land............................................ $ 10,666,000 $ -- $ (114,000) $ 10,552,000
Land improvements............................... 3,420,000 287,000 (4,000) 3,703,000
Buildings....................................... 97,139,000 2,006,000 (1,424,000) 97,721,000
Machinery and equipment......................... 236,733,000 18,166,000 (4,938,000) 249,961,000
Construction in process......................... 13,244,000 (1,876,000) (2,228,000) 9,140,000
-------------- ------------- --------------- --------------
Total...................................... $ 361,202,000 $ 18,583,000 $ (8,708,000) $ 371,077,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
S-1
<PAGE>
SCHEDULE VI
CURTICE-BURNS FOODS, INC.
RESERVE FOR AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
(OWNED AND LEASED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 25, 1994
--------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COST AND BALANCE AT END
YEAR EXPENSES RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land Improvements............................... $ 1,946,000 $ 161,000 $ (147,000) $ 1,960,000
Buildings....................................... 36,776,000 3,925,000 (2,564,000) 38,137,000
Machinery and equipment......................... 142,330,000 18,236,000 (16,565,000) 144,001,000
-------------- ------------- --------------- --------------
Total...................................... $ 181,052,000 $ 22,322,000 $ (19,276,000) $ 184,098,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 26, 1993
--------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COST AND BALANCE AT END
YEAR EXPENSES RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land Improvements............................... $ 1,761,000 $ 185,000 $ -- $ 1,946,000
Buildings....................................... 33,251,000 4,297,000 (772,000) 36,776,000
Machinery and equipment......................... 129,410,000 20,950,000 (8,030,000) 142,330,000
-------------- ------------- --------------- --------------
Total...................................... $ 164,422,000 $ 25,432,000 $ (8,802,000) $ 181,052,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 26, 1992
--------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COST AND BALANCE AT END
YEAR EXPENSES RETIREMENTS OF YEAR
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Land Improvements............................... $ 1,583,000 $ 180,000 $ (2,000) $ 1,761,000
Buildings....................................... 29,297,000 4,338,000 (384,000) 33,251,000
Machinery and equipment......................... 113,355,000 19,896,000 (3,841,000) 129,410,000
-------------- ------------- --------------- --------------
Total...................................... $ 144,235,000 $ 24,414,000 $ (4,227,000) $ 164,422,000
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</TABLE>
S-2
<PAGE>
SCHEDULE VIII
CURTICE-BURNS FOODS, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE FISCAL YEARS ENDED JUNE 25, 1994
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
BALANCE AT ---------- ------------ BALANCE AT
BEGINNING CHARGE TO ACCOUNTS END OF
OF PERIOD EXPENSE WRITTEN OFF PERIOD
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
Year ended June 25, 1994.............................. $ 801,000 $702,000 $437,000 $1,066,000
Year ended June 26, 1993.............................. $1,353,000 $346,000 $898,000 $ 801,000
Year ended June 26, 1992.............................. $1,118,000 $827,000 $592,000 $1,353,000
</TABLE>
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING NET END OF
OF PERIOD CHANGE PERIOD*
---------- ----------- ----------
<S> <C> <C> <C>
Inventory Reserve
Year ended June 25, 1994.......................................... $1,189,000 $ (810,000) $ 379,000
Year ended June 26, 1993.......................................... $2,520,000 $(1,331,000) $1,189,000
Year ended June 26, 1992.......................................... $2,549,000 $ (29,000) $2,520,000
</TABLE>
- ------------
* Difference between FIFO cost and market applicable to canned and frozen fruit
and vegetable inventories.
S-3
<PAGE>
SCHEDULE IX
CURTICE-BURNS FOODS, INC.
SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED JUNE 25, 1994
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AT END AVERAGE DURING DURING DURING
AGGREGATE SHORT-TERM BORROWINGS OF PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD
- -------------------------------------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
June 25, 1994
Payable to Commercial Banks...... None N/A $35,000,000 $21,052,000 4.41%
Payable to Pro-Fac Cooperative,
Inc............................ $11,500,000 5.5% $46,000,000 $30,464,000 4.79%
June 26, 1993
Payable to Commercial Banks...... None N/A $54,000,000 $31,505,000 4.70%
Payable to Pro-Fac Cooperative,
Inc............................ $12,000,000 4.32% $56,000,000 $39,444,000 4.60%
June 26, 1992
Payable to Commercial Banks...... None N/A $45,100,000 $26,567,000 5.83%
Payable to Pro-Fac Cooperative,
Inc............................ $28,000,000 4.85% $77,000,000 $47,764,000 6.28%
</TABLE>
S-4
<PAGE>
SCHEDULE X
CURTICE-BURNS FOODS, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
FISCAL YEAR ENDED
-----------------------------------------------
JUNE 25, 1994 JUNE 26, 1993 JUNE 26,1992
------------- ------------- -------------
<S> <C> <C> <C>
Maintenance and repairs............................................. $ 26,519,000 $ 28,176,000 $ 29,514,000
Advertising......................................................... $ 13,319,000 $ 16,499,000 $ 16,773,000
Taxes*
Royalties*
Amortization of Intangibles*
</TABLE>
- ------------
* Not applicable as individual amounts do not exceed 1 percent of net sales
S-5
<PAGE>
SCHEDULE II
PRO-FAC COOPERATIVE, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
<CAPTION>
BALANCE BALANCE
AT BEGINNING AT END
NAME OF DEBTOR OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- -------------------------------------------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Curtice-Burns Foods
June 25, 1994................................ $ 9,113,000 $123,153,000 $121,069,000 $11,197,000
June 26, 1993................................ $ 26,767,000 $113,478,000 $131,132,000 $ 9,113,000
June 26, 1992................................ $ 45,210,000 $121,836,000 $140,279,000 $26,767,000
</TABLE>
The cash needs of a fruit and vegetable food processor such as
Curtice-Burns fluctuate greatly during the year because of the peak cash outflow
required during a limited production season that is tied to the harvest season
of the crops involved, while the cash inflow from sales is more ratably spread
throughout the year. By reason of the agreements with Pro-Fac, these peak cash
needs are supplied to Curtice-Burns by Pro-Fac. Such receivables from
Curtice-Burns include:
1. Advances under a short-term line of credit.
2. Accrued interest on all short-term and long-term borrowings that
will be paid by Curtice Burns to Pro-Fac when Pro-Fac pays its
lenders.
3. Raw product delivered to Curtice-Burns for which Pro-Fac has agreed
on extended terms under the marketing section of the Integrated
Agreement.
4. Amounts due under the profit split provisions of the operations
financing section of the Integrated Agreement.
S-6
<PAGE>
SCHEDULE IV
PRO-FAC COOPERATIVE, INC.
INDEBTEDNESS OF AND TO RELATED PARTIES -- NOT CURRENT
<TABLE>
<CAPTION>
BALANCE BALANCE
AT BEGINNING ADDITIONS DEDUCTIONS AT END
NAME OF PERSON OF PERIOD (2) (3) OF PERIOD
- ---------------------------------------------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Receivable from Curtice-Burns Foods
June 25, 1994.................................. $ 78,648,000 $40,378,000 $40,986,000 $78,040,000
June 26, 1993.................................. $ 61,300,000 $33,348,000 $16,000,000 $78,648,000
June 26, 1992.................................. $ 61,099,000 $14,201,000 $14,000,000 $61,300,000
</TABLE>
Under the terms of the operations financing section of the Integrated
Agreement between Pro-Fac and Curtice-Burns, Pro-Fac lends to Curtice-Burns all
funds not required for its own operations or for purchases of assets to be
leased to Curtice-Burns. Funds loaned to Curtice-Burns bear the same conditions
and interest rates as Pro-Fac has obtained from its lenders. The interest rates
on such borrowings at June 25, 1994, June 26, 1993 and June 26, 1992, were 6.7
percent, 6.2 percent, and 7.1 percent, respectively.
S-7
<PAGE>
SCHEDULE IX
PRO-FAC COOPERATIVE, INC.
SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED JUNE 25, 1994
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AT END AVERAGE DURING DURING DURING
AGGREGATE SHORT-TERM BORROWINGS OF PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD
- -------------------------------------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
June 25, 1994
Payable to Springfield Bank for
Cooperatives................... $11,500,000 5.50% $46,000,000 $30,464,000 4.79%
June 26, 1993
Payable to Springfield Bank for
Cooperatives................... $12,000,000 4.32% $56,000,000 $39,444,000 4.6%
June 26, 1992
Payable to Springfield Bank for
Cooperatives................... $28,000,000 4.85% $77,000,000 $47,764,000 6.20%
</TABLE>
S-8
<PAGE>
EXHIBIT 2.1
============================================================
AGREEMENT AND PLAN OF MERGER
Among
PRO-FAC COOPERATIVE, INC.,
PF ACQUISITION CORP.
and
CURTICE-BURNS FOODS, INC.
Dated as of September 27, 1994
============================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
The Offer
SECTION 1.01 The Offer . . . . . . . . . . . . . . . . 2
SECTION 1.02 Company Actions . . . . . . . . . . . . . 4
ARTICLE II
The Merger
SECTION 2.01. The Merger . . . . . . . . . . . . . . . 6
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Effective Time . . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . . 7
SECTION 2.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . . . . 7
SECTION 2.06. Directors . . . . . . . . . . . . . . . . 7
SECTION 2.07. Officers . . . . . . . . . . . . . . . . 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock . . . . . . . . . 8
SECTION 3.02. Exchange of Certificates . . . . . . . . 9
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . 11
SECTION 4.02. Representations and Warranties of
Parent and Sub . . . . . . . . . . . . 28
<PAGE>
Contents, 2
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business . . . . . . . . . . . 35
ARTICLE VI
Additional Agreements
SECTION 6.01. Shareholder Approval; Preparation of
Proxy Statement . . . . . . . . . . . . 39
SECTION 6.02. Access to Information; Confidentiality . 40
SECTION 6.03. Reasonable Efforts; Notification . . . . 40
SECTION 6.04. Stock Options . . . . . . . . . . . . . . 42
SECTION 6.05. Benefit Plans . . . . . . . . . . . . . . 43
SECTION 6.06. Indemnification . . . . . . . . . . . . . 44
SECTION 6.07. Fees and Expenses . . . . . . . . . . . . 45
SECTION 6.08. Public Announcements . . . . . . . . . . 46
SECTION 6.09. Real Estate Taxes . . . . . . . . . . . . 47
SECTION 6.10. Appraisals . . . . . . . . . . . . . . . 47
SECTION 6.11. Integrated Agreement . . . . . . . . . . 47
SECTION 6.12. Other Offers . . . . . . . . . . . . . . 47
SECTION 6.13. No Waiver . . . . . . . . . . . . . . . . 48
SECTION 6.14. Release . . . . . . . . . . . . . . . . . 48
SECTION 6.15. Directors . . . . . . . . . . . . . . . . 49
SECTION 6.16. Exchange of Class B Common Stock for
Class A Common Stock . . . . . . . . . 50
SECTION 6.17. Stockholder Agreement . . . . . . . . . . 50
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . 51
SECTION 7.02. Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . . . . . 52
SECTION 7.03. Conditions to Obligation of the Company . 53
<PAGE>
Contents, 3
ARTICLE VIII
Board Actions
SECTION 8.01. Board Actions . . . . . . . . . . . . . . 54
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination . . . . . . . . . . . . . . . 55
SECTION 9.02. Effect of Termination . . . . . . . . . . 58
SECTION 9.03. Amendment . . . . . . . . . . . . . . . . 58
SECTION 9.04. Extension; Waiver . . . . . . . . . . . . 58
SECTION 9.05. Procedure for Termination, Amendment,
Extension or Waiver . . . . . . . . . . 59
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and
Warranties . . . . . . . . . . . . . . 59
SECTION 10.02. Notices . . . . . . . . . . . . . . . . 59
SECTION 10.03. Definitions . . . . . . . . . . . . . . 61
SECTION 10.04. Interpretation . . . . . . . . . . . . . 62
SECTION 10.05. Counterparts . . . . . . . . . . . . . . 62
SECTION 10.06. Entire Agreement; No Third-Party
Beneficiaries; Effect on
Arbitration Agreement . . . . . . . . 62
SECTION 10.07. Governing Law . . . . . . . . . . . . . 63
SECTION 10.08. Assignment . . . . . . . . . . . . . . . 63
SECTION 10.09. Enforcement . . . . . . . . . . . . . . 63
Exhibit A Conditions of the Offer
Exhibit B Certificate of Incorporation of
Surviving Corporation
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of
September 27, 1994, among PRO-FAC COOPERATIVE
INC., a New York cooperative corporation
('Parent'), PF ACQUISITION CORP., a New York
corporation and a wholly owned subsidiary of
Parent ('Sub'), and CURTICE-BURNS FOODS,
INC., a New York corporation (the 'Company').
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the acquisition of
the Company by Parent on the terms and subject to the
conditions of this Agreement;
WHEREAS in furtherance of such acquisition, Parent
proposes to causes Sub to make a tender offer (as it may be
amended from time to time as permitted hereunder, the
'Offer') to purchase all the issued and outstanding shares
of Class A Common Stock, par value $.99 per share, of the
Company (the 'Class A Common Stock') and Class B Common
Stock, par value $.99 per share, of the Company (the 'Class
B Common Stock' and, together with the Class A Common Stock,
the 'Common Stock'), at a price per share of Common Stock of
$19.00 net to the seller in cash, upon the terms and subject
to the conditions of this Agreement; and the Board of
Directors of the Company has adopted resolutions approving
the Offer and the Merger (as hereinafter defined) and
recommending that the Company's shareholders accept the
Offer and, if necessary, vote in favor of the Merger;
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of Sub
into the Company as set forth below (the 'Merger'), upon the
terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or
the Company, except shares of Common Stock held by persons
who object to the Merger and comply with all the provisions
of New York law concerning the right of holders of Common
Stock to dissent from the Merger and require appraisal of
their shares of Common Stock ('Dissenting Shareholders'),
shall be converted into the right to receive the per share
consideration paid pursuant to the Offer, or, if no shares
of Common Stock are purchased pursuant to the Offer, the
highest price per share offered by Sub in the Offer; and
2
<PAGE>
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Offer and the Merger and
also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the
provisions of this Agreement, as promptly as practicable but
in no event later than five business days from the date of
public announcement of the terms of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer.
The obligation of Sub to, and of Parent to cause Sub to,
accept for payment, and pay for, any shares of Common Stock
tendered pursuant to the Offer shall be subject to the
conditions set forth in Exhibit A (any of which may, subject
to the next sentence, be waived by Sub in its sole
discretion) and to the terms and conditions set forth in
this Agreement. Sub expressly reserves the right to modify
the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of shares
of Common Stock subject to the Offer, (ii) reduce the price
per share of Common Stock to be paid pursuant to the Offer,
(iii) add to or amend in a manner adverse to the holders of
shares the conditions set forth in Exhibit A, (iv) except as
provided in the next sentence, extend the Offer, (v) change
the form of consideration payable in the Offer, (vi) amend
the Offer in any way such that holders of Class A Common
Stock receive consideration that differs from the
consideration received by holders of Class B Common Stock or
(vii) accept for payment shares of Common Stock that do not
represent, in the aggregate, at least 58% of all the
outstanding shares of Class A Common Stock, at least a
majority of all the outstanding shares of Class B Common
Stock and at least two-thirds of all the outstanding shares
of Common Stock, in each case on a fully diluted basis.
Notwithstanding the foregoing, Sub may, without the consent
of the Company (and, in the cases of clauses (i) and (ii)
below, shall, unless the Company otherwise consents),
3
<PAGE>
(i) extend the Offer if at any scheduled expiration date of
the Offer any condition to Sub's obligation to purchase
shares of Common Stock (other than the condition described
in clause (iii) of the first sentence of Exhibit A) shall
not be satisfied, to allow additional time for such
condition to be satisfied or waived, (ii) extend the Offer
if at any scheduled expiration date of the Offer the
condition described in clause (f) of the second sentence of
Exhibit A shall exist, to allow additional time to cause
such condition no longer to exist (provided that, if Parent
or Sub has signed definitive agreements for financing that
would be sufficient to consummate the Offer and the Merger
on the terms contemplated by this Agreement, Sub may not
extend the Offer pursuant to this clause (ii) to a date that
is more than five business days after the date of signing of
the last such definitive agreement to be signed),
(iii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and
Exchange Commission (the 'SEC') or the staff thereof
applicable to the Offer and (iv) extend the Offer for any
reason for a period of not more than 15 business days beyond
the latest expiration date that would otherwise be permitted
under clause (i), (ii) or (iii) of this sentence; provided,
however, that Sub may not extend the Offer pursuant to
clause (i), (ii) or (iv) of this sentence (A) to a date
later than December 15, 1994, or (B) if such extension would
be reasonably likely to result in any of the conditions
(other than any condition irrevocably waived in writing by
Parent and Sub prior to such extension) to Sub's obligations
to purchase shares of Common Stock not being satisfied at
the proposed new scheduled expiration date of the Offer.
Subject to the terms and conditions of the Offer and this
Agreement, Sub shall, and Parent shall cause Sub to, pay for
all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated
to purchase pursuant to the Offer as soon as practicable
after the expiration of the Offer.
(b) As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file with
the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents therein
pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the 'Offer Documents'),
shall hand deliver a copy of the Offer Documents to the
Company at its principal executive office, shall give the
4
<PAGE>
telephonic notice required by SEC Rule 14d-3(a)(3) to the
American Stock Exchange (if practicable prior to the opening
of such Exchange) and shall mail a copy of the Offer
Documents to the American Stock Exchange by means of first-
class mail. Each of Parent, Sub and the Company shall
promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such
information shall have become false or misleading in any
material respect, and each of Parent and Sub further agrees
to take all steps necessary to cause the Offer Documents as
so corrected to be filed with the SEC and to be disseminated
to the Company's shareholders, in each case as and to the
extent required by applicable Federal securities laws.
Parent and Sub shall provide the Company and its counsel in
writing with any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 1.02. Company Actions. (a) The Company
hereby approves of and consents to the Offer and represents
that the Board of Directors of the Company, at a meeting
duly called and held, has duly approved this Agreement, the
Offer and the Merger (including for the purposes of Section
912 of the New York Business Corporation Law (the 'BCL'))
and the Agreement, dated as of the date hereof (the
'Stockholder Agreement'), among Parent, Sub and Agway
Holdings, Inc. ('AHI'), determined that the terms of the
Offer and the Merger are fair to, and in the best interests
of, the Company and the Company's shareholders, recommended
that the Company's shareholders accept the Offer and tender
their shares pursuant to the Offer, approved the
transactions contemplated by this Agreement and the
Stockholder Agreement and waived the Company's rights under
Article 4(d) of the Company's certificate of incorporation
with respect to shares of Class B Common Stock to be sold to
and purchased by Sub pursuant to the Offer. The Company
further represents that Donaldson, Lufkin & Jenrette
Securities Corporation ('DLJ') and Goldman, Sachs & Co.
('Goldman Sachs' and, together with DLJ, the 'Advisors')
have each delivered to the Board of Directors of the Company
its written opinion that, in the case of DLJ, the
consideration to be received by holders of shares of Class A
Common Stock of the Company pursuant to the Offer and the
Merger is fair to such holders from a financial point of
view, and in the case of Goldman Sachs, the $19 per share of
Class B Common Stock in cash to be received by the holders
of shares of Class B Common Stock in the Offer and the
5
<PAGE>
Merger is fair to such holders. The Company has been
advised that all its directors and executive officers
currently intend to tender their Shares pursuant to the
Offer.
(b) As soon as practicable on the date the
recommendation of the Company with respect to the Offer is
first published or sent or given to the shareholders of the
Company, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from
time to time, the 'Schedule 14D-9') containing the
determinations and recommendations regarding the Offer
described in Section 1.02(a), shall hand deliver a copy of
the Schedule 14D-9 to Sub at its principal office, shall
give the telephonic notice required by SEC Rule 14d-9(a)(2)
to the American Stock Exchange (if possible prior to the
opening of the market), shall mail a copy of the Schedule
14D-9 to the American Stock Exchange by means of first-class
mail and shall mail the Schedule 14D-9 to the shareholders
of the Company. Each of the Company, Parent and Sub shall
promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any
material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall
provide Parent and its counsel in writing with any comments
the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company
shall cause its transfer agent to furnish Sub promptly with
mailing labels containing the names and addresses of the
record holders of Common Stock as of a recent date and of
those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders,
security position listings and computer files and all other
information in the Company's possession or control regarding
the record and beneficial owners of Common Stock, and shall
furnish to Sub such information and assistance (including
updated lists of shareholders, security position listings
and computer files) as Parent may reasonably request in
communicating the Offer to the Company's shareholders.
Subject to the requirements of applicable law, and except
6
<PAGE>
for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate
the Merger, until the consummation of the Merger Parent and
Sub shall hold in confidence the information contained in
any such labels, listings and files, shall use such
information only in connection with the Offer and the Merger
and, if this Agreement shall be terminated, shall, upon
request, deliver to the Company all copies of such
information then in their possession.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the BCL, Sub shall be merged with and
into the Company at the Effective Time of the Merger (as
defined in Section 2.03). Following the Merger, the
separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the
'Surviving Corporation') and shall succeed to and assume all
the rights and obligations of Sub in accordance with the
BCL.
SECTION 2.02. Closing. The closing of the Merger
(the 'Closing') shall take place at 10:00 a.m. on a date to
be specified by the parties, which (subject to satisfaction
or waiver of the conditions set forth in Sections 7.02 and
7.03) shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in
Section 7.01 (the 'Closing Date'), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue,
New York, N.Y. 10019, unless another date or place is agreed
to in writing by the parties hereto.
SECTION 2.03. Effective Time. As soon as practi-
cable following the satisfaction or waiver of the conditions
set forth in Article VII, the parties shall file a certifi-
cate of merger or other appropriate documents (in any such
case, the 'Certificate of Merger') executed in accordance
with the relevant provisions of the BCL and shall make all
other filings or recordings required under the BCL, it being
understood that if Sub then owns at least 90% of the
outstanding shares of each class of Common Stock the Merger
shall be effected under the procedures permitted by
Section 905 of the BCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with
7
<PAGE>
the New York Secretary of State, or at such other time as
Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective
being the 'Effective Time of the Merger').
SECTION 2.04. Effects of the Merger. The Merger
shall have the effects set forth in the BCL, including
Section 906 thereof.
SECTION 2.05. Certificate of Incorporation and
By-laws. (a) The Certificate of Incorporation of the
Surviving Corporation shall be amended, to the extent
necessary, to read as provided in Exhibit B, until there-
after changed or amended as provided therein or by applica-
ble law.
(b) The By-laws of Sub as in effect at the
Effective Time of the Merger shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub at
the Effective Time of the Merger shall be the directors of
the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. With the exception of
the Company's Chairman of the Board, the officers of the
Company at the Effective Time of the Merger shall be the
officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be; provided, however, that the Chairman of the Board and,
at the request of Parent or Sub, any officer who would be
entitled, under the terms of any severance or similar plan,
to receive severance benefits upon such officer's voluntary
departure from the Company upon completion of the Merger,
shall tender their resignations immediately following the
Effective Time of the Merger.
8
<PAGE>
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the
Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holder of any shares
of Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and
outstanding share of the capital stock of Sub shall be
converted into and become one fully paid and nonassess-
able share of Common Stock, par value $0.01 per share,
of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent
Owned Stock. Each share of Common Stock that is owned
by the Company or by any subsidiary of the Company and
each share of Common Stock that is owned by Parent, Sub
or any other subsidiary of Parent shall automatically
be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange
therefor.
(c) Conversion of Common Stock. Subject to
Sections 3.01(b) and 3.01(d), each issued and
outstanding share of Common Stock shall be converted
into the right to receive from Parent the cash price
per share of Common Stock paid pursuant to the Offer
or, if no shares of Common Stock are purchased pursuant
to the Offer, the highest price per share offered by
Sub in the Offer (the 'Merger Consideration'). As of
the Effective Time of the Merger, all such shares of
Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing
any such shares of Common Stock shall cease to have any
rights with respect thereto, except the right to
receive the Merger Consideration without interest.
(d) Shares of Dissenting Shareholders. Notwith-
standing anything in this Agreement to the contrary,
any issued and outstanding shares of Common Stock held
by a Dissenting Shareholder shall not be converted as
described in Section 3.01(c) but shall become the right
to receive such consideration as may be determined to
be due to such Dissenting Shareholder pursuant to the
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laws of the State of New York; provided, however, that
the shares of Common Stock outstanding immediately
prior to the Effective Time of the Merger and held by a
Dissenting Shareholder who shall, after the Effective
Time of the Merger, withdraw his demand for appraisal
or lose his right of appraisal, in either case pursuant
to the BCL, shall be deemed to be converted as of the
Effective Time of the Merger, into the right to receive
the Merger Consideration. The Company shall give
Parent (i) prompt notice of any written demands for
appraisal of shares of Common Stock received by the
Company and (ii) the opportunity to direct all negotia-
tions and proceedings with respect to any such demands.
The Company shall not, without the prior written
consent of Parent, voluntarily make any payment with
respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 3.02. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time of the
Merger, Parent shall select a bank or trust company to act
as exchange agent (the 'Exchange Agent') for the exchange of
the Merger Consideration upon surrender of certificates
representing Common Stock.
(b) Parent To Provide Merger Consideration.
Parent shall take all steps to provide to the Exchange Agent
promptly after the Effective Time of the Merger all the
funds payable in exchange for the outstanding shares of
Common Stock pursuant to Section 3.01.
(c) Exchange Procedure. As soon as reasonably
practicable after the Effective Time of the Merger, the
Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding shares
of Common Stock (the 'Certificates') whose shares were
converted into the right to receive the Merger Consideration
pursuant to Section 3.01, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall
be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effect-
ing the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Parent, together with such
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<PAGE>
letter of transmittal, duly executed, and such other docu-
ments as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration into which the
shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to
Section 3.01 and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of
ownership of Common Stock which is not registered in the
transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate
so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger
Consideration, without interest, into which the shares of
Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01. No
interest will be paid or will accrue on the Merger
Consideration upon the surrender of any Certificate.
(d) No Further Ownership Rights in Common Stock.
All Merger Consideration paid upon the surrender of
Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of
Common Stock theretofore represented by such Certificates,
subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a
record date prior to the Effective Time of the Merger which
may have been declared or made by the Company on such shares
of Company Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time of the Merger and have
not been paid prior to surrender, and there shall be no
further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Common
Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time
of the Merger, Certificates are presented to the Surviving
11
<PAGE>
Corporation for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) No Liability. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any person
in respect of any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have
been surrendered prior to three years after the Effective
Time of the Merger (or immediately prior to such earlier
date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.01(d))), the
payment in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of
the Company. The Company represents and warrants to Parent
and Sub as follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corpo-
rate power and authority to carry on its business as
now being conducted, except where the failure to be so
organized, existing or in good standing or to have such
power would not, individually or in the aggregate, have
a material adverse effect on the Company. Each of the
Company and each of its subsidiaries is duly qualified
or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so
qualified or licensed (individually or in the
aggregate) would not have a material adverse effect on
the Company. The Company has delivered to Parent
complete and correct copies of its Certificate of
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Incorporation and By-laws and the certificates of
incorporation and by-laws of its subsidiaries, in each
case as amended to the date of this Agreement.
(b) Subsidiaries. The disclosure schedule
previously delivered by the Company to Parent (the
'Disclosure Schedule') lists each subsidiary of the
Company. All the outstanding shares of capital stock
of each such subsidiary have been validly issued and
are fully paid and nonassessable and, except as set
forth in the Disclosure Schedule, are owned by the
Company, by another subsidiary of the Company or by the
Company and another such subsidiary, free and clear of
all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever
(collectively, 'Liens'), except as set forth in the
Disclosure Schedule. Except for the capital stock of
its subsidiaries and except for the ownership interests
set forth in the Disclosure Schedule, the Company does
not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, part-
nership, joint venture or other entity.
(c) Capital Structure. The authorized capital
stock of the Company consists of 10,125,000 shares of
Class A Common Stock and 4,050,000 shares of Class B
Common Stock. At the close of business on
September 27, 1994, (i) 6,633,129 shares of Class A
Common Stock and 2,056,876 shares of Class B Common
Stock were issued and outstanding, (ii) no shares of
Common Stock were held by the Company in its treasury
and (iii) 474,153 shares of Class A Common Stock were
reserved for issuance pursuant to options outstanding
under the Stock Plans (as defined in Section 6.04).
Except as set forth above, at the close of business on
September 27, 1994, no shares of capital stock or other
voting securities of the Company were issued, reserved
for issuance or outstanding. There are no outstanding
stock appreciation rights which were not granted in
tandem with a related Employee Stock Option (as defined
in Section 6.04). All outstanding shares of capital
stock of the Company are, and all shares which may be
issued pursuant to the Stock Plans (as defined in
Section 6.04) will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are not any bonds,
debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or
13
<PAGE>
exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may
vote. Except as set forth above, as of the date of
this Agreement, there are not any securities, options,
warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or
any of its subsidiaries, directly or indirectly, to
offer, issue, deliver or sell, or cause to be offered,
issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of
any of its subsidiaries or obligating the Company or
any of its subsidiaries, directly or indirectly, to
offer, issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking (other than this
Agreement). As of the date of this Agreement, there
are not any outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries (other than
this Agreement).
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to enter
into this Agreement and, subject, in the case of the
Merger, to approval of this Agreement by the Required
Company Shareholder Vote (as defined in
Section 4.01(m)) (except as otherwise permitted by
Section 905 of the BCL), to consummate the transactions
contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions contem-
plated by this Agreement have been duly authorized by
all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to
approval of this Agreement by the Required Company
Shareholder Vote (except as otherwise permitted by
Section 905 of the BCL). This Agreement has been duly
executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforce-
able against the Company in accordance with its terms.
The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or
14
<PAGE>
lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the
properties or assets of the Company or any of its
subsidiaries under, (i) subject, in the case of the
Merger, to approval of this Agreement by the Required
Company Shareholder Vote, the Certificate of
Incorporation or By-laws of the Company or the
comparable charter or organizational documents of any
of its subsidiaries, (ii) subject to the receipt of the
consents specifically listed in Items 3 and 5 of the
Disclosure Schedule, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its
subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) or (iii), any
such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not
(x) have a material adverse effect on the Company,
(y) impair the ability of the Company to perform its
obligations under this Agreement or (z) prevent, enjoin
or materially delay the consummation of or alter the
terms of any of the transactions contemplated by this
Agreement. No consent, approval, order or authoriza-
tion of, or registration, declaration or filing with,
any Federal, state or local government or any court,
administrative or regulatory agency or commission or
other governmental authority or agency, domestic or
foreign (a 'Governmental Entity'), is required by or
with respect to the Company or any of its subsidiaries
in connection with the execution and delivery of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger
notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the 'HSR Act'), (ii) the filing with the SEC of (w)
the Schedule 14D-9, (x) the Information Statement (as
defined in Section 4.01(f)), (y) a proxy statement or
information statement relating to the approval by the
Company's shareholders of this Agreement, if such
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<PAGE>
approval is required by law (as amended or supplemented
from time to time, the 'Proxy Statement'), and (z) such
reports under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the New York
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (iv) such notices,
filings and consents as may be required under the
Illinois Responsible Property Transfer Act of 1988 and
the Indiana Responsible Property Transfer Law, (v) such
filings as may be required in connection with the taxes
described in Section 6.09, (vi) the filings required by
Article 16 of the BCL and (vii) such other consents,
approvals, orders, authorizations, registrations,
declarations and filings as are specifically set forth
in the Disclosure Schedule.
(e) SEC Documents; Financial Statements;
Undisclosed Liabilities. The Company has filed, as and
when required, all required reports, schedules, forms,
statements and other documents with the SEC since
June 25, 1994 (the 'SEC Documents'). As of their
respective dates, the SEC Documents complied in all
material respects with the requirements of the
Securities Act of 1933 (the 'Securities Act') or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any SEC Document
has been revised or superseded by a later Company Filed
SEC Document (as defined in Section 4.01(g)), none of
the SEC Documents contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the circum-
stances under which they were made, not misleading.
The financial statements of the Company included in the
SEC Documents comply as to form in all material
respects with applicable accounting requirements and
the published rules and regulations of the SEC with
16
<PAGE>
respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto) and fairly present the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). The consolidated balance sheet for the
Company and its subsidiaries as of June 25, 1994,
contained in the Disclosure Schedule fairly presents
the consolidated financial position of the Company and
its consolidated subsidiaries as of that date (subject
to annual year-end audit adjustments). Except as set
forth in the Company Filed SEC Documents or in the
Disclosure Schedule, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries
or in the notes thereto and which, individually or in
the aggregate, could reasonably be expected to have a
material adverse effect on the Company.
(f) Information Supplied. None of the informa-
tion supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Offer
Documents or the information statement to be filed by
the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the
'Information Statement') and none of the information in
the Schedule 14D-9 or, if approval of this Agreement by
the shareholders of the Company is required by law, the
Proxy Statement, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are
filed with the SEC or published, sent or given to the
Company's shareholders, or, in the case of any Proxy
Statement, at the date the Proxy Statement is filed
with the SEC or at the time the Proxy Statement is
first mailed to the Company's shareholders or at the
time of the meeting of the Company's shareholders held
to vote on approval of this Agreement, contain any
17
<PAGE>
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they are made,
not misleading (except that no representation or
warranty is made by the Company with respect to
information supplied by Parent or Sub for inclusion in
the Schedule 14D-9, the Information Statement or the
Proxy Statement). The Schedule 14D-9, the Information
Statement and any Proxy Statement will comply as to
form in all material respects with the requirements of
the Exchange Act and the rules and regulations there-
under.
(g) Absence of Certain Changes or Events. Except
as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the
'Company Filed SEC Documents') or the Disclosure
Schedule, since the date of the most recent financial
statements included in the Company Filed SEC Documents,
the Company and its subsidiaries have conducted their
business only in the ordinary course in all material
respects, and there has not been (i) any material
adverse change, or any event or condition which could
reasonably be expected to result in a material adverse
change, in the Company, other than changes, events or
conditions after the date hereof relating to any
violation of or default under the Company Finance
Documents (as defined in Section 10.03) unless such
violation or default (A) is a default in the payment
when due of any interest on or principal of the
indebtedness thereunder or (B) results in an
acceleration of the maturity of the indebtedness
thereunder or the taking of any action by the lenders
under the Company Finance Documents to realize on the
collateral securing such indebtedness, (ii) subject to
Section 5.01(a)(i), except for the regular quarterly
dividends not in excess of $.16 per share of Common
Stock with customary record and payment dates, any
declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital
stock, (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the
authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares
of its capital stock (other than pursuant to this
Agreement), (iv) (A) any granting by the Company or any
18
<PAGE>
of its subsidiaries to any director, officer or
employee of the Company or any of its subsidiaries of
any increase in compensation or benefits, except in the
ordinary course of business consistent with prior
practice or as was required under employment agreements
in effect as of the date of this Agreement and listed
in the Disclosure Schedule, (B) any granting by the
Company or any of its subsidiaries to any such
director, officer or employee of any increase in
severance or termination pay or similar benefit, except
as was required under employment, severance or
termination agreements or plans in effect as of the
date of this Agreement and listed in the Disclosure
Schedule or (C) any entry by the Company or any of its
subsidiaries into any employment, deferred
compensation, severance or termination agreement or
other similar agreement (or any amendment to any such
existing agreement) with any such director, officer or
employee, (v) any damage, destruction or loss, whether
or not covered by insurance, that has or could have a
material adverse effect on the Company, (vi) any change
in accounting methods, principles or practices by the
Company or its subsidiaries, except insofar as may have
been required to ensure compliance with generally
accepted accounting principles, (vii) prior to the date
of this Agreement, any (A) incurrence, assumption or
guarantee by the Company or any of its subsidiaries of
any indebtedness, other than in the ordinary course of
business in amounts and on terms consistent with past
practices, (B) issuance or sale of any securities
convertible into or exchangeable for debt securities of
the Company or any of its subsidiaries or (C) issuance
or sale of options or other rights to acquire from the
Company or any of its subsidiaries, directly or
indirectly, debt securities of the Company or any of
its subsidiaries or any securities convertible into or
exchangeable for any such debt securities, (viii) prior
to the date of this Agreement, any creation or
assumption by the Company or any of its subsidiaries of
any Lien on any material asset, other than in the
ordinary course of business consistent with past
practices or as required by the Company Finance
Documents, (ix) prior to the date of this Agreement,
any making of any loan, advance or capital contribution
to or investment in any person other than loans,
advances or capital contributions to or investments in
(A) wholly owned subsidiaries of the Company made in
the ordinary course of business consistent with past
19
<PAGE>
practice, (B) Parent and (C) directors, officers and
employees of the Company and its subsidiaries made in
the ordinary course of business consistent with past
practice, (x) prior to the date of this Agreement, any
transaction or commitment made, or any contract or
agreement entered into, by the Company or any of its
subsidiaries that is material to the Company, other
than those contemplated by this Agreement, or (xi) any
agreement or arrangement made by the Company or any of
its subsidiaries to take any action which, if taken
prior to the date hereof, would have made any
representation or warranty in this Section 4.01(g)
untrue or incorrect in any material respect.
(h) Litigation. Except as disclosed in the
Company Filed SEC Documents or in the Disclosure
Schedule, there is no investigation by any Governmental
Entity, suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affect-
ing the Company or any of its subsidiaries or any of
their respective properties or assets (and the Company
is not aware of any basis for any such investigation,
suit, action or proceeding) that, individually or in
the aggregate, could reasonably be expected to (i) have
a material adverse effect on the Company, (ii) impair
the ability of the Company to perform its obligations
under this Agreement or (iii) prevent, enjoin or
materially delay the consummation of or alter the terms
of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunc-
tion, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of
its subsidiaries having, or which, insofar as reason-
ably can be foreseen, in the future would have, any
such effect.
(i) Absence of Changes in Benefit Plans. Except
(i) as disclosed in the Company Filed SEC Documents,
(ii) as contemplated by Section 6.04(a) and (iii) for
the change to the KES Plan (as defined in
Section 6.05(b)) expressly contemplated by the
Disclosure Schedule, since the date of this Agreement,
there has not been any adoption or amendment in any
material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or
any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock,
20
<PAGE>
retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally
binding) providing benefits to any current or former
employee, officer or director of the Company or any of
its subsidiaries (collectively, 'Benefit Plans').
Except as disclosed in the Company Filed SEC Documents
or in the Disclosure Schedule, there exist no
employment, consulting, severance, termination or
indemnification agreements, arrangements or
understandings, written or oral, between the Company or
any of its subsidiaries and any current or former
officer, director, employee or consultant of the
Company or any of its subsidiaries which require
aggregate annual payments or total payments over the
life of such agreement, arrangement or understanding to
such officer, director, employee or consultant in
excess of $25,000 or $40,000, respectively, other than
any such agreement, arrangement or understanding
terminable without penalty by the Company or the
applicable subsidiary upon not more than one month's
notice. The Company has delivered to Parent a true and
complete copy of each such agreement and an accurate
summary of each such other arrangement or
understanding.
(j) ERISA Compliance. (i) The Disclosure
Schedule contains a list and brief description of all
'employee pension benefit plans' (as defined in
Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ('ERISA')), 'employee welfare
benefit plans' (as defined in Section 3(1) of ERISA)
and all other Benefit Plans maintained, or contributed
to, by the Company or any of its subsidiaries for the
benefit of any current or former employees, officers or
directors of the Company or any of its subsidiaries.
The Company has delivered to Parent true, complete and
correct copies of (w) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions
thereof), (x) the most recent annual report on Form
5500 filed with the Internal Revenue Service with
respect to each Benefit Plan (if any such report was
required), (y) the most recent summary plan description
for each Benefit Plan for which such summary plan
description is required and (z) each trust agreement
and group annuity contract relating to any Benefit
Plan.
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(ii) Except as disclosed
in the Disclosure Schedule, all Benefit Plans that are
employee benefit pension plans (each, a 'Pension Plan')
have been the subject of determination letters from the
Internal Revenue Service to the effect that such Pension
Plans are qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the
Internal Revenue Code of 1986, as amended (the 'Code'),
and no such determination letter has been revoked nor,
to the knowledge of the Company, has revocation been
threatened, nor has any such Pension Plan been amended
since the date of its most recent determination letter
or application therefor in any respect that would
adversely affect its qualification or materially
increase its costs.
(iii) The Company has
furnished to Parent the most recent actuarial report or
valuation with respect to each Pension Plan subject to
Title IV of ERISA, other than any Pension Plan that is a
'multiemployer plan' (as such term is defined in Section
4001(a)(3) of ERISA; collectively, the 'Multiemployer
Pension Plans'). The information supplied to the actuary
by the Company for use in preparing those reports or
valuations was true and correct in all material
respects. None of the Pension Plans has an
'accumulated funding deficiency' (as such term is
defined in Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Parent has received a
true and complete copy of the most recent actuarial
report prepared by the Company's actuaries. The
assumptions used in such actuarial report and applied
in making such determination were, and continue to be,
reasonable. None of the Company, any of its
subsidiaries, any officer of the Company or any of its
subsidiaries or any of the Benefit Plans which are
subject to ERISA, including the Pension Plans, any
trusts created thereunder or any trustee or administra-
tor thereof, has engaged in a 'prohibited transaction'
(as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Com-
pany, any of its subsidiaries or any officer of the
Company or any of its subsidiaries to the tax or
penalty on prohibited transactions imposed by such
Section 4975 or to any liability under Section 502(i)
or (1) of ERISA. Neither any of such Benefit Plans nor
any of such trusts has been terminated, nor has there
22
<PAGE>
been any 'reportable event' (as that term is defined in
Section 4043 of ERISA) with respect thereto, during the
last five years. Neither the Company nor any of its
subsidiaries has suffered or otherwise caused a 'com-
plete withdrawal' or a 'partial withdrawal' (as such
terms are defined in Sections 4203 and Section 4205,
respectively, of ERISA) since the effective date of
such Sections 4203 and 4205 with respect to any of the
Multiemployer Pension Plans.
(iv) With respect to any
Benefit Plan that is an employee welfare benefit plan,
except as disclosed in the Disclosure Schedule, (x) no
such Benefit Plan is unfunded or funded through a 'welfare
benefits fund', as such term is defined in Section 419(e)
of the Code and (y) each such Benefit Plan that is a
'group health plan', as such term is defined in Section
5000(b)(1) of the Code, complies with the applicable
requirements of Section 4980B(f) of the Code.
(k) Taxes. Except as set forth in the Disclosure
Schedule, each of the Company and each of its
subsidiaries has timely filed all tax returns and
reports required to be filed by it and has paid (or the
Company has paid on its behalf) all taxes required to
be paid by it, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an
adequate reserve for all taxes payable by the Company
and its subsidiaries for all taxable periods and
portions thereof through the date of such financial
statements. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or
any of its subsidiaries, and no requests for waivers of
the time to assess any such taxes are pending. The
Federal income tax returns of the Company and each of
its subsidiaries consolidated in such returns have been
examined by and settled with the United States Internal
Revenue Service for all years through 1988. As used in
this Agreement, 'taxes' shall include all Federal,
state, local and foreign income, property, sales,
excise and other taxes, tariffs or governmental charges
of any nature whatsoever and all penalties and interest
with respect thereto. The Disclosure Schedule sets
forth the Company's most recent estimate of the basis,
as defined in Section 1012 of the Code, as of
December 24, 1993, of the Company's assets (by asset
categories). Such estimate was made in good faith,
applying reasonable assumptions.
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(l) No Excess Parachute Payments. Except as set
forth in the Disclosure Schedule, any amount that could
be received (whether in cash or property or the vesting
of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who
is a 'disqualified individual' (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement,
other compensation arrangement or Benefit Plan cur-
rently in effect would not be characterized as an
'excess parachute payment' (as such term is defined in
Section 280G(b)(1) of the Code). Except as set forth
in the Disclosure Schedule, no 'covered employee' (as
such term is defined in Section 162(m) of the Code) of
the Company or any of its subsidiaries is entitled to,
or as a result of the transactions contemplated hereby
or of a change in control of the Company would be
entitled to, 'applicable employee remuneration' (as
such term is defined in Section 162(m) of the Code) not
deductible by reason of Section 162(m) of the Code.
(m) Voting Requirements. In the event
Section 905 of the BCL does not eliminate the need for
the approval and adoption by the shareholders of the
Company of this Agreement and the plan of merger
included herein, the affirmative votes of (i) the
holders of two-thirds of the outstanding shares of
Class A Common Stock and Class B Common Stock, voting
as one class, (ii) the holders of a majority of the
outstanding shares of the Class A Common Stock and
(iii) the holders of a majority of the outstanding
shares of the Class B Common Stock approving this
Agreement (the 'Required Company Shareholder Vote') are
the only votes of the holders of any class or series of
the Company's capital stock necessary to consummate the
Merger.
(n) State Takeover Statutes. The Board of
Directors of the Company has approved the Offer, the
Merger and this Agreement, and such approval is suffi-
cient to render inapplicable to the Offer, the Merger,
this Agreement and the transactions contemplated by
this Agreement the provisions of Section 912 of the
BCL. To the best of the Company's knowledge, other
than Article 16 and Section 912 of the BCL, no state
takeover statute or similar statute or regulation
applies or purports to apply to the Offer, the Merger,
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this Agreement or any of the transactions contemplated
by this Agreement.
(o) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other
person, other than the Advisors, is entitled to any
broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The
Company has provided to Parent true and complete copies
of its agreements with the Advisors.
(p) Compliance with Laws. (i) Each of the
Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ('Permits')
necessary for it to own, lease or operate its
properties and assets and to carry on its business as
now conducted, and there has occurred no default under
any such Permit, except for the absence of Permits and
for defaults under Permits which absence or defaults,
individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the
Company. Except as disclosed in the Company Filed SEC
Documents, the Company and its subsidiaries are in
compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or
orders of any Governmental Entity, except for possible
noncompliance which, individually or in the aggregate,
could not reasonably be expected to have a material
adverse effect on the Company.
(ii) The Company has provided
Parent with certain environmental materials relating to the
facilities and operations of the Company and its
subsidiaries, which materials are identified in the
Disclosure Schedule (the 'Environmental Materials').
Except as set forth in the Disclosure Schedule, (A) neither
the Company nor any of its subsidiaries have received any
written communication from a Governmental Entity that
alleges that the Company or any subsidiary is not in
compliance in any material respect with any
Environmental Laws, (B) each of the Company and its
subsidiaries hold, and are in compliance with, all
Permits required for the Company and its subsidiaries
to conduct their respective businesses under
25
<PAGE>
Environmental Laws, and are in compliance with all
Environmental Laws, except for the absence of such
Permits and incidents of noncompliance which absence or
noncompliance, individually or in the aggregate, could
not reasonably be expected to have a material adverse
effect on the Company, and (C) the Company has no
knowledge of any environmental materials, events or
facts or information other than as set forth in the
Disclosure Schedule which disclose or could reasonably
be expected to give rise to an environmental liability
which would have a material adverse effect on the
Company. As used in this Agreement, the term
'Environmental Laws' means, as of the Closing Date, any
applicable treaties, laws, regulations, enforceable
requirements, orders, decrees or judgments issued,
promulgated or entered into by any Governmental Entity,
which relate to (A) pollution or protection of the
environment or (B) Hazardous Materials (as hereinafter
defined) generation, storage, use, handling, disposal
or transportation including the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. 9601 et seq.
('CERCLA'), the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. 6901 et seq., the Federal
Water Pollution Control Act, as amended, 33 U.S.C.
1251 et seq., the Clean Air Act of 1970, as amended,
42 U.S.C. 7401 et seq., the Toxic Substances Control
Act of 1976, 15 U.S.C. 2601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et
seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated
thereunder. As used in this Agreement, the term
'Hazardous Materials' means all explosive or regulated
radioactive materials or substances, hazardous or toxic
substances, wastes or chemicals, petroleum or petroleum
distillates, asbestos or asbestos containing materials,
and all other materials or chemicals regulated pursuant
to any Environmental Law, including materials listed in
49 C.F.R. 172.101 and materials defined as hazardous
pursuant to Section 101(14) of CERCLA.
(q) Contracts; Debt Instruments. (i) Neither
the Company nor any of its subsidiaries is in violation
of or in default under (nor does there exist any
condition which upon the passage of time or the giving
of notice would cause such a violation of or default
under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession,
26
<PAGE>
franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or
by which it or any of its properties or assets is
bound, except as set forth in the Disclosure Schedule
and except for violations or defaults that would not,
individually or in the aggregate, result in a material
adverse effect on the Company.
(ii) Set forth in the
Disclosure Schedule is (x) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in
an aggregate principal amount in excess of $1,000,000 is
outstanding or may be incurred and (y) the respective
principal amounts outstanding thereunder, in each case as
of February 26, 1994. The Company has provided to Parent
a true and complete copy of all such documents and
instruments. For purposes of this Agreement,
'indebtedness' shall mean, with respect to any person,
without duplication, (A) all obligations of such person
for borrowed money, or with respect to deposits or
advances of any kind to such person, (B) all
obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (C) all
obligations of such person upon which interest charges
are customarily paid, (D) all obligations of such
person under conditional sale or other title retention
agreements relating to property purchased by such
person, (E) all obligations of such person issued or
assumed as the deferred purchase price of property or
services (excluding obligations of such person to
creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such
person's business), (F) all capitalized lease
obligations of such person, (G) all obligations of
others secured by any lien on property or assets owned
or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or
currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit
issued for the account of such person (excluding
letters of credit issued for the benefit of suppliers
to support accounts payable to suppliers incurred in
the ordinary course of business) and (J) all guarantees
and arrangements having the economic effect of a
27
<PAGE>
guarantee of such person of any indebtedness of any
other person.
(iii) Set forth in the
Disclosure Schedule is a list of (A) any letter of intent,
agreement in principle, other understanding or agreement in
effect on the date hereof for the future sale, lease or
other disposition by the Company or any of its subsidiaries
of any assets, except for sales of inventory or assets
no longer used or useful in the conduct of its
business, in each case in the ordinary course and
consistent with past practice, (B) any letter of
intent, agreement in principle, other understanding or
agreement in effect on the date hereof to which the
Company or any of its subsidiaries is a party and that
substantially limits the freedom of the Company or any
of its subsidiaries to (1) compete in any line of
business or with any person or in any area or which
would so limit the freedom of the Company or any
subsidiaries after the Effective Time of the Merger
(other than any such agreement that has been in effect
for longer than seven years if the Company and all its
subsidiaries are currently in material compliance with
such agreement) or (2) sell, lease or otherwise dispose
of any significant portion of the assets of the Company
(determined on a consolidated basis) or (C) any other
agreement in effect on the date hereof not made in the
ordinary course of business and material to the Company
under which the Company or any of its subsidiaries has
material unperformed obligations, if entered into less
than seven years prior to the date hereof, or, with
respect to such agreements entered into before such
date, would, if entered into as of the date hereof, be
considered made not in the ordinary course. The
Company has provided the Parent with a true and
complete copy of all such contracts and agreements.
(r) Title to Properties. (i) Except as set
forth in the Disclosure Schedule, each of the Company
and each of its subsidiaries has good and marketable
title to, or valid leasehold interests in, all its
properties and assets, except for such as are no longer
used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of
business and except for defects in title, easements,
restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its
28
<PAGE>
business as currently conducted. All such assets and
properties, other than assets and properties in which
the Company or any of its subsidiaries has leasehold
interests, are free and clear of all Liens other than
those set forth in the Disclosure Schedule and except
for Liens that, in the aggregate, do not and will not
materially interfere with the ability of the Company
and its subsidiaries to conduct their respective
businesses, as currently conducted.
(ii) Except as set forth in
the Disclosure Schedule, each of the Company and each of
its subsidiaries has complied in all material respects with
the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases
are in full force and effect. Each of the Company and
each of its subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(s) Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name
rights, service marks, service mark rights, copyrights
and other proprietary intellectual property rights and
computer programs (collectively, 'Intellectual Property
Rights') which are material to the conduct of the
business of the Company and its subsidiaries as
currently conducted. The Disclosure Schedule sets
forth a description of all Intellectual Property Rights
which are material to the conduct of the business of
the Company and its subsidiaries as currently
conducted. Except as set forth in the Disclosure
Schedule, no claims are pending or, to the knowledge of
the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the
Company, except as set forth in the Disclosure
Schedule, no person is infringing the rights of the
Company or any of its subsidiaries with respect to any
Intellectual Property Right.
29
<PAGE>
SECTION 4.02. Representations and Warranties of
Parent and Sub. Parent and Sub represent and warrant to the
Company as follows:
(a) Organization, Standing and Corporate Power.
Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on
its business as now being conducted, except where the
failure to be so organized, existing or in good
standing or to have such power would not, individually
or in the aggregate, have a material adverse effect on
Parent. Parent has provided the Company with complete
and correct copies of its and Sub's Certificate of
Incorporation and By-laws.
(b) Capital Structure. The authorized capital
stock of Parent consists of 5,000,000 shares of
Preferred Stock, par value $25 per share, and
5,000,000 shares of common stock, par value $5 per
share. At the close of business on September 19, 1994,
(i) 2,043,493 shares of Parent Common Stock and
2,623,604 shares of Parent Preferred Stock were issued
and outstanding. As of the date of this Agreement, the
authorized capital stock of Sub consists of
10,000 shares of common stock, par value $0.01 per
share, all of which have been validly issued, are fully
paid and nonassessable and are owned by Parent free and
clear of any Liens.
(c) Authority; Noncontravention. Parent and Sub
have all requisite corporate power and authority to
enter into this Agreement and to consummate the trans-
actions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action
on the part of Parent and Sub. This Agreement has been
duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of such
party, enforceable against such party in accordance
with its terms. The execution and delivery of this
Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compli-
ance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or
30
<PAGE>
both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under,
(i) the certificate of incorporation or by-laws of
Parent or Sub or the comparable charter or
organizational documents of any other subsidiary of
Parent, (ii) subject to the receipt of the consents
specifically listed in Items 3 and 5 of the Disclosure
Schedule, any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Parent or Sub or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to Parent, Sub or any other subsidiary of Parent or
their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a material
adverse effect on Parent, (y) impair the ability of
Parent and Sub to perform their respective obligations
under this Agreement or (z) prevent, enjoin or
materially delay the consummation of or alter the terms
of any of the transactions contemplated by this
Agreement. No consent, approval, order or
authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or
with respect to Parent, Sub or any other subsidiary of
Parent in connection with the execution and delivery of
this Agreement or the consummation by Parent or Sub, as
the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form
under the HSR Act, (ii) the filing with the SEC of
(x) the Offer Documents and (y) such reports under
Sections 13 and 16 of the Exchange Act as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the New York
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (iv) such filings
as may be required in connection with the taxes
described in Section 6.09, (v) such notices, filings
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<PAGE>
and consents as may be required under the Illinois
Responsible Property Transfer Act of 1988 and the
Indiana Responsible Property Transfer Law, (vi) the
filings required by Article 16 of the BCL and
(vii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings
as may be required under the 'takeover' or 'blue sky'
laws of various states. Neither Parent nor any of its
Affiliates or Associates (as each such term is defined
in Section 912 of the BCL) is, at the date of execution
and delivery of this Agreement, an Interested
shareholder (as such term is defined in 912 of the BCL)
of the Company.
(d) SEC Documents; Financial Statements;
Undisclosed Liabilities. Parent has filed, as and when
required, all required reports, forms and other
documents with the SEC since June 26, 1993 (the 'Parent
SEC Documents'). As of their respective dates, the
Parent SEC Documents complied in all material respects
with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of
the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not mis-
leading. Except to the extent that information
contained in any Parent SEC Document has been revised
or superseded by a later Parent Filed SEC Document (as
defined in Section 4.02(f)), none of the Parent SEC
Documents contains any untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The financial
statements of Parent included in the Parent SEC
Documents comply as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis
during the periods involved and fairly present the
consolidated financial position of Parent and its
32
<PAGE>
consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Parent Filed
SEC Documents, neither Parent nor any of its
subsidiaries has any material liabilities or
obligations required by generally accepted accounting
principles to be recognized or disclosed on a
consolidated balance sheet of Parent and its consoli-
dated subsidiaries or in the notes thereto and which,
individually or in the aggregate, would have a material
adverse effect on Parent.
(e) Information Supplied. None of the informa-
tion supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in the
Schedule 14D-9 or, if approval of this Agreement by the
shareholders of the Company is required by law, the
Proxy Statement, and none of the information in the
Offer Documents or the Information Statement will, in
the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the
Offer Documents, the Schedule 14D-9, and the
Information Statement are filed with the SEC or
published, sent or given to the Company's shareholders,
or, in the case of the Proxy Statement, at the date any
Proxy Statement is first mailed to the Company's
shareholders or at the time of the meeting of the
Company's shareholders held to vote on approval of this
Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading (except that no
representation or warranty is made by Parent or Sub
with respect to information supplied by the Company for
inclusion in the Offer Documents or the Information
Statement). The Offer Documents will comply as to form
in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
(f) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed and
publicly available prior to the date of this Agreement
(the 'Parent Filed SEC Documents') or the Disclosure
Schedule, since the date of the most recent financial
statements contained in the Parent Filed SEC Documents,
33
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Parent has conducted its business only in the ordinary
course and there has not been (i) any material adverse
change, or any event or condition which could
reasonably be expected to result in a material adverse
change, in Parent, (ii) except for regular annual
dividends (in an amount determined in a manner
consistent with Parent's past practice) with customary
record and payment dates, any declaration, setting
aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to
any of Parent's capital stock, (iii) any split,
combination or reclassification of any of its capital
stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock
or (iv) any change in accounting methods, principles or
practices by Parent, except insofar as may have been
disclosed in the Parent SEC Documents or required to
ensure compliance with generally accepted accounting
principles.
(g) Litigation. Except as disclosed in the
Parent Filed SEC Documents or in the Disclosure
Schedule, there is no investigation by any Governmental
Entity, suit, action or proceeding pending or, to the
knowledge of Parent, threatened against or affecting
Parent or any of its subsidiaries or any of their
respective properties or assets that, individually or
in the aggregate, could reasonably be expected to
(i) have a material adverse effect on Parent,
(ii) impair in any material respect the ability of
Parent to perform its obligations under this Agreement
or (iii) prevent, enjoin or materially delay the
consummation of or alter the terms of any of the
transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding
against Parent or any of its subsidiaries having, or
which is reasonably likely to have, any such effect.
(h) Brokers. No broker, investment banker,
financial advisor or other person, other than Dillon,
Read & Co. Inc., the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission
in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
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(i) Contracts; Debt Instruments. Neither Parent
nor any of its subsidiaries is in violation of or in
default under (nor does there exist any condition which
upon the passage of time or the giving of notice would
cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture,
lease or other contract, agreement, arrangement or
understanding, to which it is a party or by which it or
any of its properties or assets is bound, except for
violations or defaults that could not, individually or
in the aggregate, reasonably be expected to result in a
material adverse effect on Parent.
(j) Title to Properties. Parent and its
subsidiaries have good and marketable title to, or
valid leasehold interests in, all their material
properties and assets, except as otherwise indicated in
the Disclosure Schedule or for such as are no longer
used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of
business and except for defects in title, easements,
restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its
business as currently conducted. All such material
properties and assets, other than properties and assets
in which Parent or any of its subsidiaries has
leasehold interests, and other than as reflected in the
Disclosure Schedule are free and clear of all Liens,
except for Liens that, in the aggregate, do not and
will not materially interfere with the ability of
Parent and its subsidiaries to conduct business as
currently conducted.
(k) Financing. Parent and Sub have funds avail-
able on hand or available pursuant to binding
commitments or 'highly confident' letters from
financing sources sufficient to consummate the Offer
and the Merger on the terms contemplated by this
Agreement, and, at the Effective Time of the Merger,
Parent and Sub will have available all of the funds
necessary (x) to repay the indebtedness outstanding
under the Commercial Bank Credit Agreement (as defined
in Section 10.03(b)), (y) to perform their respective
obligations under this Agreement and (z) to pay all the
related fees and expenses in connection with the
foregoing. Parent has provided to the Company true and
correct copies of all commitment letters, 'highly
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confident' letters and other evidence satisfactory to
the Company that Parent has such sufficient funds.
Parent and Sub shall use all commercially reasonable
efforts to complete and satisfy all conditions to
lending under such finance commitments.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business. (a) Conduct
of Business by the Company. During the period from the date
of this Agreement to the Effective Time of the Merger, or,
if earlier, the consummation of the Offer, the Company
shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business
organizations, keep available the services of their current
officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that
their goodwill and ongoing businesses shall be unimpaired at
the Effective Time of the Merger. Without limiting the
generality of the foregoing, during the period from the date
of this Agreement to the Effective Time of the Merger, or,
if earlier, the consummation of the Offer, except as set
forth in the Disclosure Schedule, the Company shall not, and
shall not permit any of its subsidiaries to:
(i) (x) except for regular quarterly dividends not
in excess of $.16 per share of Common Stock with
customary record and payment dates, declare, set aside
or pay any dividends on, or make any other
distributions in respect of, any of its capital stock,
other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its
parent (provided that the Company shall not set as the
record date for a dividend a date earlier than
November 15, 1994), (y) split, combine or reclassify
any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock
or (z) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any
36
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rights, warrants or options to acquire any such shares
or other securities;
(ii) offer, issue, deliver,
sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or
convertible securities (other than (x) the issuance of
Common Stock upon the exercise of Employee Stock Options
outstanding on the date of this Agreement in accordance
with their present terms and (y) the issuance of shares of
Class A Common Stock on a one for one basis in connection
with any requested conversion of outstanding shares of
Class B Common Stock to shares of Class A Common Stock
by the holders of Class B Common Stock);
(iii) amend its certificate of
incorporation, by-laws or other comparable charter or
organizational documents;
(iv) acquire or agree to
acquire (x) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof or (y) any assets that
are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, except
purchases of inventory and other assets in the ordinary
course of business consistent with past practice;
(v) except as required by the Company's Finance
Documents (as in effect on the date hereof, true and
complete copies of which have been delivered to Parent)
in the case of any property of the Company (including
after-acquired property) in which the Company is
obligated to deliver to the secured party thereunder a
security interest or mortgage or except as permitted by
the Company's Finance Documents (as in effect on the
date hereof) with respect to capitalized lease
obligations or purchase money debt, mortgage or other-
wise encumber or subject to any Lien (other than any
Lien arising by operation of law) or, except for sales
in the ordinary course of business consistent with past
practice of inventory or assets no longer used or
usable by the Company or such subsidiary, sell, lease
or otherwise dispose (or enter into any letter of
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intent, agreement in principle, other understanding or
commitment to sell, lease or otherwise dispose) of any
of its properties or assets;
(vi) (y) incur any indebtedness
for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or
warrants or other rights to acquire, directly or indirectly,
any debt securities of the Company or any of its
subsidiaries or any securities convertible into or
exchangeable for debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another
person, enter into any 'keep well' or other agreement
to maintain any financial statement condition of
another person or enter into any arrangement having the
economic effect of any of the foregoing, except for
(A) short-term borrowings incurred in the ordinary
course of business consistent with past practice if
pursuant to or permitted by the Company Finance
Documents (as in effect on the date hereof) and
(B) indebtedness to Parent, or (z) make any loans,
advances or capital contributions to, or investments
in, any other person, other than to or in (A) the Com-
pany or any direct or indirect wholly owned subsidiary
of the Company made in the ordinary course of business
consistent with past practice, (B) Parent and
(C) directors, officers and employees of the Company
and its subsidiaries made in the ordinary course of
business consistent with past practice so long as such
loans and advances do not, as to any one director,
officer or employee, exceed $10,000 and such loans and
advances do not, as to all such loans and advances,
exceed $50,000 in aggregate;
(vii) make or agree to make any
capital expenditures except as have been set forth in the
Company's approved capital budget for 1994, as amended
prior to the date hereof by the Boards of Directors of
Parent and the Company; provided, however, that (A) the
Company may make any necessary or appropriate capital
expenditures resulting from the fire at the Southern
Frozen Foods plant in Montezuma, GA, to the extent such
expenditures are (I) permitted or required by paragraphs
18 and 19 of the Integrated Agreement (as defined in
Section 6.07(d)) or (II) are made out of the proceeds
of insurance payments or are reasonably expected by the
Company to be reimbursed by insurance, and (B) the
Company or its subsidiaries may make emergency capital
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expenditures, not exceeding $25,000 as to any single
emergency, in accordance with the Company's Corporate
Policy Manual concerning capital expenditures and
consistent with past practice;
(viii) make any material tax
election (unless required by law) or settle or compromise
any material income tax liability;
(ix) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected
or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes
thereto) of the Company included in the Company Filed
SEC Documents, disclosed in the Disclosure Schedule or
incurred in the ordinary course of business consistent
with past practice, or waive the benefits of, or agree
to modify in any manner, any confidentiality, stand-
still or similar agreement to which the Company or any
of its subsidiaries is a party;
(x) enter into any agreement, contract,
transaction or commitment other than in the ordinary
course of business consistent with past practice and,
if material to the Company, other than on terms
reasonably acceptable to Parent;
(xi) enter into any agreement,
contract, transaction or commitment that limits the freedom
of the Company or any of its subsidiaries to compete in
any line of business or with any person or in any area
or which would so limit the freedom of the Company or
any subsidiaries after the Effective Time of the
Merger; or
(xii) authorize any of, or
commit or agree to take any of, the foregoing actions.
(b) Other Actions. The Company and Parent shall
not, and shall not permit any of their respective subsidi-
aries to, take any action that would result in, or omit to
take any action the omission of which would result in
(i) any of the representations and warranties of such party
set forth in this Agreement that are qualified as to
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materiality becoming untrue, (ii) any of such representa-
tions and warranties that are not so qualified becoming
untrue in any material respect (except for the
representations and warranties in Sections 4.01(c) and (g)
that are not so qualified, which shall not be permitted to
become untrue in any respect) or (iii) except as
contemplated by Section 8.01(a), any of the conditions to
the Merger set forth in Article VII not being satisfied.
(c) Notwithstanding any provision of this
Section 5.01 or any other Section of this Agreement or of
the Integrated Agreement to the contrary, the Company's
Board of Directors may declare, and the Company may pay, a
cash dividend not in excess of $.16 per share of Common
Stock with a record date therefor on or after November 15,
1994, and prior to December 31, 1994.
ARTICLE VI
Additional Agreements
SECTION 6.01. Shareholder Approval; Preparation
of Proxy Statement. (a) If approval of this Agreement by
the shareholders of the Company is required by law, the
Company shall, following the expiration or consummation of
the Offer, duly call, give notice of, convene and hold a
meeting of its shareholders (the 'Company Shareholders
Meeting') for the purpose of approving this Agreement and
the transactions contemplated by this Agreement. The
Company shall, through its Board of Directors, recommend to
its shareholders approval of this Agreement and the
transactions contemplated by this Agreement, except to the
extent that the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of this
Agreement or the Merger as contemplated by Section 8.01(a).
Notwithstanding the foregoing, if Sub shall own at least 90%
of the outstanding shares of each class of Common Stock, and
provided the conditions set forth in Section 7.01 shall have
been satisfied or waived, the parties shall take all
necessary and appropriate action to cause the Merger to
become effective simultaneously with or as soon as
practicable after acceptance of shares of Common Stock for
payment pursuant to the Offer without the approval of the
shareholders of the Company in accordance with Section 905
of the BCL.
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(b) If approval of this Agreement by the
shareholders of the Company is required by law, as promptly
as practicable following expiration or consummation of the
Offer, the Company shall prepare and file with the SEC the
Proxy Statement. The Company shall use its best efforts to
cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after such filing.
(c) If approval of this Agreement by the
shareholders of the Company is required by law, Parent shall
cause all shares of Common Stock owned by it, Sub or any
other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. Access to Information; Confiden-
tiality. The Company shall, and shall cause each of its
subsidiaries to, afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and
other representatives, reasonable access during normal busi-
ness hours during the period prior to the Effective Time of
the Merger to all their respective properties, books, con-
tracts, commitments, personnel and records and, during such
period, the Company shall, and shall cause each of its sub-
sidiaries to, furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements
of Federal or state securities laws and (ii) all other
information concerning its business, properties and
personnel as Parent may reasonably request. Parent shall
hold, and shall cause its Representatives (as defined in the
Confidentiality Agreement dated February 16, 1994 (the
'Confidentiality Agreement'), between the Company and
Parent) to hold, any Evaluation Material (as defined in the
Confidentiality Agreement) in confidence in accordance with
the terms of the Confidentiality Agreement and, in the event
of termination of this Agreement for any reason, Parent
shall promptly return or destroy, and cause to be returned
or destroyed, all Evaluation Material in accordance with the
terms of the Confidentiality Agreement.
SECTION 6.03. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, unless, as contemplated by
Section 8.01(a), the Board of Directors of the Company
approves or recommends a superior takeover proposal, each of
the parties shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in
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doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other
transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities
and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of any of the
transactions contemplated by this Agreement, including
seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any addi-
tional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of,
this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall
(A) cooperate and cause its officers to cooperate with and
assist Parent and Sub in obtaining financing, of the nature
described in the commitment letters and 'highly confident'
letters referred to in Section 4.02(k), sufficient to
consummate the Offer and the Merger, and to complete the
Offer and the Merger, on the terms contemplated by this
Agreement, (B) take all action necessary to ensure that no
state takeover statute or similar statute or regulation
(other than Article 16 of the BCL) is or becomes applicable
to the Offer, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement and (C) if any
state takeover statute or similar statute or regulation
(other than Article 16 of the BCL) becomes applicable to the
Offer, the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to
ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger and the other
transactions contemplated by this Agreement. Without
limiting the foregoing, Parent and Sub shall take all
reasonable actions necessary, proper or advisable to obtain
as promptly as practicable financing, consistent with the
terms of the commitment letters and 'highly confident'
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letters referred to in Section 4.02(k) or otherwise
satisfactory to Parent and Sub, sufficient to consummate the
Offer and the Merger on the terms contemplated by this
Agreement. Notwithstanding the foregoing, the Board of
Directors of the Company shall not be prohibited from taking
any action permitted by Section 8.01(a) or Section 9.01(c).
(b) The Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the
Company, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in
any material respect, (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under
this Agreement, (iii) any written notice or other
communication from any person alleging that the consent of
such person is or may be required in connection with the
transactions contemplated by this Agreement or (iv) any
notice or other communication from any Governmental Entity
in connection with the transactions contemplated by this
Agreement; provided, however, that no such notification
shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 6.04. Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any commit-
tee administering the Stock Plans) shall adopt such resolu-
tions or take such other actions as are required to adjust
the terms of all outstanding employee stock options to
purchase shares of Common Stock ('Employee Stock Options')
heretofore granted under any stock option or stock purchase
plan, program or arrangement of the Company (collectively,
the 'Stock Plans') to provide that each Employee Stock
Option outstanding immediately prior to the Effective Time
of the Merger shall be vested and exercisable. The Company
may discharge its obligations under this Section 6.04(a)
with respect to the 144,180 Employee Stock Options that were
issued in March and June 1993 and not by their terms
currently vested by causing such Employee Stock Options to
terminate without the requirement of any payment by the
Company immediately prior to the Effective Time of the
Merger and the Company shall do so with respect to any such
options held by any director of the Company (other than
Messrs. Call and Myers); and Parent and the Company shall
jointly approach each other holder of any such option to
consent to such termination.
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(b) The Stock Plans shall terminate as of the
Effective Time of the Merger, and the provisions in any
other Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in
respect of any capital stock of the Company shall be deleted
as of the Effective Time of the Merger, and the Company
shall ensure that following the Effective Time of the Merger
no holder of an Employee Stock Option or any participant in
any Stock Plan or other Benefit Plan shall have any right
thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
SECTION 6.05. Benefit Plans. (a) Parent shall
cause the Surviving Corporation to maintain in effect the
deferred compensation agreements with current and past
directors and employees as in effect on the date of this
Agreement. Parent shall cause the Surviving Corporation to
provide, for at least one year after the Effective Time of
the Merger, or, if earlier, the consummation of the Offer,
benefits to employees of the Company and its subsidiaries
that are no less favorable in the aggregate to such
employees than those in effect on the date of this
Agreement; provided, however, that neither Parent nor the
Surviving Corporation shall be obligated (i) to provide or
maintain such benefits to the extent they exceed, in the
aggregate, benefits generally provided to employees engaged
in similar industries and working in similar markets or in
competing markets or to the extent the provision or
maintenance thereof could reasonably likely be expected to
materially adversely affect the Surviving Corporation,
(ii) to offer such benefits to persons hired upon or after
the Effective Time of the Merger or the consummation of the
Offer, as applicable, (iii) to offer such benefits to the
extent such benefits would have expired, by their terms,
absent an agreement otherwise or (iv) to provide any
employees of the Company or its subsidiaries with any stock
options or other rights to acquire stock or with monetary or
other benefits in lieu of the right to receive stock options
or such other rights.
(b) Without limiting the generality of
Section 6.05(a), after the consummation of the Offer the
Company and, after the Effective Time of the Merger, the
Surviving Corporation shall, and Parent shall cause the
Company and the Surviving Corporation to, honor and perform
or discharge when due all the obligations of the Company
under the Company's Key Executive Severance Plan (the 'KES
Plan'), the Company's Non-Qualified Profit-Sharing Plan, the
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Company's Deferred Profit Sharing Plan, the Company's
Supplemental Executive Retirement Plan, the Company's
Management Incentive Plan and the agreements listed under
the heading 'Executive Agreements' in Item 5 of the
Disclosure Schedule, in each case as in effect on the date
of execution of this Agreement. The Company and Parent
acknowledge that the Effective Time of the Merger (or, if
earlier, the consummation of the Offer) shall constitute a
'Change of Control' and a 'Special Change of Control' within
the meaning of the KES Plan (and therefore also of any of
the other benefit plans and agreements listed above that
incorporates such definitions from the KES Plan), as in
effect on the date hereof, and that such 'Change of Control'
and 'Special Change of Control' shall take place at such
time. This Section 6.05(b) is intended to be for the
benefit of, and may be enforced by, each person entitled to
participate in any of the benefit plans and agreements
listed above.
SECTION 6.06. Indemnification. Parent and Sub
agree that all rights to indemnification for acts or
omissions occurring prior to the Effective Time of the
Merger now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as
provided in their respective certificates of incorporation
or by-laws shall survive the Merger and shall continue in
full force and effect in accordance with their terms for a
period of not less than six years from the Effective Time of
the Merger. Parent shall cause to be maintained for a
period of not less than three years from the Effective Time
of the Merger the Company's current directors' and officers'
insurance and indemnification policy to the extent that it
provides coverage for events occurring prior to the
Effective Time of the Merger (the 'D&O Insurance') for all
persons who are directors and officers of the Company on the
date of this Agreement, so long as the annual premium
therefor would not be in excess of $100,000 per year (the
'Maximum Premium'). If the existing D&O Insurance cannot be
maintained (because such policy is obtained through Agway
Inc.), expires, is terminated or canceled during such three-
year period, Parent shall use all reasonable efforts to
cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous than the existing D&O
Insurance.
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SECTION 6.07. Fees and Expenses. (a) Except in
the case of a wilful and material breach of this Agreement
by the other party or as otherwise set forth in this
Section 6.07, all fees and expenses incurred in connection
with the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not
the Merger is consummated. Prior to the Effective Time of
the Merger or, if earlier, the consummation of the Offer,
the Company shall not incur or pay any such fees and
expenses other than (i) fees and expenses required to be
paid under the terms of its agreements with the Advisors
(and only at or after the times required by such
agreements), (ii) fees and expenses of other agents and
advisors and (iii) reasonable fees and expenses not payable
to agents and advisors, in each case unless otherwise
approved by Parent.
(b) The Company shall pay Parent a termination
fee of $2,500,000 if this Agreement is terminated (i) in
connection with a superior takeover proposal, (ii) by Parent
pursuant to Section 9.01(d) if the Board of Directors of the
Company or any committee thereof shall have withdrawn or
modified, or resolved to withdraw or modify, in a manner
adverse to Parent or Sub its approval or recommendation of
the Offer, the Merger or this Agreement unless (A) such
withdrawal or modification shall have resulted primarily
from facts not known to the Board of Directors on the date
of this Agreement or developments occurring after the date
of this Agreement and (B) at the time of such withdrawal or
modification there shall not be pending any takeover
proposal (as defined in Section 8.01(a)) (other than by
Parent) made after the date of this Agreement or (iii) by
Parent pursuant to Section 9.01(d) and, in the case of this
clause (iii), within one year from such termination any
person (other than Parent or one of its subsidiaries)
acquires a controlling equity interest in the voting
securities, or substantially all the assets, of the Company
or engages in any merger or other business combination with
the Company (an 'Alternative Acquisition') (unless any
termination fee shall have previously been paid pursuant to
clause (i) or (ii) above). Such payment shall be paid in
immediately available funds, promptly, but in no event later
than five business days, after the termination of this
Agreement or, in the case of a payment pursuant to
clause (iii) above, after such Alternative Acquisition.
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(c) Notwithstanding anything to the contrary
contained herein, if this Agreement is terminated (i) in
circumstances in which a termination fee is due pursuant to
Section 6.07(b), (ii) by Parent pursuant to Section 9.01(d)
or (iii) pursuant to Section 9.01(b)(i) or 9.01(b)(ii) (if
due to the Company's breach) and, in the case of this
clause (iii), within two years from such termination, any
person (or an affiliate thereof) (other than Parent or one
of its subsidiaries) who, between April 1, 1993, and the
date of such termination, had made, indicated to the Board
of Directors of the Company or any committee thereof, to the
chief executive officer or chief financial officer of the
Company or to either Advisor its interest in making or was
approached by the Company to make, a takeover proposal
consummates an Alternative Acquisition, then the Company
shall reimburse Parent for all fees and expenses incurred by
Parent prior to the termination date (including the
reasonable fees and expenses of Parent's counsel and
financial advisors and any institutions that have prior to
the date hereof made a commitment to provide financing to
Parent, Sub or the Surviving Corporation for the
transactions contemplated hereby) in connection with this
Agreement and the transactions contemplated hereby, up to a
maximum reimbursement of $3,000,000.
(d) Notwithstanding anything to the contrary in
the Integrated Agreement (the 'Integrated Agreement') dated
as of June 27, 1992, between Parent and the Company, any
amounts payable by the Company pursuant to Section 6.07(b)
or 6.07(c) shall not be taken into account for the purposes
of determining any amounts due from the Company to Parent,
or from Parent to the Company, pursuant to paragraphs 48
through 52 of the Integrated Agreement.
SECTION 6.08. Public Announcements. Parent and
Sub, on the one hand, and the Company, on the other hand,
shall consult with each other before issuing, and provide
each other the opportunity to review and comment upon, any
press release or other public statements with respect to the
transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except
as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the
initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the
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form agreed to by the parties hereto prior to the execution
of this Agreement.
SECTION 6.09. Real Estate Taxes. Parent and Sub
agree that the Surviving Corporation shall pay the New York
State Real Property Transfer Tax, the New York State Real
Property Transfer Gains Tax, the Pennsylvania Realty
Transfer Tax, and the Washington State Excise Tax on Real
Estate Sales (collectively, the 'Gains Taxes'), if any, and
any penalties or interest with respect to the Gains Taxes,
payable in connection with the consummation of the Merger
without any offset, deduction, counterclaim or deferment of
price to be paid for Common Stock in the Merger. The
Company shall cooperate with Parent and Sub in the filing of
any returns with respect to the Gains Taxes, including
supplying in a timely manner a complete list of all real
property interests held by the Company that are located in
the applicable state and any information with respect to
such property that is reasonably necessary to complete such
returns. The portion of the consideration to be received by
holders of Common Stock in connection with the Merger that
is allocable to the real property of the Company and its
subsidiaries in the applicable state shall be determined by
Parent and the Company or, if they are unable to agree, an
independent appraiser selected by Parent and the Company.
The shareholders of the Company shall be deemed to have
agreed to be bound by the allocation established pursuant to
this Section 6.09 in the preparation of any return with
respect to the Gains Taxes.
SECTION 6.10. Appraisals. Prior to the Effective
Time of the Merger, Parent shall have the right to conduct
or have conducted on its behalf appraisals of all or part of
such assets and businesses of the Company and its
subsidiaries as Parent may reasonably request.
SECTION 6.11. Integrated Agreement. Prior to the
Effective Time of the Merger, the Company shall not
terminate or take any action to terminate the Integrated
Agreement between the Company and the Parent.
SECTION 6.12. Other Offers. From the date
hereof, neither the Company, any of its subsidiaries nor any
officer, director, employee or any agent of the Company or
any of its subsidiaries shall, directly or indirectly,
(i) solicit, initiate or (subject to Section 8.01(a))
encourage any takeover proposal or (ii) subject to
Section 8.01(a), engage in negotiation with or disclose any
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nonpublic information relating to the Company or any of its
subsidiaries or afford access to the properties, books or
records of the Company or any of its subsidiaries to any
person (other than Parent) that has made or that the Company
has reason to believe is considering making a takeover
proposal. The Company shall, and shall cause its
subsidiaries to, terminate any and all existing discussions
or negotiations with any person (other than Parent) relating
to any takeover proposal. The Company shall not be
responsible for any breach of this Section 6.12 by Roy
Myers, Robert Call, Jr., or any employee of the Company
involved primarily in managing the business of Parent or any
other employee of the Company acting at the request of any
of the foregoing.
SECTION 6.13. No Waiver. By entering into and
delivering this Agreement, neither the Company nor Parent
has, and neither of them shall be deemed to have, waived any
of its rights or claims against the other with respect to
the Integrated Agreement or otherwise or to have agreed with
the characterization of any arrangement, obligation, dispute
or claim involving the Company and Parent disclosed in the
Disclosure Schedule.
SECTION 6.14. Release. From and after the
Effective Time of the Merger, or, if earlier, the
consummation of the Offer, (i) Parent, the Company and the
Surviving Corporation (each a 'Releasor') shall release and
discharge each director, officer, employee, agent and
advisor of the Company (each, a 'Releasee') from any and all
claims, demands, causes of action, actions, suits,
proceedings and liabilities of any nature whatsoever
(collectively, 'Claims') that may exist at such time in
favor of any such Releasor against any such Releasee to the
extent arising out of or based upon (A) the Integrated
Agreement, including the write-down by the Company of
certain assets at the end of fiscal 1993 and in the first
half of fiscal 1995, the actions by the Company in
connection with the termination by Parent in March 1994 of
certain crops, the management by the Company of the business
of Parent prior to the date hereof or the inclusion of
certain 'change-of-control' expenses in the profits of the
Company for fiscal 1994 to be shared with Parent pursuant to
the Integrated Agreement, or (B) the transactions leading up
to this Agreement; provided, however, that the foregoing
release shall not apply to any Claim to the extent such
Claim (I) arises after the date of this Agreement,
(II) either (x) is based upon behavior of the applicable
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Releasee that is not generally consistent with the behavior
of such Releasee prior to the date hereof or (y) is based
upon any action taken by such Releasee, or failure by such
Releasee to take any action, with intentional disregard for
what such Releasee in good faith believes to be the rights
of Parent under the Integrated Agreement (it being agreed
that any action or failure to take action consistent with
such Releasee's understanding of the advice (written or
oral) of counsel shall be deemed to have been without
intentional disregard for what such Releasee in good faith
believes to be the rights of Parent), and (III) is made in
writing by Parent to such Releasee promptly upon Parent or
Sub becoming aware of facts giving rise to such Claim if
they so became aware prior to the Effective Time of the
Merger or, if earlier, the consummation of the Offer (it
being acknowledged by Parent and Sub that neither the
Company nor any Releasee concedes that a Claim made that is
consistent with this proviso is necessarily a valid claim
against any Releasee, none of whom is a party to the
Integrated Agreement); and (ii) Parent shall release and
discharge the Company from any and all claims, demands,
causes of action, actions, suits, proceedings and
liabilities of any nature whatsoever that may exist in favor
of Parent against the Company to the extent arising out of
or based upon the Integrated Agreement or the transactions
leading up to this Agreement.
SECTION 6.15. Directors. Promptly upon the
acceptance of any shares of Common Stock for payment
pursuant to the Offer, the number of directors constituting
the Board of Directors of the Company shall be reduced to
not less than seven, and Sub shall be entitled to designate
such number of directors on the Board of Directors of the
Company as shall give Sub, subject to compliance with
Section 14(f) of the Exchange Act, majority representation
on such Board of Directors, and the Company shall, at such
time, cause Sub's designees to be elected to the Board of
Directors of the Company. Notwithstanding the foregoing, if
Sub's designees are appointed or elected to the Board of
Directors of the Company, (a) immediately following such
appointment or election the Board of Directors of the
Company shall also include at least three directors who are
directors on the date hereof and who are approved by the
Board of Directors of the Company immediately prior to such
appointment or election (the 'Independent Directors') and
(b) if the number of Independent Directors shall be reduced
below three for any reason whatsoever, (i) any remaining
Independent Directors (or Independent Director, if there
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shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or (ii)
if no Independent Directors then remain, the other directors
shall designate three persons to fill such vacancies who
shall not be officers, shareholders or affiliates of the
Company, Parent or Sub, and such persons shall be deemed to
be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election,
including mailing to its shareholders an Information
Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. This Section 6.15 shall terminate upon the
Effective Time of the Merger.
SECTION 6.16. Exchange of Class B Common Stock
for Class A Common Stock. If, at any time on or after the
acceptance for payment of shares pursuant to the Offer, Sub
shall own more than 90% of the outstanding shares of Class B
Common Stock, and (i) Sub shall own less than 90% of the
outstanding shares of Class A Common Stock, the Company
shall forthwith issue to Sub such number of shares of
Class A Common Stock as shall be sufficient to cause Sub to
own at least 90% of the outstanding shares of Class A Common
Stock or (ii) Sub shall own 90% or more of the outstanding
shares of Class A Common Stock, the Company shall at Sub's
request issue to Sub additional shares of Class A Common
Stock, in each case in exchange for an equivalent number of
shares of Class B Common Stock surrendered by Sub to the
Company; provided, however, that the foregoing exchange
shall only be effected to the extent that the surrender of
such shares of Class B Common Stock shall not result in Sub
owning less than 90% of the outstanding shares of Class B
Common Stock after giving effect to such surrender.
SECTION 6.17. Stockholder Agreement. Parent and
Sub shall not exercise the option granted by AHI pursuant to
the Stockholder Agreement unless Sub is simultaneously
accepting, or has previously accepted, for payment pursuant
to the Offer at least 44% of the outstanding shares of Class
A Common Stock.
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ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obliga-
tion To Effect the Merger. The respective obligation of
each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Shareholder Approval. If required by
applicable law, this Agreement shall have been approved
and adopted by the Required Company Shareholder Vote.
(b) HSR Act. The waiting period (and any
extension thereof) applicable to the Merger under the
HSR Act shall have been terminated or shall have
expired.
(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in
effect, no proceeding challenging this Agreement or
seeking to prohibit, prevent or materially delay, or
alter any of the terms of, the transactions
contemplated hereby shall have been instituted by any
Governmental Entity and be pending and no other
proceeding challenging this Agreement or seeking to
prohibit, prevent or materially delay, or alter any of
the terms of, the transactions contemplated hereby
shall have been instituted by any other person and be
pending if, in the written opinion of counsel for the
party seeking to invoke this condition, such other
proceeding is reasonably likely to have a material
adverse affect on the Company; provided, however, that
each of the parties shall have used its reasonable best
efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any
injunction or other order that may be entered.
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<PAGE>
SECTION 7.02. Conditions to Obligations of Parent
and Sub. Unless Sub shall have accepted shares of Common
Stock for payment pursuant to the Offer, the obligations of
Parent and Sub to effect the Merger are further subject to
the following conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of the Company set forth in
this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects (except that the representations
and warranties in Sections 4.01(c) and 4.01(g) shall be
true and correct in all respects), in each case as of
the date of this Agreement and as of the Closing Date,
as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Parent
shall have received a certificate signed on behalf of
the Company by the chief executive officer and the
chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such
effect.
(c) Employee Stock Options. Other than the
144,180 Employee Stock Options granted in March and
June 1993 that are not by their terms currently vested,
each Employee Stock Option shall have been exercised or
terminated.
(d) Consents. Parent shall have received, or be
satisfied that it will receive, any consents, filings,
approvals or waivers from third parties required to
consummate the Merger, other than such consents,
filings, approvals or waivers the absence of which
would not, individually or in the aggregate, have a
material adverse effect on the operation of the
business of the Company after the Effective Time of the
Merger substantially in the manner now conducted.
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(e) Financing. Parent shall have received
financing sufficient to consummate the Merger on the
terms contemplated by this Agreement.
(f) Advisors' Termination. Parent shall have
received evidence, reasonably satisfactory to it, of
the termination of the contracts, agreements and other
arrangements between the Company and each Advisor,
terminating as of the Effective Time of the Merger all
of the Company's (or any successor's) obligations
thereunder, except the obligations to make the expense
reimbursements and other payments in connection with
the Offer and the Merger required by the agreements
previously delivered to Parent and referred to in
Section 4.01(o), and the indemnification and
contribution obligations for services performed before
the Effective Time of the Merger, as set out in such
agreements previously delivered to Parent.
(g) Other Documents. The Parent shall have
received all other documents it may reasonably request
relating to the existence of the Company and its
corporate authority for this Agreement, all in form and
substance reasonably satisfactory to the Parent.
SECTION 7.03. Conditions to Obligation of the
Company. Unless Sub shall have accepted shares of Common
Stock for payment pursuant to the Offer, the obligation of
the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set
forth in this Agreement that are qualified as to
materiality shall be true and correct, and the
representations and warranties of Parent and Sub set
forth in this Agreement that are not so qualified shall
be true and correct in all material respects, in each
case as of the date of this Agreement and as of the
Closing Date, as though made on and as of the Closing
Date, except as otherwise contemplated by this
Agreement, and the Company shall have received a
certificate signed on behalf of each of Parent and Sub
by the chief executive officer and the chief financial
officer of such entity to such effect.
(b) Performance of Obligations of the Parent and
Sub. Each of Parent and Sub shall have performed in
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all material respects all obligations required to be
performed by it under this Agreement at or prior to the
Closing Date, and the Company shall have received a
certificate signed on behalf of each of Parent and Sub
by the chief executive officer and the chief financial
officer of such entity to such effect.
ARTICLE VIII
Board Actions
SECTION 8.01. Board Actions. (a) Notwith-
standing any other provision of this Agreement to the
contrary, to the extent required by the fiduciary obliga-
tions of the Board of Directors of the Company, as deter-
mined in good faith by a majority of the disinterested
members thereof based on the written advice of the Company's
outside counsel:
(i) the Company may, in response to an unsolicited
request therefor, participate in discussions or
negotiations with, or furnish information with respect
to the Company pursuant to a customary confidentiality
agreement (as determined by the Company's outside
counsel) to, any person who a majority of such
disinterested directors believes (A) intends to submit
a takeover proposal and (B) has the financial ability
to make (or the ability to obtain financing for) a
superior takeover proposal (for purposes of this
Agreement, 'takeover proposal' means any proposal for a
merger or other business combination involving the
Company or any proposal or offer to acquire in any
manner, directly or indirectly, a controlling equity
interest in any voting securities of, or a substantial
portion of the assets of, the Company, other than the
transactions contemplated by this Agreement); and
(ii) the Board of Directors of the Company may
approve or recommend (and, in connection therewith,
withdraw or modify its approval or recommendation of
this Agreement, the Offer or the Merger) a superior
takeover proposal and the Company may enter into an
agreement with respect to such superior takeover
proposal (for purposes of this Agreement, 'superior
takeover proposal' means a bona fide takeover proposal
made by a third party (A) that a majority of the
disinterested members of the Board of Directors of the
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Company determines in its good faith judgment (based on
the advice of the Company's independent financial
advisor) to be more favorable to the Company's
shareholders than the Offer and the Merger, (B) for
which financing, to the extent required, is then
committed or the subject of 'highly confident' letters
issued by reputable, nationally recognized investment
banking firms and (C) that is not subject to any
condition requiring the sale by the Company of any
material asset unless a reputable, financially capable
person has agreed, or entered into a letter of intent,
subject only to customary conditions to purchase such
asset on terms that would satisfy such condition).
(b) The Company promptly shall advise Parent
orally and in writing of any takeover proposal or any
inquiry with respect to or which could lead to any takeover
proposal and the identity of the person making any such
takeover proposal or inquiry. The Company shall keep Parent
fully informed of the status and details of any such take-
over proposal or inquiry and shall provide copies of all
such proposals, together with any financing commitments,
'highly confident' letters, letters of intent and other
relevant documents.
(c) For purposes of this Section 8.01, a member
of the Board of Directors of the Company shall be
'disinterested' unless he or she is an executive officer of
the Company or Parent or an executive officer or director of
Agway Inc.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the
Merger, whether before or after approval of the transactions
contemplated by this Agreement, by the shareholders of the
Company:
(a) by mutual written consent of Parent and the
Company;
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<PAGE>
(b) by notice from either Parent or the Company to
the other:
(i) unless Sub shall have accepted shares of
Common Stock for payment pursuant to the Offer,
if, upon a vote at a duly held Company
Shareholders Meeting or any adjournment thereof,
the required approval of the shareholders of the
Company shall not have been obtained as
contemplated by Section 6.01(a);
(ii) unless Sub shall
have accepted shares of Common Stock for payment
pursuant to the Offer, if the Merger shall not have
been consummated on or before February 28, 1995,
unless the failure to consummate the Merger is the
result of a wilful and material breach of this
Agreement by the party seeking to terminate this
Agreement; provided, however, that the passage of such
period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order,
decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger
or the calling or holding of the Company Shareholders
Meeting; or
(iii) if any
Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(c) by notice to Parent from the Company if the
Board of Directors of the Company shall have
(i) withdrawn or modified its approval or
recommendation of this Agreement, the Offer or the
Merger, as contemplated by Section 8.01(a)(ii), or
(ii) determined to enter into an agreement with respect
to a superior takeover proposal as contemplated by
Section 8.01(a); provided, however, that, in either
case, the Company shall have entered into a binding
agreement with respect to such superior takeover
proposal within five business days of its notice to
Parent of such termination (and, if the Company shall
not have done so, such notice of termination shall be
null and void and any amounts paid to Parent or Sub
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pursuant to Section 6.07 shall be promptly returned by
Parent to the Company);
(d) by notice to the Company from Parent
if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or
recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any superior
takeover proposal, (ii) the Company shall have entered
into any agreement with respect to any superior
takeover proposal (other than a confidentiality
agreement as contemplated by Section 8.01(a)(i)) or
(iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the
foregoing;
(e) unless Sub shall have accepted shares of
Common Stock for payment pursuant to the Offer, by
notice to the Company from Parent if any Governmental
Entity shall have issued an order, decree or ruling
that (i) shall have become final and unappealable and
(ii) would, in the reasonable judgment of Parent, have
a material adverse effect on the operation after the
Effective Time of the Merger of the business of the
Company and its subsidiaries substantially in the
manner now conducted;
(f) by notice from either Parent or the Company to
the other if Sub shall not have accepted shares of
Common Stock for payment pursuant to the Offer within
ten business days after expiration of the Offer;
provided, however, that such notice shall have been
given within 15 business days after expiration of the
Offer; and
(g) by notice from either Parent or the Company to
the other if Sub shall not have accepted shares of
Common Stock for payment pursuant to the Offer by
10:00 a.m., New York time, on December 16, 1994;
provided, however, that the Company shall not have the right
to terminate this Agreement pursuant to clause (f) or (g)
above if (i) at the time of expiration of the Offer the
Minimum Tender Condition (as defined in Exhibit A) shall not
have been satisfied and (ii) at least five business days
prior to the time of expiration of the Offer, Sub shall have
publicly disclosed that it has executed definitive
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agreements or otherwise has commitments reasonably
satisfactory to the Company, subject only to customary
closing conditions, for financing that would be sufficient
to consummate the Offer and the Merger on the terms
contemplated by the Agreement.
SECTION 9.02. Effect of Termination. In the
event of termination of this Agreement by either the Company
or Parent as provided in Section 9.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 4.01(o),
Section 4.02(h), the last sentence of Section 6.02,
Section 6.05, Section 6.07, Section 6.14, Section 6.15, this
Section 9.02 and Article X and except to the extent that
such termination results from the wilful and material breach
by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement;
provided, however, that if the Offer is not consummated
prior to termination of this Agreement, Sections 6.05, 6.14
and 6.15 shall not survive such termination.
SECTION 9.03. Amendment. This Agreement may be
amended by the parties at any time before or after any
required approval of the transactions contemplated by this
Agreement by the shareholders of the Company; provided,
however, that, after any such approval, there shall not be
made any amendment that by law requires further approval by
such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties.
SECTION 9.04. Extension; Waiver. At any time
prior to the Effective Time of the Merger, the parties may
(a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso of
Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
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<PAGE>
SECTION 9.05. Procedure for Termination, Amend-
ment, Extension or Waiver. A termination of this Agreement
pursuant to Section 9.01, an amendment of this Agreement
pursuant to Section 9.03 or an extension or waiver pursuant
to Section 9.04 shall, in order to be effective, require
(a) in the case of Parent, Sub or the Company, action by its
Board of Directors or the duly authorized designee of its
Board of Directors and (b) in the case of the Company,
action by a majority of the members of the Board of
Directors of the Company who were members thereof on the
date of this Agreement and remain as such hereafter or the
duly authorized designee of such members; provided, however,
that in the event that Sub's designees are appointed or
elected to the Board of Directors of the Company as provided
in Section 6.15, after the acceptance for payment of shares
of Common Stock pursuant to the Offer and prior to the
Effective Time of the Merger, the affirmative vote of a
majority of the Independent Directors, in lieu of the vote
required pursuant to clause (b) above, shall be required to
(i) amend or terminate this Agreement by the Company,
(ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for
performance of Parent's and Sub's respective obligations
under this Agreement.
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time of the
Merger, or, if earlier, the consummation of the Offer. This
Section 10.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance
after the Effective Time of the Merger.
SECTION 10.02. Notices. All notices, requests,
claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses
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(or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Pro-Fac Cooperative, Inc.
90 Linden Place
P.O. Box 682
Rochester, New York 14603
Attention: Roy A. Myers
Fax: (716) 383-1606
Harris Beach & Wilcox
The Granite Building
130 East Main Street
Rochester, New York 14604-1687
Attention: Thomas M. Hampson
Fax: (716) 232-6925
and
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith
Fax: (212) 841-1010
(b) if to the Company, to
Curtice-Burns Foods, Inc.
90 Linden Place
Rochester, New York 14603
Attention: Mr. J. William Petty
Fax: (716) 383-0719
61
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Alan C. Stephenson, Esq.
Fax: (212) 474-3700
SECTION 10.03. Definitions. For purposes of this
Agreement:
An 'affiliate' of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person.
'Company Finance Documents' means, collectively,
(1) the Credit Agreement dated as of September 4, 1992,
as amended (the 'Commercial Bank Credit Agreement'),
among the Company, The Chase Manhattan Bank, N.A.
('Chase'), as agent, and the banks party thereto (the
'Commercial Banks'), (2) the Guaranty dated July 2,
1990, as amended, between the Company and Springfield
Bank for Cooperatives ('Springfield') pursuant to which
the Company has agreed to guarantee the obligations of
Parent, under (A) the Master Agreement dated October 8,
1981, as amended, (B) the Seasonal Loan Agreement dated
December 10, 1992, as amended, (C) the Seasonal Loan
Agreement (Letters of Credit) dated February 9, 1993,
as amended, and (D) various Term Loan Agreements dated
various dates, each as amended and including future
Term Loan Agreements, (3) the related agreements
securing such obligations of the Company, including (I)
each of the Security Agreement and the Trademark
Collateral Assignment and Agreement, each dated as of
September 1, 1993, among the Company, Chase and the
Commercial Banks and (II) the Security Agreement dated
as of September 1, 1993, between the Company and
Springfield and (4) the other agreements related to any
of the agreements referred to in the foregoing clauses
(1), (2) and (3), which agreements are listed in the
Disclosure Schedule.
'Material adverse change' or 'material adverse
effect' means, when used in connection with the Company
or Parent, any change or effect (or any development
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that, insofar as can reasonably be foreseen, is likely
to result in any change or effect) that is materially
adverse to the business, properties, assets, condition
(financial or otherwise), results of operations or
prospects of the Company and its subsidiaries, taken as
a whole, or Parent and its subsidiaries, taken as a
whole, as the case may be.
A 'person' means an individual, corporation,
partnership, joint venture, association, trust, unin-
corporated organization or other entity.
A 'subsidiary' of any person means another person,
an amount of the voting securities, other voting
ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by
such first person.
SECTION 10.04. Interpretation. When a reference
is made in this Agreement to a Section, such reference shall
be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words 'include', 'includes' or
'including' are used in this Agreement, they shall be deemed
to be followed by the words 'without limitation'.
SECTION 10.05. Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 10.06. Entire Agreement; No Third-Party
Beneficiaries; Effect on Arbitration Agreement. (a) This
Agreement (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of this Agreement, other than the agreement
with respect to arbitration dated August 16, 1994, between
the Company and Parent (the 'Arbitration Agreement') and the
Confidentiality Agreement, and (ii) except for the
provisions of Article III and Sections 6.05(b), 6.06 and
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<PAGE>
6.14, is not intended to confer upon any person other than
the parties any rights or remedies hereunder.
(b) Notwithstanding anything to the contrary in
the Arbitration Agreement, (i) the references in the
Schedule to the Arbitration Agreement to 'signing Merger
Agreement' and to 'signing' shall be construed as references
to November 15, 1994, or the first date prior thereto on
which Parent or Sub shall be in breach in any material
respect of its obligations hereunder, including the
penultimate sentence of Section 6.03, and (ii) the
Arbitration Agreement shall be null and void if this
Agreement shall have been terminated pursuant to Section
9.01(b)(ii) (if the Merger shall not have been consummated
due to the Company's breach of this Agreement).
SECTION 10.07. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of
conflict of laws thereof.
SECTION 10.08. Assignment. Neither this
Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part,
by operation of law or otherwise by any of the parties
without the prior written consent of the other parties,
except that Sub may assign its rights and obligations
hereunder to any other wholly owned subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree
that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of New York or in New
York state court, this being in addition to any other remedy
to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court
in the event any dispute arises out of this Agreement or any
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<PAGE>
of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not bring
any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than a Federal or state court sitting in the State of
New York or a New York state court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
PRO-FAC COOPERATIVE, INC.,
by
/s/ Roy Myers
Name: Roy A. Myers
Title: General Manager
PF ACQUISITION CORP.,
by
/s/ Roy Myers
Name: Roy A. Myers
Title: President
CURTICE-BURNS FOODS, INC.,
by
/s/ William Petty
Name: J. William Petty
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or
this Agreement, Sub shall not be required to accept for
payment or, subject to any applicable rules and regulations
of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered
shares of Common Stock after the termination or withdrawal
of the Offer), to purchase or pay for any shares of Common
Stock tendered pursuant to the Offer unless (i) there shall
have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common
Stock which would represent at least 90% of the shares of
Class A Common Stock and 90% of the shares of Class B Common
Stock outstanding at the time of expiration of the Offer
(the 'Minimum Tender Condition'), (ii) any waiting period
under the HSR Act applicable to the purchase of shares of
Common Stock pursuant to the Offer shall have expired or
been terminated and (iii) Parent or Sub shall have received
financing sufficient to consummate the Offer and the Merger
on the terms contemplated by this Agreement. Furthermore,
notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to commence the Offer
(and, if the Offer shall have commenced, Sub may terminate
or (subject to Section 1.01(a) of this Agreement) amend the
Offer) if any of the conditions set forth in clauses (a),
(b) or (d) below shall exist or if the Company is in
material breach of its obligations hereunder, nor shall Sub
be required to accept for payment or, subject as aforesaid,
to pay for any shares of Common Stock and Sub may terminate
or (subject to Section 1.01(a)) amend the Offer, if, at any
scheduled expiration date of the Offer or following the
expiration of the Offer but before the acceptance of such
shares for payment or the payment therefor, any of the
following conditions shall exist:
(a) any temporary restraining order, preliminary
or permanent injunction or other order shall have been
issued by any court of competent jurisdiction, or any
other legal restraint or prohibition shall be in
effect, that, directly or indirectly, prohibits or
delays materially Sub from purchasing or paying for
shares of Common Stock pursuant to the Offer, or
consummation of the Merger, any proceeding challenging
this Agreement or the Stockholder Agreement or seeking
to prohibit, prevent or materially delay, or alter any
of the terms of, the transactions contemplated hereby
or thereby shall have been instituted by any
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Governmental Entity and be pending or any other
proceeding challenging this Agreement or the
Stockholder Agreement or seeking to prohibit, prevent
or materially delay, or alter any of the terms of, the
transactions contemplated hereby, shall have been
instituted by any other person and be pending if, in
the written opinion of counsel for the party seeking to
invoke this condition, such other proceeding is
reasonably likely to have a material adverse effect on
the Company; provided, however, that Parent and Sub
shall have used their reasonable best efforts to
prevent the entry of such injunction or other order and
to appeal as promptly as possible any injunction or
other order that may be entered;
(b) any of the representations and warranties of
the Company set forth in this Agreement that are
qualified as to materiality, or set forth in
Section 4.01(c) or 4.01(g), or any of the
representations and warranties of AHI set forth in the
Stockholder Agreement, shall not be true and correct or
any of the other representations and warranties set
forth in this Agreement shall not be true and correct
in all material respects; in each case as if each such
representation and warranty were made as of such time;
(c) the Company or AHI shall have breached or
failed to perform when required in any material respect
any obligation required to be performed by it under
this Agreement or the Stockholder Agreement;
(d) this Agreement shall have been terminated in
accordance with its terms, or the Offer shall have been
amended or terminated with the consent of the Company;
(e) Parent shall not have received, or not be
satisfied that it shall receive, all consents, filings,
approvals or waivers from third parties required to
consummate the Offer or the Merger, other than such
consents, filings, approvals or waivers the absence of
which would not, individually or in the aggregate, have
a material adverse effect on the operation of the
business of the Company in the manner now conducted; or
(f) Parent shall not have received evidence,
reasonably satisfactory to it, of the termination of
the contracts, agreements and other arrangements
between the Company and each Advisor terminating as of
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the Effective Time of the Merger all of the Company's
(or any successor's) obligations thereunder, except the
obligations to make the expense reimbursements and
other payments in connection with the Offer and the
Merger required by the agreements previously delivered
to Parent and referred to in Section 4.01(o), and the
indemnification and contribution obligations for
services performed before the Effective Time of the
Merger, as set out in such agreements previously
delivered to Parent.
The foregoing conditions are for the sole benefit
of Sub and Parent and may be asserted by Sub or Parent
regardless of the circumstances giving rise to such
condition or (subject to Section 1.01(a)) may be waived by
Sub and Parent in whole or in part at any time and from time
to time in their sole discretion. The failure by Parent,
Sub or any other affiliate of Parent at any time to exercise
any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and
each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
<PAGE>
EXHIBIT B
Certificate of Incorporation of
Surviving Corporation
FIRST. The name of the corporation is Curtice-
Burns Foods, Inc.
SECOND. The purpose of the corporation is to
engage in any lawful act or activity for which corporations
may be organized under the Business Corporation Law of the
State of New York but not to engage in any act or activity
requiring the consent or approval of any state official,
department, board, agency or other body without such consent
or approval first being obtained.
THIRD. The office of the corporation in the State
of New York is to be located in the County of Monroe.
FOURTH. The aggregate number of shares which the
corporation shall have authority to issue is 10,000 common
shares of the par value of $.01 per share.
FIFTH. The Secretary of State of the State of New
York is designated as agent of the corporation upon whom
process in any action or proceeding against it may be
served. The address to which the Secretary of State shall
mail a copy of any process against the corporation served
upon him is in care of Curtice-Burns Foods, Inc., 90 Linden
Place, P.O. Box 681, Rochester, New York 14603, Attention:
Corporate Secretary.
SIXTH. By-laws of the corporation may be adopted,
amended or repealed by the Board of Directors of the
corporation by the vote of a majority of the directors
present at a meeting of the Board of Directors at which a
quorum is present, subject to the power of the holders of
stock having voting power thereon to alter, amend or repeal
the By-laws adopted by the Board of Directors.
SEVENTH. No holder of shares of any class of the
corporation, now or hereafter authorized, shall as such
holder have any preferential or preemptive right to
subscribe for, purchase or receive any shares of the
corporation of any class, now or hereafter authorized, or
any options or warrants for such shares, or any rights to
subscribe for or purchase such shares, or any bonds,
debentures, notes or other securities convertible into or
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exchangeable for such shares, which may at any time be
issued, sold or offered for sale by the corporation.
EIGHTH. To the fullest extent permitted by the
Business Corporation Law of the State of New York as the
same exists or may hereafter be amended, no director shall
be personally liable to the corporation or any of its
shareholders for damages for any breach of duty as a
director; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director if
a judgment or other final adjudication adverse to him
establishes that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of
law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or
that his acts violated Section 719 of the Business
Corporation Law of the State of New York.
NINTH. The corporation reserved the right to
amend, alter, change or repeal any provision contained in
this Certificate of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are
subject to this reserved power.
<PAGE>
COMPOSITE CERTIFICATE OF INCORPORATION
OF
PRO-FAC COOPERATIVE, INC.
Pursuant to Article 6 of the Cooperative
Corporations Law of the State of New York
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 Paragraphs 13 and
14 of Article 2 as limited by said Article 6 of the Cooperative
Corporation Law of the State of New York, individually or as agent
either along or in association with other corporations, firms or
individuals.
3. Its duration shall be perpetual.
4. Its principal business office is to be located at
City of Rochester, County of Monroe, State of New York.
5. The number of its directors shall be such number not
less than 5 nor more than 18 as the Bylaws shall from time to time
provide.
6. The total amount of capital stock which the
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corporation shall have is $150,000,000.
(a) The number of shares of which the capital stock
shall consist is 10,000,000 shares, of which number of shares
5,000,000 shares are to have a par value of $25 each to be known as
Non-Cumulative Preferred Stock, and 5,000,000 shares are to have a
par value of $5.00 each to be known as Common Voting Stock.
(b) The designations, preferences, privileges and
voting powers of the shares and the restrictions or qualifications
thereof are as follows:
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 Shares, dividends may be declared and paid
or set apart for payment to the holders of Common shares.
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.
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Upon dissolution or other termination of the
corporation or its business, or the distribution of its
assets, 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 and
payment. After payment to the holders of preferred stock
as herein provided, out of the funds so remaining there
shall first be paid to the holders of the common stock
the par value thereof, together with the amount of such
dividends as may have been declared but are unpaid as of
such distribution and payment. Should there be
insufficient funds to make such payment, then the holders
of such common stock shall share such funds as are
available in such proportion as the par value of and
accrued dividends on their stock shall bear to the total
par value of and accrued dividends on all outstanding
common voting stock. After payment to the holders of
preferred and common stock as herein provided, the funds
remaining shall be distributed as provided by law and in
the Bylaws of the Corporation.
The holders of common voting stock shall have all
the voting power of the corporation excepting as
otherwise expressly provided by law. Each holder of
common voting stock shall have one vote regardless of the
number of such shares held by such shareholder. When two
or more holders of common voting stock join in an
agricultural venture which markets crops through the
corporation, the Board of Directors shall in its
discretion, determine whether such venture is a single
agricultural enterprise for which the holders of the
common voting 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
voting stock who participate in the enterprise to more
than one vote.
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.
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
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relieved of and from 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
anywise 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 by the Board 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 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 provided.
(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 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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PRO-FAC COOPERATIVE, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. Principal Office
The principal office of 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
MEMBERSHIP
Section 1. Eligibility
All persons, partnerships, firms, corporations,
institutions and business organizations of any sort 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. Application for Membership
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: (a) comply with and be
bound by the terms and conditions contained in the Certificate of
Incorporation and in these Bylaws and amendments thereto; (b)
purchase the required number of shares of common stock of the
Cooperative as established from time to time by the Board of
Directors based upon the quantity and type of agricultural products
to marketed through the Cooperative by the applicant; and (c) take
into account, pursuant to Section 1385 and 1388 of the Internal
Revenue Code of 1954, 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.
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
<PAGE>
The Board of Directors, by resolution adopted by a
majority of the entire Board, 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 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 by only persons, partnerships, firms, corporations,
institutions, or other business organizations of any sort 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. The term 'member' shall refer to
an owner of common stock of the Cooperative.
(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 the 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 dividends accrued to the
date of such sale.
(f) Should a member desire or be required by the
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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 common shares 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.
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 (1) has become in
default in payment of his subscription for common stock, or (2)
willfully fails to comply with these Bylaws or otherwise obstructs
the purposes or proper activities of general marketing agreement,
crop 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 therefor. 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 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
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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.
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.
ARTICLE III
MEETINGS OF MEMBERS
Section 1. Annual Meeting
(a) The annual meeting of members of the Cooperative
shall be held at such time and place as shall be designated 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 than ten, not more than fifty days prior
to the meeting, postage prepaid, a copy of such notice directed to
each eligible voter at his address as the same appears o the books
of the Cooperative.
(b) The Board of Directors may direct that, in lieu of
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. At each regional
meeting the members shall from their number elect a delegate and an
alternate delegate (who shall act if the delegate is unable to
serve) to represent the members at the meeting of delegates. Any
action required to be taken by the entire membership of the
Cooperative shall then be taken in their behalf by the delegates so
elected at a subsequent meeting of delegates.
(d) Delegates and alternate delegates shall be nominated
in the same manner as provided herein for the nomination of
regional directors.
(e) To the maximum extent possible, the members shall at
regional meetings instruct their delegates as to how to vote at any
meeting of delegates. At any meeting of delegates each delegate
shall, as to all matters voted upon by members as a regional
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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 meting.
(f) 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 delegates.
(g) 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 (or any alternate delegates if they are serving
instead of the delegates) shall constitute a quorum.
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 same manner as that
required for the annual meeting.
Section 3. Quorum and Voting
(a) At all meetings of the members, the members present
shall constitute a quorum. At any regularly called meeting of
members, 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 meetings of members, 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.
(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
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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 annual or special 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 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. Agway Inc. is involved in many activities in support
of agriculture, Curtice-Burns, Inc., with which the Cooperative
has a close working relationship, is familiar with and responsible
to the interest of the general public which buys the products of
Curtice-Burns, Inc., many of which are manufactured from crops
grown by members of the Cooperative; the stock of Curtice-Burns,
Inc. is also widely held by many members of the investing public.
Accordingly, in appointing directors to represent primarily the
interest of the general public in the Cooperative, the Board of
Directors shall appoint as such a director a nominee of Agway Inc.
and a nominee of Curtice-Burns, Inc.
(d) In the event that regional meetings of members are
directed to be held, the members in each region shall elect the
director or directors for that region. In any region which is
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divided into districts, the members in each district shall elect
the directors from that director.
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 shall be
nominated by the regional or district nominating committees formed
pursuant to these Bylaws. Directors may otherwise be nominated
only by members from the floor of the annual meeting or the
respective regional membership meetings.
(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 or 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 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, the Board of
Directors may request the nominating committees for the affected
regions or districts to nominate members for election to those
vacant directorships to which the region or district may be
entitled to elect after the redistribution of director
representation as provided in this Section 5. At the next annual
regional meeting of members of the regions affected, or at a
special meeting of such members, as determined by the Board of
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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 be filled
until the next annual meeting by a majority vote of the remaining
directors at any meeting of the Board. 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, a stated sum and expenses
of attendance may be allowed for such meetings as they necessarily
attend in behalf of the Cooperative.
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.
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,
except as to the following matters:
(1) The submission to members of any action that by law
requires authorization of members.
(2) The filling of vacancies in the Board of Directors
or in any committee.
(3) The fixing of compensation of any director for
serving on the Board or on any committee.
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(4) The amendment or repeal of the Bylaws, or the
adoption of new Bylaws.
(5) The amendment or repeal of any resolution of the
Board which by its terms shall not be so amendable or repealable.
The Board 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 the 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.
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 than 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.
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
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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; he 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 and
of the members or delegates and shall
(a) give or cause to be given a notice of all meetings
of members, shareholders, delegates and the Board of Directors.
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(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, 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
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Section 1. Formation
There shall be a commodity committee representing the
member-growers for each of the major crops produced for the
Cooperative as determined by the Board of Directors.
Section 2. Committee Members
The number, distributions, 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.
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.
ARTICLE VIII
INVESTMENT SUMMARIES AND SHARES OF STOCK
Section 1. Investment Summaries
Unless otherwise required by law, the Cooperative shall
not issue certificates for stock but 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. Certificate of Stock
When required by law, the Cooperative shall issue stock
certificates. 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
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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 it 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 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 of
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 be determined; and all persons
who were holders of record of voting stock at such time and no
others 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.
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ARTICLE IX
PROCESSING & 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. Such other 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
other 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
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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
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 its 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 Curtice-Burns, Inc.
Section 2. Pools
The Cooperative shall operate with a single pool unless
the Board of Directors determines that additional pools are
advisable. The term 'pool' means the grouping together each fiscal
year for accounting purposes, of the operations concerned with the
determination of proceeds derived from a commodity or group of
commodities.
Section 3. Patronage Proceeds
The patronage proceeds of the Cooperative shall be the
gross receipts derived from sources which under law qualify as
patronage income, including income from the sale of raw product 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. 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.
Section 4. Members' Share of Patronage Proceeds
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Each member's and each agent grower's pro rata share of
the patronage proceeds shall be determined annually by dividing the
patronage proceeds by the total raw product value (commercial
market value times total quantity delivered); this gives the
percent of commercial market value earned. The multiplication of
that percentage by the raw product value delivered by each member
and agent grower determines the pro rata share of patronage
proceeds of each member and agent grower. In any year in which
patronage proceeds as determined pursuant to Sections 3, 4 and 8
are less than commercial market value 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 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, up to a total payment or
allocation of full commercial market value or the maximum amount
available under the program, whichever is less.
Section 5. Payment of Patronage Proceeds
Without any further action on the part of any officer or 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 determined pursuant to
Section 4. Such payment or 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 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 so retained shall be allocated among the
members and agent growers entitled thereto, and the Cooperative
shall cause written notice of such allocation to be sent to each
such member and agent grower. The balance of the patronage
proceeds not so retained shall be paid in cash.
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 of the Internal Revenue Code of
1954, 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.
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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. 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.
Section 9. Dissolution
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.
After such payments, out of any funds then remaining, holders
of non-cumulative preferred stock are entitled to receive the full
par value of such stock, together with the amount of such dividends
as may have been declared but are then unpaid. After payment to
the holders of preferred stock, out of any funds then remaining,
the holders of common stock are entitled to receive the par value
thereof, together with the amount of such dividends as may have
been declared but are then unpaid.
After payments to the holders of preferred and common stock,
any funds then remaining shall be distributed among the members to
whom interests in funds retained by the Cooperative have been
allocated during the preceding five fiscal years 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 of the Certificate of
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. The 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, they are to be determined in
accordance with the most recent edition 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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COMPOSITE CERTIFICATE OF INCORPORATION
of
CURTICE-BURNS FOODS, INC.
1. The name of the corporation shall be: Curtice-Burns
Foods, Inc.
2. The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized
under the Business Corporation Law of the State of New York, but
not to engage in any act or activity requiring the consent or
approval of any state official, department, board, agency or other
body without such consent or approval first being obtained.
3. The aggregate number of shares which the corporation
shall have authority to issue is 10,000 common shares of the par
value of $.01 per share.
4. No holder of shares of any class of the corporation,
now or hereafter authorized, shall as such holder have any
preference or preemptive right to subscribe for, purchase or
receive any shares of the corporation of any class, now or
hereafter authorized, or any options or warrants for such shares,
or any rights to subscribe for or purchase such shares, or any
bonds, debentures, notes or other securities convertible into or
exchangeable for such shares, which may at any time be issued, sold
or offered for sale by the corporation.
5. The office of the corporation is to be located in
the City of Rochester, County of Monroe, and State of New York.
The address to which the Secretary of State shall mail a copy of
process in any action or proceeding against the corporation which
may be served upon him is 90 Linden Place, Post Office Box 681,
Rochester, New York 14603.
6. The duration of the corporation shall be perpetual.
7. The corporation reserves the right to alter, change
or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by law, and
all rights and powers conferred herein on stockholders, directors
and officers are subject to this reserved power.
8. By-laws of the corporation may be adopted, amended
or repealed by the Board of Directors of the corporation by the
vote of a majority of the directors present at a meeting of the
Board of Directors at which a quorum is present, subject to the
power of the holders of stock having voting power thereon to alter,
amend or repeal the By-laws adopted by the Board of Directors.
9. The Secretary of State is designated as agent of the
corporation upon whom process in any action or proceeding against
<PAGE>
the corporation may be served.
10. To the fullest extent permitted by the Business
Corporation Law of the State of New York as the same exists or may
hereafter be amended, no director shall be personally liable to the
corporation or any of its shareholders for any breach of duty as a
director; provided, however, that the foregoing provision shall not
eliminate or limit the liability of a director if a judgment or
other final adjudication adverse to him establishes that his acts
or omissions were in bad faith or involved intentional misconduct
or a knowing violation of law or that he personally gained in fact
a financial profit or other advantage to which he was not legally
entitled or that his acts violated Section 719 of the Business
Corporation Law of the State of New York.
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BY-LAWS
OF
CURTICE BURNS FOODS, INC.
ARTICLE I
Shareholders
Section 1.1. Annual Meetings. A meeting of shareholders shall
be held annually for the election of directors and the
transaction of other business on such date as may be designated
by the Board of Directors from time to time.
Section 1.2. Special Meetings. Special meetings of shareholders
may be called at any time by the Board of Directors, the Chairman
of the Board, if any, or the President.
Section 1.3. Place of Meetings. Meetings of shareholders shall
be held at such place, within or without the State of New York,
as may be fixed by the Board of Directors. If no place is fixed,
such meetings shall be held at the principal office of the
Corporation in the State of New York.
Section 1.4. Notice of Meetings. Written notice of each meeting
of shareholders shall be given stating the place, date and hour
of the meeting. Notice of a special meeting of shareholders
shall state the purpose or purposes for which the meeting is
called and shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting.
If, at any meeting of shareholders, action is proposed to be
taken which would, if taken, entitle shareholders fulfilling the
requirements of Section 623 of the New York Business Corporation
Law to receive payment for their shares, the notice of such
meeting shall include a statement of that purpose and to that
effect and shall be accompanied by a copy of Section 623 or an
outline of its material terms.
A copy of the notice of each meeting of shareholders shall be
given, personally or by first class mail, not fewer than ten nor
more than fifty days before the date of the meeting, provided,
however, that a copy of such notice may be given by third class
mail not fewer than twenty-four nor more than fifty days before
the date of the meeting, to each shareholder entitled to vote at
such meeting. If mailed, such notice shall be deemed given when
deposited in the United States mail, with postage thereon
<PAGE>
prepaid, directed to the shareholder at his address as it appears
on the record of shareholders, or, if he shall have filed with
the Secretary of the Corporation a written request that notices
to him be mailed to some other address, then directed to him at
such other address.
When a meeting of shareholders is adjourned to another time or
place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment
is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date
of the meeting. However, if after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each
shareholder of record on the new record date entitled to notice
under the preceding paragraphs of this Section 1.4.
Section 1.5. Waiver of Notice. Notice of meeting need not be
given to any shareholder who submits a signed waiver of notice,
in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by
proxy, without protesting prior to the conclusion of the meeting
the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 1.6. Inspectors. Voting at meetings of shareholders
need not be conducted by inspectors unless a shareholder present
in person or by proxy and entitled to vote at such meeting so
requests. The Board of Directors, in advance of any
shareholders' meeting, may appoint one or more inspectors to act
at the meeting or any adjournment thereof. If inspectors are not
so appointed, the person presiding at a shareholders' meeting
may, and on the request of any shareholder entitled to vote
thereat shall, appoint one or more inspectors. In case any
person appointed fails to appear or act, the vacancy may be
filled by appointment made by the Board in advance of the meeting
or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according
to the best of his ability.
The inspectors shall determine the number of shares outstanding
and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders.
On request of the person presiding at the meeting or any
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shareholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, question or matter determined
by them and execute a certificate of any fact found by them.
Section 1.7. List of Shareholders at Meetings. A list of
shareholders as of the record date, certified by the Secretary or
any Assistant Secretary or by a transfer agent, shall be produced
at any meeting of shareholders upon the request thereat or prior
thereto of any shareholder. If the right to vote at any meeting
is challenged, the inspectors of election, or person presiding
thereat, shall require such list of shareholders to be produced
as evidence of the right of the persons challenged to vote at
such meeting, and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
Section 1.8. Qualification of Voters. Every shareholder of
record shall be entitled at every meeting of shareholders to one
vote for every share standing in his name on the record of
shareholders, unless otherwise provided in the certificate of
incorporation or by law. If the certificate of incorporation or
law provides for more or less than one vote for any share on any
matter, every reference in these by-laws to a majority or other
proportion of shares shall be construed to refer to such majority
or other proportion of the votes of such shares.
Treasury shares as of the record date and shares held as of the
record date by another domestic or foreign corporation of any
type or kind, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held as of the
record date by the Corporation, shall not be shares entitled to
vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian, conservator,
committee or other fiduciary, except a trustee, may be voted by
him, either in person or by proxy, without transfer of such
shares into his name. Shares held by a trustee may be voted by
him, either in person or by proxy, only after the shares have
been transferred into his name as trustee or into the name of his
nominee.
Shares held by or under the control of a receiver may be voted by
him without the transfer thereof into his name if authority so to
do is contained in an order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name
of the pledgee, or a nominee of the pledgee.
Redeemable shares which have been called for redemption shall not
be deemed to be outstanding shares for the purpose of voting or
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determining the total number of shares entitled to vote on any
matter on and after the date on which written notice of
redemption has been sent to holders thereof and a sum sufficient
to redeem such shares has been deposited with a bank or trust
company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of
certificates therefor.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer,
agent or proxy as the by-laws of such corporation may provide,
or, in the absence of such provision, as the board of directors
of such corporation may determine.
If shares are registered on the record of shareholders of the
Corporation in the name of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in
common, tenants by the entirety or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written
notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting
shall have the following effect:
(1) If only one votes, the vote shall be accepted by the
Corporation as the vote of all;
(2) If more than one vote, the act of the majority so voting
shall be accepted by the Corporation as the vote of all;
(3) If more than one vote, but the vote is equally on any
particular matter, the vote shall be accepted by the Corporation
as a proportionate vote of the shares; unless the Corporation has
evidence, on the record of shareholders or otherwise, than the
shares are held in a fiduciary capacity. Nothing in this
paragraph shall alter any requirement that the exercise of
fiduciary powers be by act of a majority, contained in any law
applicable to such exercise of powers (including section 10-10.7
of the estates, powers and trusts law of the State of New York);
(4) When shares as to which the vote is equally divided are
registered on the record of shareholders of the Corporation in
the name of, or have passed by operation of law or by virtue of
any deed or trust or other instrument to two or more fiduciaries,
any court having jurisdiction of their accounts, upon petition by
any of such fiduciaries or by any party in interest, may direct
the voting of such shares for the best interest of the
beneficiaries. This subparagraph shall not apply in any case
where the instrument or order of the court appointing fiduciaries
shall otherwise direct how such shares shall be voted; and
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(5) If the instrument or order furnished to the Secretary of the
Corporation shows that a tenancy is held in unequal interests, a
majority or equal division for the purposes of this paragraph
shall be a majority or equal division in interest.
Section 1.9. Quorum of Shareholders. The holders of a majority
of the shares entitled to vote thereat shall constitute a quorum
at a meeting of shareholders for the transaction of any business,
provided that when a specified item of business is required to be
voted on by a class or series, voting as a class, the holders of
a majority of the shares of such class or series shall constitute
a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the
absence of a quorum.
Section 1.10. Proxies. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent without
a meeting may authorize another person or persons to act for him
by proxy.
Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration
of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of
the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who
executed the proxy unless, before the authority is exercised,
written notice of an adjudication of such incompetence or of such
death is received by the Secretary or any Assistant Secretary.
A shareholder shall not sell his vote or issue a proxy to vote to
any person for any sum of money or anything of value except as
permitted by law.
Section 1.11. Vote or Consent of Shareholders. Directors shall,
except as otherwise required by law or by the certificate of
incorporation, be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote
in the election.
Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall,
except as otherwise required by law or by the certificate of
incorporation, be authorized by a majority of the votes cast at a
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meeting of shareholders by the holders of shares entitled to vote
thereon.
Section 1.12. Fixing Record Date. For the purpose of
determining the shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a
meeting, or for the purpose of determining shareholders entitled
to receive payment of any dividend or the allotment of any
rights, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be more
than fifty nor less than ten days before the date of such
meeting, nor more than fifty days prior to any other action.
If no record date is fixed: (1) the record date for the
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if
no notice is given, the day on which the meeting is held; and (2)
the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the
resolution of the Board of Directors relating thereto is adopted.
When a determination of shareholders of record entitled to notice
of or to vote at any meeting of shareholders has been made as
provided in this Section 1.12, such determination shall apply to
any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
ARTICLE II
Board of Directors
Section 2.1. Power of Board and Qualification of Directors. The
business of the Corporation shall be managed under the direction
of the Board of Directors. Each director shall be at least
eighteen years of age.
Section 2.2. Number of Directors. The Board of Directors shall
consist of such number of members, not less than three, as may be
fixed from time to time by vote of a majority of the entire
Board; provided, however, that if all the shares of the
Corporation are owned beneficially and of record by less than
three shareholders, the number of directors may be fixed by such
a vote at less than three, but not less than the number of
shareholders.
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Section 2.3. Election and Term of Directors. At each annual
meeting of shareholders, directors shall be elected to hold
office until the next annual meeting except as otherwise
permitted by law and until their successors have been elected and
qualified.
Section 2.4. Quorum of Directors. Unless a greater proportion
is required by the certificate of incorporation, a majority of
the entire Board of Directors shall constitute a quorum for the
transaction of business or of any specified item of business.
Except where otherwise provided by law or in the certificate of
incorporation or these by-laws, the vote of a majority of the
directors present at a meeting at the time of such vote, if a
quorum is then present, shall be the act of the Board.
Section 2.5. Board or Committee Action. Unless otherwise
restricted by the certificate of incorporation or these by-laws,
any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting
if all members of the Board or the committee consent in writing
to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the
Board or the committee shall be filed with the minutes of the
proceedings of the Board or the committee.
Any one or more members of the Board of Directors or committee
thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar
communications equipment allowing all persons participating in
the meeting to hear each other at the same time, and
participation by such means shall constitute presence in person
at such meeting.
Section 2.6. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places, within or without the State
of New York, and at such times as the Board may from time to time
determine, and if so determined notice thereof need not be given.
Section 2.7. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place, within or without the
State of New York, whenever called by the Chairman of the Board,
if any, by the Vice Chairman of the Board, if any, by the
President or by any two directors. Reasonable notice thereof
shall be given by the person or persons calling the meeting.
Section 2.8. Resignation. Any director of the Corporation may
resign at any time by giving written notice to the Board of
Directors or to the Chairman of the Board or the Vice-Chairman of
the Board, if any, or the President or the Secretary of the
Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no
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acceptance of such resignation shall be necessary to make it
effective.
Section 2.9. Removal of Directors. Any one or more of the
directors may be removed for cause by action of the Board of
Directors. Any or all of the directors may be removed with or
without cause by vote of the shareholders.
Section 2.10. Newly Created Directorships and Vacancies. Newly
created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board of Directors for
any reason except the removal of directors without cause may be
filled by vote of the Board. If the number of directors then in
office is less than a quorum, such newly created directorships
and vacancies may be filled by vote of a majority of the
directors then in office. Vacancies occurring by reason of the
removal of directors without cause by the shareholders shall be
filled by vote of the shareholders. A director elected to fill a
vacancy, unless elected by the shareholders, shall hold office
until the next meeting of shareholders at which the election of
directors is in the regular order of business, and until his
successor has been elected and qualified.
Section 2.11. Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or
in the absence of the Chairman of the Board by the Vice Chairman
of the Board, if any, or in the absence of the Vice Chairman of
the Board by the President, or in their absence by a chairman
chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the
meeting, but in the absence of the Secretary and any Assistant
Secretary the chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 2.12. Compensation of Directors. The Board of Directors
shall have authority to fix the compensation of directors for
services in any capacity.
ARTICLE III
Executive and Other Committees
Section 3.1. Executive and Other Committees of Directors. 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 the
resolution, shall have all the authority of the Board, except
that no such committee shall have authority as to the following
matters:
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(1) The submission to shareholders of any action that needs
shareholders' approval;
(2) The appointment of any person to a vacancy in the Board or
in any committee thereof;
(3) The fixing of compensation of the directors for serving on
the Board or on any committee thereof;
(4) The amendment or repeal of the by-laws, or the adoption of
new by-laws;
(5) The amendment or repeal of any resolution of the Board
which, by its terms, shall not be so amendable or repealable; or
(6) The removal or indemnification of directors.
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.
Unless the Board of Directors otherwise provides, each committee
designated by the Board may adopt, amend and repeal rules for the
conduct of its business. In the absence of a provision by the
Board of Directors or a provision in the rules of such committee
to the contrary, a majority of the entire authorized number of
members of such committee shall constitute a quorum for the
transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then
present or the unanimous written consent of all members thereof
shall be the act of such committee, and in other respects each
committee shall conduct its business in the same manner as the
Board of Directors conducts its business pursuant to Article II
of these by-laws. Each committee shall keep regular minutes of
its proceedings and report the same to the Board.
Each such committee shall serve at the pleasure of the Board of
Directors. Any member of a committee may be removed at any time,
with or without cause, by the affirmative vote of a majority of
the entire Board.
ARTICLE IV
Officers
Section 4.1. Officers. The officers of the Corporation shall be
chosen by the Board. As soon as practicable after the annual
meeting of shareholders in each year, the Board of Directors
shall elect or appoint a President, a Secretary and a Treasurer,
and it may, if it so determines, elect or appoint from among its
members a Chairman of the Board and one or more Vice-Chairmen of
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the Board. The Board may also elect or appoint one or more
Vice-Presidents, Assistant Vice-Presidents, Assistant Secretaries
and Assistant Treasurers and may give any of them such further
designations or alternate titles as it considers desirable. Any
two or more offices may be held by the same person, except the
offices of President and Secretary.
Section 4.2. Term of Office; Resignation; Removal; Vacancies.
Except as otherwise provided in the resolution of the Board of
Directors electing or appointing any officer, each officer shall
hold office until the meeting of the Board of Directors following
the next succeeding annual meeting of shareholders and until his
successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon
written notice to the Board or to the Chairman of the Board, if
any, or the President or the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, and
unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The Board
may remove any officer with or without cause at any time. Any
such removal shall be without prejudice to the contractual rights
of the officer, if any, with the Corporation, but the election or
appointment of an officer shall not of itself create contract
rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or
special meeting.
Section 4.3. Powers and Duties. The officers of the Corporation
shall have such powers and perform such duties in the management
of the Corporation as shall be stated in these by-laws or in a
resolution of the Board of Directors which is not inconsistent
with these by-laws and, to the extent not so stated, as generally
pertain to their respective offices, subject to the control of
the Board.
Section 4.4. Chairman of the Board. The Chairman of the Board,
if any, shall preside at all meetings of the Board of Directors
and of the shareholders at which he shall be present. He shall
have and may exercise such powers and perform such other duties
as are assigned to him by the Board from time to time or as may
be provided by law.
Section 4.5. Vice-Chairman of the Board. In the absence of the
Chairman of the Board, the Vice-Chairman of the Board or
Vice-Chairmen of the Board, if any, shall preside at all meetings
of the Board of Directors and of the shareholders at which he or
they shall be present. If there be more than one Vice-Chairman
of the Board, the Board may determine the order in which the
Vice-Chairmen of the Board shall so preside. The Vice-Chairman
of the Board or Vice-Chairmen of the Board shall have and may
exercise such powers and perform such other duties as are
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assigned to him or them by the Board from time to time or as may
be provided by law.
Section 4.6. President. In the absence of the Chairman of the
Board and all Vice-Chairmen of the Board, if
any, the President shall preside at all meetings of the Board of
Directors and of the shareholders at which he shall be present;
he shall be the chief executive officer and shall have general
charge and supervision of the business of the Corporation; and,
in general, he shall perform all duties incident to the office of
president of a corporation, and in addition shall have and may
exercise such other powers and perform such other duties as are
assigned to him by the Board from time to time or as may be
provided by law.
Section 4.7. Vice-Presidents. The Vice-President or
Vice-Presidents, at the request of the President or in his
absence or during his inability to act, shall perform the duties
of the President, and when so acting shall have the powers of the
President. If there be more than one Vice-President, the Board
of Directors may determine which one or more of the
Vice-Presidents shall perform any of such duties; or if such
determination is not made by the Board, the President may make
such determination; otherwise any of the Vice-Presidents may
perform any of such duties. The Vice-President or
Vice-Presidents shall have and may exercise such other powers and
perform such other duties as are assigned to him or them by the
Board or the President from time to time or as may be provided by
law.
Section 4.8. Secretary. The Secretary shall have the duty to
record all the proceedings of the meetings of the shareholders,
Board of Directors and any committee in a book to be kept for
that purpose; he shall see that all notices are duly given in
accordance with the provisions of these by-laws or as required by
law; he shall be custodian of the records of the Corporation; he
may affix the corporate seal to any document the execution of
which, on behalf of the Corporation, is duly authorized, and when
so affixed may attest the same; and, in general, he shall perform
all duties incident to the office of secretary of a corporation,
and shall have and may exercise such other powers and shall
perform such other duties as are assigned to him by the Board or
the President from time to time or as may be provided by law.
Section 4.9. Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit or cause to
be deposited, in the name of the Corporation, all moneys or other
valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by or under
authority of the Board of Directors; if required by the Board, he
shall give a bond for the faithful discharge of his duties, with
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such surety or sureties as the Board may determine; he shall keep
or cause to be kept full and accurate records of all receipts and
disbursements in books of the Corporation and shall render to the
President and to the Board, whenever requested, an account of the
financial condition of the Corporation; and, in general, he shall
perform all the duties incident to the office of treasurer of a
corporation, and shall have and may exercise such other powers
and shall perform such other duties as are assigned to him by the
Board or the President from time to time or as may be provided by
law.
Section 4.10. Other Officers. The other officers of the
Corporation, if any, shall have such authority and perform such
duties in the management of the Corporation as shall be stated in
a resolution of the Board of Directors and which are not
inconsistent with these by-laws, and, to the extent not so
stated, as generally pertain to their respective offices, subject
to the control of the Board.
Section 4.11. Fidelity Bonds. If required by the Board, any
officer shall give the Corporation a bond in a sum and with one
or more sureties satisfactory to the Board, for the faithful
performance of the duties of his office, and for the restoration
to the Corporation, 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 Corporation.
ARTICLE V
Indemnification
Section 5.1 Indemnification. The Corporation shall indemnify
any person made, or threatened to be made, a party to any action
or proceeding, whether civil or criminal, by reason of the fact
that he, his testator or intestate is or was a director, officer
or employee of the Corporation or serves or served any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity at the request of the
Corporation against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees actually and
necessarily incurred as a result of such action or proceeding or
any appeal thereon to the full extent permitted by the New York
Business Corporation Law. Expenses incurred in defending a civil
or criminal action or proceeding shall be paid by the Corporation
in advance of the final disposition of such action or proceeding
to the extent, if any, authorized by the Board in accordance with
the provisions of said Business Corporation Law, upon receipt of
an undertaking by or on behalf of the director, officer or
employee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
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Corporation as authorized in these by-laws or to repay such
amount to the extent the expenses so advanced by the Corporation
or allowed by a court exceed the indemnification to which he is
entitled. The Corporation shall provide such other
indemnification to the directors and officers of the Corporation
as may, from time to time, be provided pursuant to resolutions
duly adopted by the Board of Directors of the Corporation.
ARTICLE VI
Forms of Certificates and Loss and
Transfer of Shares
Section 6.1. Forms of Share Certificates. The shares of the
Corporation shall be represented by certificates or shall be
uncertified shares. Certificates shall be signed by the Chairman
or a Vice-Chairman of the Board or the President or a
Vice-President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and may be sealed with the
seal of the Corporation or a facsimile thereof. The signatures
of the officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by
a registrar other than the Corporation itself or its employee or
if the shares are listed on a registered national security
exchange. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to
be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such
officer at the date of issue.
Each certificate representing shares issued by the Corporation
which is authorized to issue shares of more than one class shall
set forth upon the face or back of the certificate, or shall
state that the Corporation will furnish to any shareholder upon
request and without charge, a full statement of the designation,
relative rights, preferences and limitations of the shares of
each class authorized to be issued and the designation, relative
rights, preferences and limitations of each series of any class
of preferred shares authorized to be issued in series so far as
the same have been fixed and the authority of the Board of
Directors to designate and fix the relative rights, preferences
and limitations of other series.
Each certificate representing shares shall state upon the face
thereof:
(1) That the Corporation is formed under the laws of the State
of New York;
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(2) The name of the person or persons to whom issued; and
(3) The number and class of shares, and the designation of the
series, if any, which such certificate represents.
Unless otherwise provided by the articles of incorporation or
these by-laws, the Board of Directors of the Corporation may
provide by resolution that some or all of any or all classes and
series of its shares shall be uncertificated shares, provided
that such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the
Corporation. Within a reasonable time after the issuance or
transfer of uncertificated shares, the Corporation shall send to
the registered owner thereof a written notice containing the
information required to be set forth or stated on certificates
pursuant to the two immediately preceding paragraphs of this
section. Except as otherwise expressly provided by law, the
rights and obligations of the holders of uncertificated shares
and the rights and obligations of the holders of certificates
representing shares of the same class and series shall be
identical.
Section 6.2. Lost, Stolen or Destroyed Share Certificate. Any
person claiming a certificate for shares to be lost, stolen or
destroyed shall furnish proof of that fact satisfactory to an
officer of the Corporation, and shall give the Corporation a bond
of indemnity in form and amount and with one or more sureties
satisfactory to such officer, whereupon a new certificate may be
issued of the same tenor and for the same number of shares as the
one alleged to be lost, stolen or destroyed. The Board may at
any time authorize the issuance of a new certificate to replace a
certificate alleged to be lost, stolen or destroyed upon such
other lawful terms and conditions as the Board shall prescribe.
Section 6.3. Transfers of Shares. Transfer of shares shall be
made on the books of the Corporation only by the person named in
the certificate or by his attorney, lawfully constituted in
writing, and upon surrender of the certificate therefor, together
with such evidence of the payment of transfer taxes and
compliance with other provisions of law as the Corporation or its
transfer agent may require.
Section 6.4. Registered Shareholders. The Corporation 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, save as expressly
provided by the laws of New York.
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ARTICLE VII
Other Matters
Section 7.1. Fiscal Year. The fiscal year of the Corporation
shall be fixed by the Board of Directors.
Section 7.2. Corporate Seal. The Board of Directors may adopt a
corporate seal, alter such seal at pleasure, and authorize it to
be used by causing it or a facsimile to be affixed or impressed
or reproduced in any other manner.
Section 7.3. When Notice or Lapse of Time Unnecessary. Whenever
for any reason the Corporation or the Board of Directors or any
committee thereof is authorized to take any action after notice
to any person or persons or after the lapse of a prescribed
period of time, such action may be taken without notice and
without the lapse of such period of time if at any time before or
after such action is completed the person or persons entitled to
such notice or entitled to participate in the action to be taken
or, in the case of a shareholder, his attorney-in-fact, submit a
signed waiver of notice of such requirements.
Section 7.4. Books to be Kept. The Corporation shall keep (a)
correct and complete books and records of account, (b) minutes of
the proceedings of the shareholders, Board of Directors and
Committee thereof, if any, and (c) a current list of the
directors and officers and their residence addresses; and the
Corporation shall also keep at its principal office in the State
of New York or at the office of its transfer agent or registrar
in the State of New York, if any, a record containing the names
and addresses of all shareholders, the number and class of shares
held by each and the dates when they respectively became the
owners of record thereof. Any of the foregoing books, minutes or
records may be in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 7.5. Interest of Directors and Officers in Transactions.
In the absence of fraud, no contract or other transaction between
the Corporation and one or more of its directors, or between the
Corporation and any other corporation, firm, association or other
entity in which one or more of its directors are directors or
officers, or have a substantial financial interest, shall be
either void or voidable, for this reason alone or by reason alone
that such director or directors are present at the meeting of the
Board, or of a committee thereof, which approves such contract or
transaction, or that their votes are counted for such purpose:
(1) If the material facts as to such director's interest in such
contract or transaction and as to any such common directorship,
officership or financial interest are disclosed in good faith or
known to the Board of Directors or a committee thereof, and the
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Board or committee approves such contract or transaction by a
vote sufficient for such purpose without counting the vote of
such interested director or, if the votes of the disinterested
directors are insufficient to constitute an act of the Board
under Section 2.4 of these by-laws, by unanimous vote of the
disinterested directors; or
(2) If the material facts as to such director's interest in such
contract or transaction and as to any such common directorship,
officership or financial interest are disclosed in good faith or
known to the shareholders entitled to vote thereon, and such
contract or transaction is approved by vote of such shareholders.
If such good faith disclosure of material facts as to the
director's interest in the contract or transaction and as to such
common directorship, officership or financial interest is made to
the directors or shareholders, or known to the Board of Directors
or the committee or shareholders approving such contract or
transaction, as provided above, the contract or transaction may
not be avoided by the Corporation for the reasons set forth
above.
If there was no such disclosure or knowledge, or if the vote of
such interested director was necessary for the approval of such
contract or transaction at a meeting of the Board or committee at
which it was approved, the Corporation may avoid the contract or
transaction unless the party or parties thereto shall establish
affirmatively that the contract or transaction was fair and
reasonable as to the Corporation at the time it was approved by
the Board, a committee thereof or the shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee
which approves such contract or transaction.
Notwithstanding the foregoing, no loan, except advances in
connection with indemnification, shall be made by the Corporation
to any director unless it is authorized by vote of the
shareholders. For this purpose, shares of the director who would
be the borrower shall not be shares entitled to vote.
Section 7.6. Powers of Execution. (a) All checks and other
demands for money and notes and other instruments for the payment
of money shall be signed on behalf of the Corporation by such
officer or officers or by such other person or persons as the
Board may designate from time to time.
(b) All contracts, deeds and other instruments to which the seal
of the Corporation is affixed shall be signed on behalf of the
Corporation by the Chairman of the Board, by the Vice Chairman of
the Board, by the President, by any Vice President, or by such
other person or persons as the Board may designate from time to
-16-
<PAGE>
time, and shall be attested by the Secretary or an Assistant
Secretary.
(c) All other contracts, deeds and instruments shall be signed
on behalf of the Corporation by the Chairman of the Board, by the
Vice Chairman of the Board, by the President, by any Vice
President, or by such other person or persons as the Board or the
President may designate from time to time.
(d) All shares of stock owned by the Corporation in other
corporations shall be voted on behalf of the Corporation by the
President or by such other person or persons as the Board may
designate from time to time.
Section 7.7. Notices. Whenever, under the provisions of these
by-laws, notice is required to be given to any director or
shareholder, such notice may be given in writing (a) in person or
(b) by mail, by depositing the same in the United States mail,
postage prepaid, addressed to such director or shareholder at
such address as appears on the records of the Corporation (or, in
the case of any shareholder, at such other address as he may have
specified in a written request filed with the Secretary), and
such notice shall be deemed to be given on the day it is so
mailed.
Section 7.8. Amendment of By-Laws. By-laws of the Corporation
may be adopted, amended or repealed by vote of the holders of the
shares at the time entitled to vote in the election of any
directors. By-laws may also be adopted, amended or repealed by
the Board of Directors by the vote of a majority of the directors
present at a meeting of the Board at which a quorum is present,
but any by-law adopted by the Board may be amended or repealed by
the shareholders entitled to vote thereon as hereinabove
provided.
If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of
shareholders for the election of directors the by-law so adopted,
amended or repealed, together with a concise statement of the
changes made.
-17-
<PAGE>
_______________________________________________________________
_______________________________________________________________
PF ACQUISITION CORP.,
as Issuer,
PRO-FAC COOPERATIVE, INC.,
as Guarantor,
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
____________________
INDENTURE
Dated as of November 3, 1994
____________________
$160,000,000
12 1/4% Senior Subordinated Notes due 2005
_______________________________________________________________
_______________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
SS 310(a)(1) ............................ 7.10
(a)(2) ............................ 7.10
(a)(3) ............................ N.A.
(a)(4) ............................ N.A.
(a)(5) ............................ N.A.
(b) ............................... 7.8; 7.10; 12.2
(c) ............................... N.A.
SS 311(a) ............................... 7.7; 7.11
(b) ............................... 7.7; 7.11
(c) ............................... N.A.
SS 312(a) ............................... 2.5
(b) ............................... 12.3
(c) ............................... 12.3
SS 313(a) ............................... 7.6
(b)(1) ............................ 7.6
(b)(2) ............................ 7.6
(c) ............................... 7.6; 12.2
(d) ............................... 7.6
SS 314(a) ............................... 4.6; 4.7; 12.2
(b) ............................... N.A.
(c)(1) ............................ 12.4
(c)(2) ............................ 12.4
(c)(3) ............................ 12.4
(d) ............................... N.A.
(e) ............................... 12.5
(f) ............................... N.A.
SS 315(a) ............................... 7.1(b)
(b) ............................... 7.5; 12.2
(c) ............................... 7.1(a)
(d) ............................... 7.1(c)
(e) ............................... 6.10
SS 316(a) (last sentence) ............... 2.9
(a)(1)(A) ......................... 6.4
(a)(1)(B) ......................... 9.2
(a)(2) ............................ N.A.
(b) ............................... 6.6
(c) ............................... 9.4
SS 317(a)(1) ............................ 6.7
(a)(2) ............................ 6.8
(b) ............................... 2.4
SS 318(a) ............................... 12.1
____________________
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
1.1 Definitions ..................................... 1
1.2 Incorporation by Reference of Trust
Indenture Act ................................. 20
1.3 Rules of Construction ........................... 21
ARTICLE II
THE SECURITIES
2.1 Form and Dating ................................. 21
2.2 Execution and Authentication .................... 22
2.3 Registrar and Paying Agent ...................... 23
2.4 Paying Agent to Hold Money in Trust.............. 23
2.5 Securityholder Lists ............................ 24
2.6 Transfer and Exchange ........................... 24
2.7 Replacement Securities .......................... 30
2.8 Outstanding Securities .......................... 31
2.9 Treasury Securities ............................. 31
2.10 Temporary Securities ............................ 32
2.11 Cancellation .................................... 32
2.12 Defaulted Interest .............................. 33
2.13 CUSIP Number .................................... 33
2.14 Deposit of Moneys ............................... 33
ARTICLE III
REDEMPTION
3.1 Notices to Trustee .............................. 34
3.2 Selection of Securities to Be
Redeemed ...................................... 34
3.3 Notice of Redemption ............................ 34
3.4 Effect of Notice of Redemption .................. 36
3.5 Deposit of Redemption Price ..................... 36
3.6 Securities Redeemed in Part ..................... 36
3.7 Limitations ..................................... 37
ARTICLE IV
COVENANTS
4.1 Payment of Securities ........................... 37
4.2 Maintenance of Office or Agency ................. 37
i
<PAGE>
Section Page
4.3 Corporate Existence ............................. 38
4.4 Payment of Taxes and Other Claims ............... 38
4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with
Law ........................................... 39
4.6 Compliance Certificates ......................... 40
4.7 Reports ......................................... 41
4.8 Limitation on Incurrence of
Indebtedness and Issuance of
Preferred Stock ............................... 41
4.9 Limitation on Liens ............................. 43
4.10 Limitation on Restricted Payments ............... 44
4.11 Disposition of Proceeds of Asset
Sales ......................................... 46
4.12 Transactions with Affiliates .................... 50
4.13 Limitation on Sale and Leaseback
Transactions .................................. 51
4.14 Change of Control ............................... 51
4.15 Limitation on Dividends and Other Pay-
ment Restrictions Affecting Subsid-
iaries ........................................ 53
4.16 Waiver of Stay; Extension of Usury
Laws .......................................... 54
4.17 Subsidiary Guarantees ........................... 54
4.18 Limitation on Certain Transactions
with Pro-Fac .................................. 54
4.19 Limitation on Other Senior Subordi-
nated Indebtedness ............................ 55
4.20 Securities Owned by the Company or an
Affiliate of the Company ...................... 55
ARTICLE V
SUCCESSOR CORPORATION
5.1 When Company May Merge, Etc. .................... 55
5.2 Successor Entity Substituted .................... 57
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Events of Default ............................... 57
6.2 Acceleration .................................... 59
6.3 Other Remedies .................................. 60
6.4 Control by Majority ............................. 60
6.5 Limitation on Suits ............................. 61
6.6 Rights of Holders to Receive Payment ............ 61
6.7 Collection Suit by Trustee ...................... 62
ii
<PAGE>
Section Page
6.8 Trustee May File Proofs of Claim ................ 62
6.9 Priorities ...................................... 63
6.10 Undertaking for Costs ........................... 63
6.11 Willful Default ................................. 64
ARTICLE VII
TRUSTEE
7.1 Duties of Trustee ............................... 64
7.2 Rights of Trustee ............................... 66
7.3 Individual Rights of Trustee .................... 67
7.4 Trustee's Disclaimer ............................ 67
7.5 Notice of Defaults .............................. 67
7.6 Reports by Trustee to Holders ................... 68
7.7 Compensation and Indemnity ...................... 68
7.8 Replacement of Trustee .......................... 69
7.9 Successor Trustee by Merger, Etc. ............... 70
7.10 Eligibility; Disqualification ................... 71
7.11 Preferential Collection of Claims
Against Company ............................... 71
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
8.1 Termination of Company's Obligations ............ 71
8.2 Legal Defeasance and Covenant
Defeasance..................................... 72
8.3 Application of Trust Money ...................... 76
8.4 Repayment to Company ............................ 76
8.5 Reinstatement ................................... 77
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 Without Consent of Holders ...................... 77
9.2 With Consent of Holders ......................... 78
9.3 Compliance with Trust Indenture Act ............. 80
9.4 Revocation and Effect of Consents ............... 80
9.5 Notation on or Exchange of Securities ........... 80
9.6 Trustee To Sign Amendments, Etc. ................ 81
9.7 Effect on Senior Indebtedness ................... 81
iii
<PAGE>
Section Page
ARTICLE X
SUBORDINATION
10.1 Securities Subordinated to Senior
Indebtedness .................................. 81
10.2 No Payment on Securities in Certain
Circumstances ................................. 82
10.3 Payment Over of Proceeds upon Dissolu-
tion, Etc. .................................... 84
10.4 Payments May Be Paid Prior to Dissolu-
tion .......................................... 85
10.5 Subrogation ..................................... 86
10.6 Obligations of the Company Uncondi-
tional ........................................ 86
10.7 Notice to Trustee ............................... 86
10.8 Reliance on Judicial Order or Certifi-
cate of Liquidating Agent ..................... 87
10.9 Trustee's Relation to Senior Indebted-
ness .......................................... 88
10.10 Subordination Rights Not Impaired by
Acts or Omissions of the Company or
Holders of Senior Indebtedness ................ 88
10.11 Holders Authorize Trustee To Effec-
tuate Subordination of Securities ............. 89
10.12 This Article Ten Not To Prevent Events
of Default .................................... 90
10.13 Trustee's Compensation Not Prejudiced ........... 90
ARTICLE XI
GUARANTEE OF SECURITIES
11.1 Unconditional Guarantee.......................... 90
11.2 Severability..................................... 91
11.3 Release of a Subsidiary Guarantor................ 91
11.4 Limitation of Subsidiary Guarantor's
Liability...................................... 92
11.5 Contribution..................................... 93
11.6 Waiver of Subrogation............................ 93
11.7 Agreement To Subordinate ........................ 94
11.8 Execution of Guarantee........................... 94
iv
<PAGE>
Section Page
ARTICLE XII
MISCELLANEOUS
12.1 Trust Indenture Act Controls .................... 95
12.2 Notices ......................................... 95
12.3 Communications by Holders with Other
Holders ....................................... 97
12.4 Officers' Certificate and Opinion of
Counsel as to Conditions Precedent ............ 97
12.5 Statements Required in Officers' Cer-
tificate and Opinion of Counsel ............... 98
12.6 Rules by Trustee, Paying Agent, Regis-
trar .......................................... 99
12.7 Legal Holidays .................................. 99
12.8 Governing Law ................................... 99
12.9 No Recourse Against Others ...................... 99
12.10 Successors ...................................... 99
12.11 Counterparts .................................... 99
12.12 Severability .................................... 99
12.13 Table of Contents, Headings, Etc. ............... 100
12.14 Certain Registration Rights ..................... 100
SIGNATURES ............................................. 101
EXHIBIT A - Form of Security
EXHIBIT B - Form of Transferor Certificate
EXHIBIT C - Global Security Legend
v
<PAGE>
INDENTURE, dated as of November 3, 1994, among PF
ACQUISITION CORP., a corporation incorporated under the laws of
the State of New York (the 'Company'), PRO-FAC COOPERATIVE,
INC., a cooperative corporation incorporated under the laws of
the State of New York ('Pro-Fac'), and IBJ SCHRODER BANK &
TRUST COMPANY, a New York banking corporation, as trustee (the
'Trustee').
The Company has duly authorized the creation of an
issue of 12 1/4% Senior Subordinated Notes Due 2005 (the 'Securi-
ties'), and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
Pro-Fac has duly authorized its senior subordinated
guarantee of the Securities and to provide therefor Pro-Fac has
duly authorized the execution and delivery of this Indenture
and its Guarantee (as hereinafter defined) of the Securities.
All things necessary have been done to make the Secu-
rities and the Guarantee thereof, when executed by the Company
and Pro-Fac, respectively, and authenticated and delivered
hereunder and duly issued by the Company and Pro-Fac, respec-
tively, the valid obligations of the Company and Pro-Fac and to
make this Indenture a valid agreement of the Company and
Pro-Fac, in accordance with the terms hereof.
The Company and Pro-Fac, as Guarantor, jointly and
severally, and the Trustee hereto agree as follows for the
benefit of each other and for the equal and ratable benefit of
the Holders (as hereinafter defined) of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
'Acquired Debt' means, with respect to any specified
Person: (i) Indebtedness of any other Person existing at the
time such other Person merged with or into or became a Subsid-
iary of such specified Person, including Indebtedness incurred
in connection with, or in contemplation of, such other Person
merging with or into or becoming a Subsidiary of such specified
Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
<PAGE>
2
'Acquisition' means (i) the acquisition by the Com-
pany of 90% or more of the outstanding shares of each class of
the capital stock of Curtice-Burns and (ii) the Merger.
'Additional Payment' means additional payments by the
Company to the Holders of Securities in an amount equal to one-
half percent per annum of the principal amount thereof.
'Adjusted Net Assets' has the meaning provided in
Section 11.5.
'Affiliate' of any specified Person means (i) any
other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such speci-
fied Person and (ii) with respect to Pro-Fac and the Company,
any member of Pro-Fac that is a director of Pro-Fac or that has
beneficial ownership of more than 1% of the voting securities
of Pro-Fac. 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; pro-
vided, however, that beneficial ownership of 10% or more of the
voting securities of a Person shall be deemed to be control.
'Affiliate Transaction' has the meaning provided in
Section 4.12.
'Agent' means any Registrar, Paying Agent or
co-registrar.
'Asset Sale' has the meaning provided in
Section 4.11(a).
'Asset Sale Offer' has the meaning provided in Sec-
tion 4.11(b).
'Asset Sale Payment Date' means a date chosen by the
Company that is within 60 days of the date that the aggregate
amount of Excess Proceeds first exceeds $10.0 million.
'Attributable Debt' in respect of a sale and lease-
back transaction means, at the time of determination, the pre-
sent value (discounted at the actual rate of interest implicit
in such transaction) of the obligation of the lessee for net
rental payments during the remaining terms of the lease
<PAGE>
3
included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the
option of the lessor, be extended).
'Bankruptcy Law' means Title 11 of the U.S. Code or
any similar federal or state law for the relief of debtors.
'Board of Directors' means with respect to any Per-
son, the Board of Directors of such Person or any committee of
such Board of Directors authorized to act for it hereunder.
'Board Resolution' means with respect to any Person,
a copy of a resolution certified by the Secretary or an Assis-
tant Secretary of such Person to have been duly adopted by the
Board of Directors of such Person and to be in full force and
effect on the date of such certification, and delivered to the
Trustee.
'Book-Entry Security' means a Security represented by
a Global Security and registered in the name of the nominee of
the Depository.
'Borrowing Base' means, as of any date, an amount
equal to the sum of (i) 80% of the face amount of all accounts
receivable owned by the Company and its Subsidiaries as of such
date and (ii) 50% of the book value of all inventory owned by
the Company and its Subsidiaries as of such date (calculated in
each case in accordance with the New Credit Agreement). To the
extent that information is not available as to the amount of
accounts receivable or inventory as of a specific date, the
Company may utilize the most recent available information for
purposes of calculating the Borrowing Base.
'Business Day' means any day except a Saturday, a
Sunday or any day on which banking institutions in New York,
New York are required or authorized by law or other governmen-
tal action to be closed.
'Capital Lease Obligation' means, at the time any
determination thereof is to be made, the amount of the lia-
bility in respect of a capital lease that would at such time be
required to be capitalized on the balance sheet in accordance
with GAAP.
'Capital Stock' means any and all shares, interests,
participations, rights or other equivalents (however desig-
nated) of corporate stock, including, without limitation, with
respect to partnerships, partnership interests (whether general
<PAGE>
4
or limited) and any other interest or participation that con-
fers on a Person the right to receive a share of the profits
and losses of, or distributions of assets of, such partnership.
'Cash Equivalents' means (i) United States dollars,
(ii) securities issued or directly and fully guaranteed or
insured by the United States Government or any agency or
instrumentality thereof having remaining maturities of not more
than 12 months from the date of acquisition and rated at least
'A' or the equivalent by either Moody's Investors Service, Inc.
or Standard & Poor's Corporation, (iii) certificates of deposit
and Eurodollar time deposits with remaining maturities of not
more than 12 months from the date of acquisition, bankers'
acceptances with maturities not more than 12 months and over-
night bank deposits, in each case with any lender party to the
New Credit Agreement or with any domestic commercial bank hav-
ing capital and surplus in excess of $250 million and a Keefe
Bank Watch Rating of B or better, (iv) repurchase Obligations
with a term of not more than 30 days for underlying securities
of the types described in clauses (ii) and (iii) entered into
with any financial institution meeting the qualifications spec-
ified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc.
or Standard & Poor's Corporation and in each case maturing not
more than 12 months after the date of acquisition, (vi) any
security with a remaining maturity of not more than 12 months
from the date of acquisition backed by standby or direct pay
letters of credit issued by any bank satisfying the require-
ments of clause (iii) above, and (vii) any money-market fund
sponsored by any registered broker-dealer or mutual fund dis-
tributor that invests solely in instruments of the types set
forth above.
'Certificated Security' has the meaning provided in
Section 2.1.
'Change of Control' means the occurrence of any of
the following, other than in connection with the Acquisition:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of Pro-Fac's or the
Company's assets to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act), (ii) the consummation
of any transaction the result of which is that any Person or
group (as such term is used in Section 13(d)(3) of the Exchange
Act) owns, directly or indirectly, (A) more than 50% of the
voting power of the voting stock of Pro-Fac or the Company or
(B) more than 30% of the voting power of the voting stock of
the Company if Pro-Fac owns, directly or indirectly, a lesser
<PAGE>
5
percentage than such Person or group of the voting power of the
voting stock of the Company, (iii) the first date on which any
Person or group (as defined above) shall have elected, or
caused to be elected, a sufficient number of its or their nomi-
nees to the Board of Directors of Pro-Fac or the Company such
that the nominees so elected (regardless of when elected) shall
collectively constitute a majority of the Board of Directors of
Pro-Fac or the Company, as the case may be, or (iv) for a
period of 120 consecutive days, the number of Disinterested
Directors on the Board of Directors of the Company being less
than the greater of (A) two and (B) the number of directors of
the Company who are Pro-Fac Directors. For purposes of this
definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting stock of
Pro-Fac or the Company shall be deemed to be a transfer of such
portion of the voting stock owned by such entity as corresponds
to the portion of the equity of such entity that has been so
transferred.
'Change of Control Offer' has the meaning provided in
Section 4.14.
'Change of Control Payment' has the meaning provided
in Section 4.14.
'Change of Control Payment Date' has the meaning pro-
vided in Section 4.14.
'Commercial Market Value' means Commercial Market
Value determined in accordance with the Pro-Fac Marketing
Agreement.
'Company' means the party named as such in this
Indenture until a successor replaces it in accordance with the
provisions of this Indenture and, thereafter, means the
successor.
'Consolidated Cash Flow' means, with respect to any
Person for any period, the Consolidated Net Income of such Per-
son for such period plus (i) an amount equal to the noncash
portion of any extraordinary loss and any loss realized in con-
nection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), plus
(ii) the Consolidated Income Tax Expense of such Person for
such period (other than income tax expense (either positive or
negative) attributable to extraordinary gains or losses or
gains or losses on Asset Sales), plus (iii) in the case of the
Company, the Pro-Fac share of earnings or loss as determined in
<PAGE>
6
accordance with the Pro-Fac Marketing Agreement, plus (iv) the
Consolidated Interest Expense of such Person for such period,
plus (v) depreciation, amortization (including amortization of
goodwill and other intangibles) and other non-cash charges
(excluding any such non-cash charge that results in an accrual
of a reserve for cash charges in any future period) of such
Person for such period to the extent such depreciation, amorti-
zation and other non-cash charges were deducted in computing
such Consolidated Net Income, in each case, on a consolidated
basis and determined in accordance with GAAP.
'Consolidated Income Tax Expense' means, with respect
to any Person for any period, the income tax expense of such
Person and its Subsidiaries for such period that was deducted
in computing the Consolidated Net Income of such Person for
such period, determined on a consolidated basis in accordance
with GAAP.
'Consolidated Interest Expense' means, without dupli-
cation, with respect to any Person for any period, the sum of
the interest expense on all Indebtedness of such Person and its
Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP and including, without limitation
(i) imputed interest on Capital Lease Obligations and Attribut-
able Debt, (ii) commissions, discounts and other fees and
charges owed with respect to letters of credit securing finan-
cial Obligations and bankers' acceptance financing, (iii) the
net costs associated with Hedging Obligations,
(iv) amortization of financing fees and expenses, (v) the
interest portion of any deferred payment Obligations,
(vi) amortization of debt discount or premium, if any,
(vii) all other non-cash interest expense, (viii) capitalized
interest, (ix) all interest payable with respect to discontin-
ued operations, and (x) all interest on any Indebtedness of any
other Person guaranteed by the referent Person or any of its
Subsidiaries to the extent paid by the referent Person or any
such Subsidiary.
'Consolidated Net Income' means, with respect to any
Person for any period, the aggregate of the Net Income of such
Person and its Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP; provided, that
(i) the Net Income of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Subsid-
iary thereof, (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of
<PAGE>
7
dividends or similar distributions by that Subsidiary of such
Net Income is not at the date of determination permitted with-
out any governmental approval (which has not been obtained) or
directly or indirectly, by operation of the terms of its char-
ter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded
and (iv) the cumulative effect of a change in accounting prin-
ciples shall be excluded; provided, that in calculating the
Consolidated Net Income for the Company, any charges recognized
in connection with the Company's elimination of its Nalley's
U.S. Chips and Snacks line of business or the change of control
of the Company, in each case subsequent to June 25, 1994 and
net of any related tax benefits, shall be excluded.
'Consolidated Net Worth' means, with respect to any
Person as of any date, the sum of (i) the consolidated equity
of the common stockholders of such Person and its consolidated
Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disquali-
fied Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only
out of net earnings in respect of the year of such declaration
and payment, but only to the extent of any cash received by
such Person upon issuance of such preferred stock determined in
accordance with GAAP, less all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of
tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to
the date of this Indenture in the book value of any asset owned
by such Person or a consolidated Subsidiary of such Person.
'Consolidated Tangible Assets' means with respect to
any Person as of any date, the total assets of such Person and
its Subsidiaries (excluding any assets that would be classified
as 'intangible assets' under GAAP) on a consolidated basis at
such date, as determined in accordance with GAAP, less all
write-ups subsequent to the date of this Indenture in the book
value of any asset owned by such Person or any of its Subsid-
iaries (except to the extent that any such write-up was
required by GAAP as a result of an acquisition by such Person
or any such Subsidiary accounted for as a purchase.
<PAGE>
8
'Consummate' has the meaning provided in the Regis-
tration Rights Agreement. 'Consummated' and 'Consummation'
have correlative meanings.
'Curtice-Burns' means Curtice-Burns Foods, Inc., a
New York corporation, and the survivor of the Merger.
'Custodian' has the meaning provided in Section
6.1(b).
'Default' means any event that is or with the passage
of time or the giving of notice or both would be an Event of
Default.
'Depository' means, with respect to the Securities
issued in the form of one or more Book-Entry Securities, The
Depository Trust Company or another person designated as Depos-
itory by the Company, which must be a clearing agency regis-
tered under the Exchange Act.
'Disinterested Directors' means directors of the Com-
pany who are not employees, shareholders (at the time of becom-
ing directors) or otherwise Affiliates (other than by reason of
being a director of the Company) of either Pro-Fac or the Com-
pany.
'Disqualified Stock' means any Capital Stock and all
warrants, options and other rights to acquire Capital Stock
which, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund Obligation or otherwise, or redeem-
able at the option of the holder thereof, in whole or in part,
on or prior to a date that is one year after the date on which
the Securities mature.
'Equity Interests' means Capital Stock and all war-
rants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into or
exchangeable for Capital Stock).
'Event of Default' has the meaning provided in Sec-
tion 6.1(a).
'Excess Proceeds' has the meaning provided in Section
4.11(b).
<PAGE>
9
'Exchange Act' means the Securities Exchange Act of
1934, as amended.
'Exchange Offer' has the meaning specified in the
Registration Rights Agreement.
'Fair value' or 'fair market value' means, with
respect to any asset or property, the price which could be
negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the
Board of Directors acting in good faith and shall be evidenced
by a Board Resolution delivered to the Trustee.
'Fixed Charge Coverage Ratio' means, with respect to
any Person for any period, the ratio of the Consolidated Cash
Flow of such Person for such period (exclusive of amounts
attributable to discontinued operations, as determined in
accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date (as defined below)) to the Fixed
Charges of such Person for such period (exclusive of amounts
attributable to discontinued operations, as determined in
accordance with GAAP, or operations and businesses disposed of
prior to the Calculation Date, but only to the extent that the
Obligations giving rise to such Fixed Charges would no longer
be Obligations contributing to such Person's Fixed Charges sub-
sequent to the Calculation Date). In the event that the Com-
pany or any of its Subsidiaries incurs, assumes, guarantees or
redeems any Indebtedness (other than revolving credit borrow-
ings) or Attributable Debt or issues preferred stock subsequent
to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the 'Calculation Date'), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma
effect to such incurrence, assumption, guarantee or repayment
of Indebtedness or Attributable Debt, or such issuance or
redemption of preferred stock, as if the same had occurred at
the beginning of the applicable four-quarter reference period.
For purposes of making the computation referred to above,
acquisitions that have been made by the referent Person or any
of its Subsidiaries, including all mergers and consolidations,
during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall
be deemed to have occurred on the first day of the four-quarter
reference period; provided, however, that if any such calcula-
tion requires the use of any quarter prior to the date of this
<PAGE>
10
Indenture, such calculation for such quarter shall be made on a
pro forma basis giving effect to the Acquisition, including the
financing thereof, as if the same had occurred at the beginning
of such four-quarter period.
'Fixed Charges' means, with respect to any Person for
any period, the sum of (a) the Consolidated Interest Expense of
such Person and its Subsidiaries for such period, and (b) the
product of (i) all cash dividend payments (and non-cash divi-
dend payments in the case of a Person that is a Subsidiary) on
any series of preferred stock of such Person or a Subsidiary of
such Person, times (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such
Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
'Funding Guarantor' has the meaning provided in Sec-
tion 11.5.
'GAAP' means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of
the accounting profession, which are in effect on the date of
this Indenture.
'Global Security' means a permanent global security
in registered form, substantially in the form set forth in
Exhibit A and containing the legend set forth in Exhibit C,
deposited with the Trustee, as custodian for the Depository,
duly executed by the Company and authenticated by the Trustee
as provided herein.
'Guarantee' has the meaning provided in Section 11.1.
'Guarantor' means Pro-Fac, any Subsidiary Guarantor
and any successor to or assignee of all or substantially all of
the assets of any of them pursuant to Section 5.2.
'Hedging Obligations' means, with respect to any Per-
son, the Obligations of such Person under (i) interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in inter-
est rates or the value of foreign currencies.
<PAGE>
11
'Holder' or 'Securityholder' means the Person in
whose name a Security is registered on the Registrar's books.
'Indebtedness' means, with respect to any Person,
(i) any indebtedness of such Person (including Acquired Debt
and Attributable Debt), whether or not contingent, in respect
of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase
price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any such indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person pre-
pared in accordance with GAAP, (ii) all indebtedness of others
secured by a Lien on any asset of such Person whether or not
such indebtedness is assumed by such Person, and (iii) to the
extent not otherwise included, the guarantee of any indebted-
ness of any other Person by such Person.
'Indenture' means this Indenture as amended or sup-
plemented from time to time pursuant to the terms hereof.
'Institutional Accredited Investor' means an institu-
tional 'accredited investor' within the meaning of
Rule 501(a)(1), (2), (3) and (7) under the Securities Act.
'interest,' when used with respect to any Security,
means the amount of all interest accruing on such Security,
including all interest accruing subsequent to the occurrence of
any events specified in Sections 6.1(a)(ix) and (x) or which
would have accrued but for any such event.
'Interest Payment Date,' when used with respect to
any Security, means the stated maturity of an installment of
interest specified in such Security.
'Investments' means, with respect to any Person, all
(i) investments by such Person in other Persons (including
Affiliates) in the forms of loans (including guarantees),
advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the
ordinary course of business), (ii) purchases or other acquisi-
tions for consideration of Indebtedness, (iii) Equity Interests
or other securities and (iv) other items that are or would be
classified as investments on a balance sheet prepared in accor-
dance with GAAP.
<PAGE>
12
'Legal Holiday' means any day other than a Business
Day.
'Letter of Credit Facility' means that portion of the
New Credit Agreement that provides for the issuance of letters
of credit, with an aggregate face amount not in excess of
$10.0 million at any time outstanding, naming the Company as
the account party.
'Lien' means, with respect to any asset, any mort-
gage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agree-
ment to give any financing statement under the Uniform Commer-
cial Code (or equivalent statutes) of any jurisdiction).
'Liquidated Damages' means amounts payable pursuant
to Section 5 of the Registration Rights Agreement.
'LLC Restructuring' has the meaning provided in
Section 5.1.
'Maturity Date,' when used with respect to any Secu-
rity, means the date specified in such Security as the fixed
date on which the final installment of principal of such Secu-
rity is due and payable (in the absence of any acceleration
thereof pursuant to Section 6.2).
'Merger' means the merger under New York law of the
Company with and into Curtice-Burns, with Curtice-Burns being
the surviving entity.
'Net Income' means, with respect to any Person, the
net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of preferred stock
dividends, excluding, however, (i) any gain (but not loss),
together with any related provision for taxes on such gain (but
not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale
and leaseback transactions), or (b) the disposition of any
securities or the extinguishment of any Indebtedness of such
Person or any of its Subsidiaries, and (ii) any extraordinary
gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).
<PAGE>
13
'Net Proceeds' means the aggregate cash proceeds
received by the Company or any of its Subsidiaries in respect
of any Asset Sale, net of the direct costs relating to such
Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment
of Indebtedness (other than Indebtedness that is by its terms
subordinated to the Securities) upon sale of the asset or
assets that are the subject of such Asset Sale, and any reserve
for adjustment in respect of the sale price of such asset or
assets.
'New Credit Agreement' means the Term Loan, Term Loan
Facility and Seasonal Loan Agreement by and among the Company,
Curtice-Burns and Springfield Bank for Cooperatives in the form
existing as of the Closing Date, including any related notes,
guarantees, collateral documents, instruments and agreements
executed in connection therewith, in each case as amended, mod-
ified, renewed, restated, refunded, replaced or refinanced in
whole or in part from time to time.
'Non-payment Default' has the meaning provided in
Section 10.2(b).
'Obligations' means any principal, interest, penal-
ties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any
Indebtedness.
'Officer' means the Chairman, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Sec-
retary or the Controller of the Company.
'Officers' Certificate' means a certificate reason-
ably satisfactory to the Trustee and in compliance with the
terms of this Indenture signed by two Officers or by an Officer
and an Assistant Treasurer or Assistant Secretary of the
Company.
'Opinion of Counsel' means a written opinion reason-
ably satisfactory to the Trustee and in compliance with the
terms of this Indenture from legal counsel who is reasonably
acceptable to the Trustee, which may include counsel to the
Company, any Subsidiary of the Company, Pro-Fac or the Trustee.
<PAGE>
14
'Participating Guarantor' has the meaning provided in
Section 11.4.
'Participating Indebtedness' has the meaning provided
in Section 11.4.
'Paying Agent' has the meaning provided in Section
2.3.
'Payment Blockage Notice' has the meaning provided in
Section 10.2(b).
'Payment Blockage Period' has the meaning provided in
Section 10.2(b).
'Payment Default' has the meaning provided in
Section 10.2(a).
'Permitted Asset Sale Consideration' means securities
and other non-cash consideration acquired by the Company or any
of its Subsidiaries as consideration for the sale of assets or
Equity Interests in an Asset Sale having an aggregate fair mar-
ket value (measured as of the date of acquisition) that does
not exceed 5% of the Consolidated Tangible Assets of the Com-
pany and its Subsidiaries as of the most recently ended fiscal
quarter for which financial statements are available immedi-
ately preceding the date such consideration is acquired. The
fair market value of Permitted Asset Sale Consideration shall
be determined in good faith by the Company's Board of Directors
on the date on which it is acquired and no adjustments shall be
made for subsequent changes in fair market value except that
the amount deemed to be outstanding shall be reduced (but not
below zero) to the extent of any cash received by the Company
or a Subsidiary upon disposition of such Permitted Asset Sale
Consideration.
'Permitted Investments' means (i) any Investments in
the Company or in a Subsidiary of the Company; (ii) any Invest-
ments in Cash Equivalents; (iii) Investments by the Company or
any Subsidiary in a Person, if as a result of such Investment
(a) such Person becomes a Subsidiary of the Company that is
engaged in the same or a similar line of business to that which
the Company and its Subsidiaries were engaged in on the date of
the Investment or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a
Subsidiary of the Company that is engaged in the same or a
similar line of business to that which the Company and its
<PAGE>
15
Subsidiaries were engaged in on the date of the Investment;
(iv) Permitted Asset Sale Consideration; and (v) loans by the
Company or any of its Subsidiaries to employees of the Company
or any of its Subsidiaries the proceeds of which are applied to
purchase Capital Stock of the Company; (vi) demand loans for
working capital purposes from the Company to Pro-Fac, not
exceeding $10.0 million at any time outstanding, which will be
reduced to zero for a period of not less than 15 consecutive
days in each fiscal year; and (vii) any Investment in Spring-
field Bank for Cooperatives required under the New Credit
Agreement as in effect on the date hereof.
'Permitted Liens' means (i) Liens securing Indebted-
ness under the New Credit Agreement that is permitted to be
incurred pursuant to clauses (i) through (iv) of
Section 4.8(b); (ii) Liens securing intercompany notes on
assets that are required to be pledged to secure borrowings
under the New Credit Agreement; (iii) Liens in favor of the
Company; (iv) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business; (v) Liens on assets of the Company and its Subsidiar-
ies to secure Capital Lease Obligations, purchase money obliga-
tions and industrial revenue bonds or similar securities per-
mitted to be incurred pursuant to Section 4.8, provided that
such Liens cover only the assets acquired with the proceeds of
such Capital Lease Obligations, purchase money obligations or
industrial revenue bonds or similar securities, as the case may
be; (vi) Liens existing on the date of this Indenture;
(vii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested
in good faith by appropriate proceedings promptly instituted
and diligently prosecuted; provided that any reserve or other
appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens created or
pledges and deposits in connection with workers' compensation,
unemployment insurance and other social security benefits
incurred by the Company or any Subsidiary of the Company;
(ix) Liens imposed by law, including, without limitation,
mechanics', carriers', warehousemen's, materialman's, suppli-
ers' and vendors' Liens created by the Company or any Subsid-
iary in the ordinary course of business; (x) zoning restric-
tions, easements, licenses, covenants, reservations, restric-
tions on the use of real property or minor irregularities of
title incident thereto which do not, in the aggregate, have a
material adverse effect on the operation of the business of the
Company and its Subsidiaries taken as a whole; (xi) Liens
imposed pursuant to condemnation or eminent domain or
<PAGE>
16
substantially similar proceedings or in connection with compli-
ance with environmental laws or regulations; and (xii) Liens
incurred in the ordinary course of business of the Company or
any Subsidiary of the Company with respect to Obligations that
do not exceed $2.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money
or the obtaining of advances or credit (other than trade credit
in the ordinary course of business) and (b) do not in the
aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business
by the Company or such Subsidiary.
'Permitted Refinancing Indebtedness' means any
Indebtedness of the Company issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew,
replace, defease or refund, other Indebtedness of the Company;
provided that: (i) the principal amount and premium, if any,
of such Indebtedness does not exceed the principal amount of
the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of expenses incurred in
connection therewith); (ii) such Indebtedness has a Weighted
Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iii)
such Indebtedness is subordinated in right of payment to the
Securities on terms at least as favorable to the Holders of
Securities as those, if any, contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
'Person' means any individual, corporation, partner-
ship, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
'principal' of a debt security means the principal
amount of the security plus, when appropriate, the premium, if
any, on the security.
'Pro-Fac' means Pro-Fac Cooperative, Inc., a New York
cooperative corporation.
'Pro-Fac Director' means any Person who, as a direc-
tor, officer or other designee of Pro-Fac, serves as a director
of the Company.
'Pro-Fac Marketing Agreement' means the agreement
between Pro-Fac and the Company in the form existing as of the
<PAGE>
17
date of this Indenture, as such agreement may be amended,
restated, renewed, extended or replaced in accordance with this
Indenture.
'Qualified Institutional Buyer' or 'QIB' shall have
the meaning specified in Rule 144A under the Securities Act.
'Redemption Date' means, with respect to any Secu-
rity, the Maturity Date of such Security or the date on which
such Security is to be redeemed by the Company pursuant to the
terms of the Securities.
'Registrar' has the meaning provided in Section 2.3.
'Registration Rights Agreement' means the Registra-
tion Rights Agreement dated as of November 3, 1994 by and among
the Company, Pro-Fac, the purchasers who are signatories
thereto and, subsequent to the Merger, each Subsidiary
Guarantor.
'Restricted Investment' means an Investment other
than a Permitted Investment.
'Restricted Payment' has the meaning provided in
Section 4.10.
'SEC' means the Securities and Exchange Commission.
'Seasonal Working Capital Facility' means that por-
tion of the New Credit Agreement that provides for revolving
Indebtedness of the Company, the proceeds of which are to be
used to finance the Company's operations.
'Securities' means the 12 1/4% Senior Subordinated Notes
Due 2005 issued, authenticated and delivered under this Inden-
ture, as amended or supplemented from time to time pursuant to
the terms of this Indenture.
'Securities Act' means the Securities Act of 1933, as
amended.
'Securityholder' or 'Holder' means the Person in
whose name a Security is registered on the Registrar's books.
'Senior Indebtedness' means all Indebtedness and
other Obligations specified below payable directly or indi-
rectly by the Company or any Guarantor, as the case may be,
whether outstanding on the date of this Indenture or thereafter
<PAGE>
18
created, incurred or assumed by the Company or such Guarantor:
(i) the principal of and interest on and all other Obligations
related to the New Credit Agreement (including without limita-
tion all loans, letters of credit and unpaid drawings with
respect thereto and other extensions of credit under the New
Credit Agreement, and all expenses, fees, reimbursements,
indemnities and other amounts owing pursuant to the New Credit
Agreement), (ii) amounts payable in respect of any Hedging
Obligations, (iii) all Indebtedness not prohibited by Section
4.8 hereof that is not expressly pari passu with, or subordi-
nated to, the Securities or the Guarantees, as the case may be,
(iv) all Indebtedness represented by industrial revenue bonds
and all Capital Lease Obligations, in each case, outstanding on
the date of this Indenture, (v) all amounts payable to senior
officers and directors of Curtice-Burns in connection with the
Acquisition and (vi) all permitted renewals, extensions,
refundings or refinancings thereof permitted under this Inden-
ture. Notwithstanding anything to the contrary in the fore-
going, Senior Indebtedness shall not include (i) any Indebted-
ness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subor-
dinate in right of payment to any item of Senior Indebtedness
(it being understood that any agreements among creditors, as to
their priority positions with respect to collateral, shall not
be included as Indebtedness for purposes of this clause (i)),
(ii) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of
business or (iii) Indebtedness incurred (but only to the extent
incurred) in violation of this Indenture as in effect at the
time of the respective incurrence, provided that any Lender
under the New Credit Agreement with respect to such Indebted-
ness shall be permitted to rely conclusively on an Officers'
Certificate as to the permissibility of such Indebtedness under
this Indenture.
'Senior Representative' means, with respect to any
Senior Indebtedness, the indenture trustee or other trustee or
agent for such Senior Indebtedness.
'Subsidiary' means, with respect to any Person, any
corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indi-
rectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
<PAGE>
19
'Subsidiary Guarantor' means each Subsidiary of the
Company which, pursuant to Section 4.17 of this Indenture, exe-
cutes a supplemental indenture in which such Subsidiary agrees
to be bound by Article Eleven hereof and the other provisions
of this Indenture applicable to Subsidiary Guarantors, unless
and until released pursuant to Section 11.3 hereof.
'Term Loan Facility' means that portion of the New
Credit Agreement that provides for up to $120.0 million of term
Indebtedness of the Company, as reduced by any mandatory com-
mitment reductions pursuant to the terms of the New Credit
Agreement as in effect on the date of this Indenture, at least
$90.0 million of the proceeds of which are to be used to
finance in part the Acquisition.
'Term Loans' means that portion of the New Credit
Agreement that provides for $80.0 million of term Indebtedness
of the Company, as reduced by any mandatory commitment reduc-
tions pursuant to the terms of the New Credit Agreement as in
effect on the date of this Indenture.
'TIA' means the Trust Indenture Act of 1939 (15 U.S.
Code SS 77aaa-77bbbb) as in effect on the date of this
Indenture.
'Transfer Restricted Security' means each Security,
until the earliest to occur of (a) the date on which such Secu-
rity is exchanged in the Exchange Offer as defined in the Reg-
istration Rights Agreement and entitled to be resold to the
public by the Holder of such Security without complying with
the prospectus delivery requirements of the Securities Act,
(b) the date on which such Security has been effectively regis-
tered under the Securities Act and disposed of in accordance
with a shelf registration statement filed pursuant to the Reg-
istration Rights Agreement and (c) the date on which such Secu-
rity is distributed to the public pursuant to a transaction
satisfying the conditions for an exemption from registration in
accordance with Rule 144 under the Securities Act or by a
broker-dealer pursuant to the Registration Rights Agreement.
'Transferor Certificate' means a certificate substan-
tially in the form of Exhibit B hereto.
'Trustee' means the party named as such in this
Indenture until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means
such successor serving hereunder.
<PAGE>
20
'Trust Officer' means an officer or assistant officer
of the Trustee assigned to the Corporate Trust Administration
Department or similar department performing corporate trust
work, or any successor to such department or, in the case of a
successor trustee, an officer assigned to the department, divi-
sion or group performing the corporate trust work of such
successor.
'U.S. Government Obligations' means direct non-call-
able obligations of, or non-callable obligations guaranteed by,
the United States of America for the payment of which guarantee
or obligation the full faith and credit of the United States is
pledged.
'Weighted Average Life to Maturity' means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that shall elapse between such date and the making
of such payment, by (ii) the then outstanding principal amount
of such Indebtedness.
SECTION 1.2 Incorporation by Reference
of Trust Indenture Act.
Whenever this Indenture refers to a provision of the
TIA, the provision shall be deemed incorporated by reference in
and made a part of this Indenture. The following TIA terms
used in this Indenture have the following meanings:
(a) 'Commission' means the SEC;
(b) 'indenture securities' means the Securities;
(c) 'indenture security holder' means a
Securityholder or a Holder;
(d) 'indenture to be qualified' means this
Indenture;
(e) 'indenture trustee' or 'institutional trustee'
means the Trustee; and
(f) 'obligor' on the Securities means the Company or
any other obligor on the Securities.
<PAGE>
21
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by SEC rule under the TIA and not otherwise defined
herein have the meanings so assigned to them therein.
SECTION 1.3 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) 'or' is not exclusive;
(c) words in the singular include the plural, and
words in the plural include the singular;
(d) 'herein,' 'hereof' and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other Subdivision; and
(e) unless otherwise specified herein, all account-
ing terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be
prepared in accordance with GAAP as in effect from time to
time, applied on a basis consistent with the most recent
audited consolidated financial statements of the Company.
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
The Securities and the Trustee's certificate of
authentication with respect thereto shall be substantially in
the form set forth in Exhibit A annexed hereto, which is hereby
incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements
required by law, rule, usage or agreement to which the Company
is subject. Each Security shall be dated the date of its
authentication. The terms and provisions contained in the
Securities shall constitute, and are expressly made, a part of
this Indenture.
Securities originally issued to or transferred to
Institutional Accredited Investors that are Qualified Institu-
tional Buyers shall be issued initially in the form of one or
<PAGE>
22
more Global Securities. The aggregate principal amount of the
Global Security may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian
for the Depository, as hereinafter provided.
Securities originally issued to or transferred to
Institutional Accredited Investors that are not Qualified
Institutional Buyers shall be issued in the form of permanent
certificated Securities in registered form, in substantially
the form set forth in Exhibit A (a 'Certificated Security').
SECTION 2.2 Execution and Authentication.
Two Officers shall execute the Securities on behalf
of the Company by either manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or repro-
duced on the Securities.
If an Officer whose signature is on a Security no
longer holds that office at the time the Trustee authenticates
the Security or at any time thereafter, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Security. Such signature shall be con-
clusive evidence that the Security has been authenticated under
this Indenture.
The Trustee shall authenticate Securities for origi-
nal issue in an aggregate principal amount not to exceed
$160,000,000, upon an Officers' Certificate of the Company
signed by two Officers directing the Trustee to authenticate
the Securities and certifying that all conditions precedent to
the issuance of the Securities contained herein have been com-
plied with. The aggregate principal amount of Securities out-
standing at any time may not exceed $160,000,000 except as pro-
vided in Section 2.7.
The Trustee may appoint an authenticating agent
acceptable to and at the expense of the Company to authenticate
Securities. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. Such authenticating agent shall have the same authenti-
cating rights and duties as the Trustee in any dealings hereun-
der with the Company or with any Affiliate of the Company.
<PAGE>
23
SECTION 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New
York, State of New York) where Securities may be presented for
registration of transfer or for exchange (the 'Registrar'), an
office or agency (which shall be located in the Borough of Man-
hattan, City of New York, State of New York) where Securities
may be presented for payment (the 'Paying Agent') and an office
or agency where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served.
The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The
term 'Paying Agent' includes any additional paying agent. Nei-
ther the Company nor any Affiliate of the Company may act as
Paying Agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which
shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name
and address of any such Agent. If the Company fails to main-
tain a Registrar or Paying Agent, or fails to give the fore-
going notice, the Trustee shall act as such and shall be enti-
tled to appropriate compensation in accordance with
Section 7.7.
The Company initially appoints the Trustee as Regis-
trar and Paying Agent in connection with the Securities. The
Trustee shall at all times act as Paying Agent for purposes of
Sections 4.11 and 4.14.
SECTION 2.4 Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit
of the Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest and,
if applicable, Additional Payments and Liquidated Damages on
the Securities, and the Company and the Paying Agent shall
notify the Trustee of any default by the Company in making any
such payment. Money held in trust by the Paying Agent need not
be segregated except as required by law and in no event shall
the Paying Agent be liable for any interest on any money
received by it hereunder. The Company at any time may require
the Paying Agent to pay all money held by it to the Trustee and
account for any funds disbursed and the Trustee may at any time
<PAGE>
24
during the continuance of any Event of Default specified in
Section 6.1(a)(i) or (ii), upon written request to the Paying
Agent, require such Paying Agent to pay forthwith all money so
held by it to the Trustee and to account for any funds dis-
bursed. Upon making such payment, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of the Securityholders. If the Trustee
is not the Registrar, the Company shall furnish or cause the
Registrar to furnish to the Trustee at least five Business Days
before each Interest Payment Date, and at such other times as
the Trustee may request in writing, a list in such form and as
of such date as the Trustee may reasonably require of the names
and addresses of the Securityholders.
SECTION 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Certificated Securi-
ties. When Certificated Securities are presented by a Holder
to the Registrar with a request:
(x) to register the transfer of the Certificated
Securities; or
(y) to exchange such Certificated Securities for an
equal principal amount of Certificated Securities of other
authorized denominations;
the Registrar shall register the transfer or make the exchange
as requested if its requirements for such transactions are met;
provided, however, that the Certificated Securities presented
or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a writ-
ten instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
(ii) in the case of a Certificated Security that is a
Transfer Restricted Security such request shall be accom-
panied by the following additional information and docu-
ments, as applicable:
<PAGE>
25
(A) if such Transfer Restricted Security is
being delivered to the Registrar by a Holder for reg-
istration in the name of such Holder, without trans-
fer, a Transferor Certificate to that effect from
such Holder; or
(B) if such Transfer Restricted Security is
being transferred to a Qualified Institutional Buyer
in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Secu-
rities Act or pursuant to an effective registration
statement under the Securities Act, a Transferor Cer-
tificate to that effect from such Holder; or
(C) if such Transfer Restricted Security is
being transferred in reliance on another exemption
from the registration requirements of the Securities
Act, a Transferor Certificate to that effect from
such Holder and an opinion of counsel from such
Holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) Transfer of a Certificated Security for a Bene-
ficial Interest in a Global Security. A Certificated Security
may not be exchanged for a beneficial interest in a Global
Security except upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a Certificated Security,
duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Trustee, together with:
(i) if such Certificated Security is a Transfer
Restricted Security, a Transferor Certificate from the
Holder thereof to the effect that such Certificated Secu-
rity is being transferred by such Holder to a Qualified
Institutional Buyer in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Certificated Security is a
Transfer Restricted Security, written instructions from
the Holder thereof directing the Trustee to make, or to
direct the Depository to make, an endorsement on the Glo-
bal Security to reflect an increase in the aggregate prin-
cipal amount of the Securities represented by the Global
Security,
<PAGE>
26
in which case the Trustee shall cancel such Certificated Secu-
rity and cause, or direct the Depository to cause, the aggre-
gate principal amount of Securities represented by the Global
Security to be increased accordingly. If no Global Securities
are then outstanding, the Company shall issue and, upon receipt
of an authentication order in accordance with Section 2.2, the
Trustee shall authenticate a new Global Security in the appro-
priate principal amount.
(c) Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial inter-
ests therein shall be effected through the Depository, in
accordance with this Indenture, which shall include restric-
tions on transfer comparable to those set forth herein to the
extent required by the Securities Act and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a
Global Security for a Certificated Security.
(i) Any Person having a beneficial interest in a
Global Security may upon request exchange such beneficial
interest for a Certificated Security. Upon receipt by the
Trustee of written instructions or such other form of
instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Security, and, in the case
of a Transfer Restricted Security, the following addi-
tional information and documents (all of which may be sub-
mitted by facsimile):
(A) if such beneficial interest is being trans-
ferred to the Person designated by the Depository as
being the beneficial owner, a Transferor Certificate
to that effect from such Person; or
(B) if such beneficial interest is being trans-
ferred to a Qualified Institutional Buyer in accor-
dance with Rule 144A under the Securities Act or pur-
suant to an exemption from registration in accordance
with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a Transferor Certificate to that
effect from the transferor; or
(C) if such beneficial interest is being trans-
ferred in reliance on another exemption from the reg-
istration requirements of the Securities Act, a
<PAGE>
27
Transferor Certificate to that effect from the trans-
feror and an opinion of counsel from the transferee
or transferor reasonably acceptable to the Company
and to the Registrar to the effect that such transfer
is in compliance with the Securities Act,
in which case the Trustee shall cause the aggregate prin-
cipal amount of Global Securities to be reduced accord-
ingly and, following such reduction, the Company shall
execute and, upon receipt of an authentication order in
accordance with Section 2.2, the Trustee shall authenti-
cate and deliver to the transferee a Certificated Security
in the appropriate principal amount.
(ii) Certificated Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this
Section 2.6(d) shall be registered in such names and in
such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Certificated Securities to the Persons
in whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this
Indenture (other than the provisions set forth in subsection
(f) of this Section 2.6), a Global Security may not be trans-
ferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such
successor Depository.
(f) Authentication of Certificated Securities in
Absence of Depository. If at any time:
(i) the Depository notifies the Company that the
Depository is unwilling or unable to continue as Deposi-
tory for the Global Securities and a successor Depository
for the Global Securities is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issu-
ance of Certificated Securities under this Indenture,
then the Company shall execute, and the Trustee, upon receipt
of an Officers' Certificate requesting the authentication and
<PAGE>
28
delivery of Certificated Securities, shall authenticate and
deliver, Certificated Securities in an aggregate principal
amount equal to the principal amount of the Global Securities
in exchange for such Global Securities.
(g) Legends.
(i) Except as permitted by the following paragraphs
(ii) and (iii), each Security certificate evidencing Glo-
bal Securities and Certificated Securities (and all Secu-
rities issued in exchange therefor or substitution
thereof) shall bear legends in substantially the form set
forth in Exhibit A hereto and in addition, each Security
certificate evidencing Global Securities shall also bear
legends in substantially the form set forth in Exhibit C
hereto.
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted
Security represented by a Global Security) pursuant to
Rule 144 under the Securities Act or pursuant to an effec-
tive registration statement under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Certificated Security, the Regis-
trar shall permit the Holder thereof to exchange such
Transfer Restricted Security for a Certificated Secu-
rity that does not bear the legend set forth in
Exhibit A and rescind any restriction on the transfer
of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Security, such
Transfer Restricted Security shall not be required to
bear the legend set forth in Exhibit A, although it
shall continue to be subject to the provisions of
Section 2.6(c) hereof; provided, however, that with
respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global
Security for a Certificated Security that does not
bear the legend set forth in Exhibit A, which request
is made in reliance upon Rule 144, the Holder thereof
shall furnish a Transferor Certificate to the Regis-
trar that such request is being made pursuant to
Rule 144.
(iii) Notwithstanding the foregoing, upon Consummation
of the Exchange Offer, the Company shall issue, and upon
<PAGE>
29
receipt of an authentication order in accordance with
Section 2.2, the Trustee shall authenticate, Securities to
be issued in the Exchange Offer, which Securities shall
not bear the legend set forth in Exhibit A, and the Regis-
trar shall rescind any restriction on the transfer of such
Securities, in each case unless the Holder of the Securi-
ties tendered into the Exchange Offer is either (A) a
broker-dealer who purchased such Securities directly from
the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person
participating in the distribution of the Securities or
(C) a Person who is an affiliate (as defined in Rule 144A)
of the Company.
(h) Cancellation and/or Adjustment of Global Securi-
ties. At such time as all beneficial interests in Global Secu-
rities have either been exchanged for Certificated Securities,
redeemed, repurchased or cancelled, all Global Securities shall
be returned to or retained and cancelled by the Trustee. At
any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for Certificated Securities,
redeemed, repurchased or cancelled, the principal amount of
Securities represented by such Global Security shall be reduced
accordingly and an endorsement shall be made on such Global
Security, by the Trustee to reflect such reduction.
(i) General Provisions Relating to
Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Certificated Securities and Global Securities
at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or
transfer pursuant to Sections 4.11 and 4.14 hereof and
Section 7 of the Securities).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Security selected for
redemption in whole or in part, except the unredeemed por-
tion of any Security being redeemed in part.
<PAGE>
30
(iv) All Certificated Securities and Global Securi-
ties issued upon any registration of transfer or exchange
of Certificated Securities or Global Securities shall be
the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Inden-
ture, as the Certificated Securities or Global Securities
surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Securities during a period beginning at the
opening of business 15 days before the day of any
selection of Securities for redemption under Section
3.2 hereof and ending at the close of business on the
day of selection; or
(B) to register the transfer of or to exchange
any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Secu-
rity being redeemed in part; or
(C) to register the transfer of or to exchange
a Security between a record date and the next suc-
ceeding interest payment date.
(vi) Prior to due presentment for the registration of
a transfer of any Security, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any
Security is registered as the absolute owner of such Secu-
rity for the purpose of receiving payment of principal of
and interest on such Security, and neither the Trustee,
any Agent nor the Company shall be affected by notice to
the contrary.
(vii) The Trustee shall authenticate Certificated
Securities and Global Securities upon receipt of an Offic-
ers' Certificate instructing it to do so.
SECTION 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Regis-
trar or the Trustee or if the Holder of a Security claims that
the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a
replacement Security if the Holder of such Security furnishes
to the Company and to the Trustee evidence reasonably
<PAGE>
31
acceptable to them of the ownership and the destruction, loss
or theft of such Security. If required by the Trustee or the
Company, an indemnity bond shall be posted, sufficient in the
judgment of the Company or the Trustee, as the case may be, to
protect the Company, the Trustee or any Agent from any loss
that any of them may suffer if such Security is replaced. The
Company may charge such Holder for the Company's expenses in
replacing such Security and the Trustee may charge the Company
for the Trustee's expenses in replacing such Security. Every
replacement Security shall constitute an additional obligation
of the Company.
SECTION 2.8 Outstanding Securities.
The Securities outstanding at any time are all Secu-
rities that have been authenticated by the Trustee except for
(a) those cancelled by it, (b) those delivered to it for can-
cellation, (c) to the extent set forth in Sections 8.1 and 8.2,
on or after the date on which the conditions set forth in
Section 8.1 or 8.2 have been satisfied, those Securities there-
tofore authenticated and delivered by the Trustee hereunder and
(d) those described in this Section 2.8 as not outstanding. A
Security does not cease to be outstanding because the Company
or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7, it
ceases to be outstanding unless the Trustee receives proof sat-
isfactory to it that the replaced Security is held by a bona
fide purchaser in whose hands such Security is a legal, valid
and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such,
on any Maturity Date or on any optional redemption date money
sufficient to pay all accrued interest, Additional Payments,
Liquidated Damages and principal with respect to such Securi-
ties payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Securities cease to
be outstanding and interest on them ceases to accrue.
SECTION 2.9 Treasury Securities.
In determining whether the Holders of the required
principal amount of Securities have concurred in any declara-
tion of acceleration or notice of default or direction, waiver
or consent or any amendment, modification or other change to
this Indenture, Securities owned by the Company or a Subsidiary
or an Affiliate of the Company shall be disregarded as though
<PAGE>
32
they were not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent or any amendment, mod-
ification or other change to this Indenture, only Securities
that the Trustee actually knows are so owned shall be so disre-
garded. Securities owned by the Company or a Subsidiary or an
Affiliate of the Company which have been pledged in good faith
may be regarded as outstanding if the Trustee receives an
Officers' Certificate stating that said Securities have been so
pledged, that the pledgee is entitled to vote with respect to
such Securities and that the pledgee is not the Company or any
other obligor on the Securities, a Subsidiary or an Affiliate
of the Company, or a Subsidiary of such other obligor.
SECTION 2.10 Temporary Securities.
Until definitive Securities are prepared and ready
for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall
be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for tem-
porary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until such
exchange, Holders of temporary Securities shall be entitled to
the same rights, benefits and privileges as Holders of defini-
tive Securities.
SECTION 2.11 Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee
shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and
shall (subject to the record-retention requirements of the
Exchange Act) dispose of cancelled Securities unless the Com-
pany directs the Trustee to return such Securities to the Com-
pany, and, if so disposed, shall deliver a certificate of dis-
position thereof to the Company upon the Company's written
request. The Company may not reissue or resell, or issue new
Securities to replace, Securities that the Company has redeemed
or paid, or that have been delivered to the Trustee for
cancellation.
<PAGE>
33
SECTION 2.12 Defaulted Interest.
If the Company defaults on a payment of interest,
Additional Payments or Liquidated Damages on the Securities, it
shall pay the defaulted interest, Additional Payments and
Liquidated Damages, plus (to the extent permitted by law) any
interest payable on the defaulted interest, Additional Payments
and Liquidated Damages, in accordance with the terms hereof, to
the Persons who are Securityholders on a subsequent special
record date, which date shall be at least five Business Days
prior to the payment date. The Company shall fix such special
record date and payment date in a manner reasonably satisfac-
tory to the Trustee. At least 15 days before such special
record date, the Company (or, upon the written request of the
Company, the Trustee in the name and at the expense of the Com-
pany) shall mail or cause to be mailed to each Securityholder a
notice that states the special record date, the related payment
date and the amount of defaulted interest, Additional Payments
and Liquidated Damages, and interest payable on such defaulted
interest, Additional Payments and Liquidated Damages, if any,
to be paid on account of each Security.
SECTION 2.13 CUSIP Number.
The Company in issuing the Securities may use a
'CUSIP' number, and if so, such CUSIP number shall be included
in notices of redemption or exchange as a convenience to Hold-
ers; provided, however, that any such notice may state that no
representation is made as to the correctness or accuracy of the
CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly
notify the Trustee of any change in the CUSIP number.
SECTION 2.14 Deposit of Moneys.
Not less than one Business Day prior to each Interest
Payment Date and Maturity Date, the Company shall have depos-
ited with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest
Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date or Maturity Date, as the
case may be.
<PAGE>
34
ARTICLE III
REDEMPTION
SECTION 3.1 Notices to Trustee.
If the Company elects to redeem Securities pursuant
to Paragraph 7 of the Securities, it shall notify the Trustee
and the Paying Agent in writing of the Redemption Date and the
principal amount of Securities to be redeemed.
The Company shall give each notice provided for in
this Section 3.1 at least 60 days before the Redemption Date
(unless a shorter notice shall be agreed to by the Trustee in
writing), together with an Officers' Certificate stating that
such redemption will comply with the conditions contained
herein and in the Securities.
SECTION 3.2 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed
at any time, selection of Securities for redemption will be
made by the Trustee on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate or, if
the relevant notice of redemption identifies the requirements
applicable to such selection of the principal national securi-
ties exchange, if any, on which the Notes are listed, then
selection of Notes for redemption will be made by the Trustee
in compliance with such requirements. The Trustee shall make
the selection from the Securities outstanding and not previ-
ously called for redemption. The Trustee shall promptly notify
the Company in writing of such Securities selected for redemp-
tion and, in the case of Securities selected for partial
redemption, the principal amount to be redeemed. The Trustee
may select for redemption portions of the principal amount of
Securities that have denominations larger than $1,000. Securi-
ties and portions of them the Trustee selects shall be in
amounts of $1,000 or integral multiples of $1,000. Provisions
of this Indenture that apply to Securities called for redemp-
tion also apply to portions of Securities called for
redemption.
SECTION 3.3 Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail, or cause the mailing
of, a notice of redemption by first-class mail to each Holder
of Securities to be redeemed and the Trustee.
<PAGE>
35
The notice shall identify the Securities to be
redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price and the amount of accrued
interest, Additional Payments and Liquidated Damages, if
any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price and accrued interest, Additional Payments and Liqui-
dated Damages, if any;
(e) that, unless the Company defaults in making the
redemption payment, interest, Additional Payments and
Liquidated Damages on Securities called for redemption
ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities of
such series is to receive payment of the redemption price
upon surrender to the Paying Agent of the Securities
redeemed;
(f) if any Security is to be redeemed in part, the
portion of the principal amount (equal to $1,000 or any
integral multiple thereof) of such Security to be redeemed
and that, on or after the Redemption Date, upon surrender
and cancellation of such Security, a new Security or Secu-
rities in aggregate principal amount equal to the
unredeemed portion thereof will be issued without charge
to the Securityholder;
(g) if less than all of the Securities are to be
redeemed, the identification of the particular Securities
(or portion thereof) to be redeemed, as well as the aggre-
gate principal amount of Securities to be redeemed; and
(h) the CUSIP number, if any, pursuant to Section
2.13.
At the Company's written request, made at least 15
days prior to the date on which notice of redemption is to be
given, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense.
<PAGE>
36
SECTION 3.4 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities
called for redemption become due and payable on the Redemption
Date and at the redemption price. Upon surrender to the Paying
Agent, such Securities shall be paid at the redemption price
plus accrued interest, Additional Payments and Liquidated Dam-
ages to the Redemption Date, but interest installments, Addi-
tional Payments and Liquidated Damages whose maturity is on or
prior to such Redemption Date will be payable on the relevant
Interest Payment Dates to the Holders of record at the close of
business on the relevant record dates referred to in the
Securities.
SECTION 3.5 Deposit of Redemption Price.
Not less than one Business Day prior to the Redemp-
tion Date, the Company shall deposit with the Paying Agent in
immediately available funds money sufficient to pay the redemp-
tion price of and accrued interest, Additional Payments and
Liquidated Damages on all Securities or portions thereof to be
redeemed on that date. Upon written request of the Company,
the Paying Agent shall promptly return to the Company any money
deposited with the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued
interest, Additional Payments and Liquidated Damages on, all
Securities to be redeemed.
If any Security surrendered for redemption in the
manner provided in the Securities shall not be so paid on the
Redemption Date due to the failure of the Company to deposit
sufficient funds with the Paying Agent, interest and, if appli-
cable, Additional Payments and Liquidated Damages will continue
to accrue from the Redemption Date until such payment is made
on the unpaid principal and, to the extent lawful, interest
will continue to accrue from the Redemption Date on any inter-
est, Additional Payments and Liquidated Damages not paid on
such unpaid principal, in each case at the date and in the man-
ner provided in the Securities.
SECTION 3.6 Securities Redeemed in Part.
Upon surrender to the Paying Agent of a Security that
is redeemed in part, the Company shall execute and, upon the
Company's written request, the Trustee shall authenticate for
the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
<PAGE>
37
SECTION 3.7 Limitations.
The provisions of this Article Three and of
Paragraph 7 of the Securities shall not apply to any private or
open market purchase of Securities by the Company, whether or
not any Securities so purchased are retired or extinguished.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities.
The Company shall pay, or cause to be paid, the prin-
cipal of and interest and, if applicable, Additional Payments
and Liquidated Damages on the Securities on the dates and in
the manner provided in the Securities and this Indenture.
An installment of principal or interest and, if
applicable, Additional Payments and Liquidated Damages shall be
considered paid on the date due if the Trustee or Paying Agent
(other than the Company, a Subsidiary of the Company or any
Affiliate of any thereof) holds on such date immediately avail-
able funds designated for and sufficient to pay such
installment.
The Company shall pay interest on overdue principal
(including post-petition interest in any proceeding under Bank-
ruptcy Law) and (to the extent permitted by law) on overdue
installments of interest and, if applicable, Additional Pay-
ments and Liquidated Damages (including post-petition interest
in any proceeding under Bankruptcy Law) at a rate equal to 12-1/4%
per annum.
SECTION 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhat-
tan, the City of New York, an office or agency (which may be
the Trustee or an Affiliate of the Trustee), where Securities
may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to
or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made
<PAGE>
38
or served at the address of the Trustee set forth in
Section 12.2.
The Company may also from time to time designate one
or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York, for
such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby initially designates the corporate
trust office of the Trustee set forth in Section 12.2 as an
agency of the Company in accordance with Section 2.3.
SECTION 4.3 Corporate Existence.
Subject to Article Five hereof, the Company shall do
or cause to be done, at its own cost and expense, all things
necessary to and will cause each of its Subsidiaries to, pre-
serve and keep in full force and effect the corporate or part-
nership existence and rights (charter and statutory), licenses
and/or franchises of the Company and each of its Subsidiaries;
provided, however, that (x) this Section 4.3 shall not apply to
any Subsidiary of the Company after its corporate or partner-
ship existence is terminated in a transaction permitted by Sec-
tion 4.11 and (y) the Company or any of its Subsidiaries shall
not be required to preserve any such rights, licenses and fran-
chise or corporate existence (with respect to Subsidiaries) if
the Board of Directors of the Company shall reasonably deter-
mine that the loss thereof is not, and will not be, adverse in
any material respect to the Holders.
SECTION 4.4 Payment of Taxes and Other Claims.
The Company shall and shall cause each of its Subsid-
iaries to pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all material taxes,
assessments and governmental levies, except such as are being
contested in good faith by appropriate negotiations or proceed-
ings and for which appropriate provision has been made in
accordance with GAAP.
<PAGE>
39
SECTION 4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
(a) The Company shall and shall cause each of its
Subsidiaries to, at all times cause all properties used in the
conduct of its business to be maintained and kept in good con-
dition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment, and shall
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereto, in each case, in a manner
customary for companies similarly situated.
(b) The Company shall and shall cause each of its
Subsidiaries to maintain insurance with insurance companies or
association with a rating of 'A-' or better, as established by
Best's Rating Guide (or an equivalent rating with such other
publication of a similar nature as shall be in current use) in
such amounts and covering such risks as are usually and custom-
arily carried with respect to companies similarly situated and
similar facilities according to their respective locations.
(c) The Company shall and shall cause each of its
Subsidiaries to keep proper books of record and account, in
which full and correct entries shall be made of all financial
transactions and the assets and business of the Company and
each Subsidiary of the Company, in accordance with GAAP consis-
tently applied to the Company and its Subsidiaries taken as a
whole.
(d) The Company shall and shall cause each of its
Subsidiaries to comply with all statutes, laws, ordinances, or
government rules and regulations to which it is subject, non-
compliance with which would materially adversely affect the
business, condition (financial or otherwise), results of opera-
tions or properties of the Company and its Subsidiaries taken
as a whole.
(e) The Company and each Guarantor shall deliver to
the Trustee any information reasonably requested by the Trustee
in connection with compliance by the Trustee or the Company
with any of their respective duties or obligations hereunder or
under the TIA.
(f) Upon the request of the Trustee, the Company and
each Guarantor shall execute and deliver such further instru-
ments and do such further acts as may be reasonably necessary
or proper to carry out effectively the purposes of this
Indenture.
<PAGE>
40
(g) The Company shall not and shall not permit any
of its Subsidiaries to enter into any agreement or instrument
that by its terms expressly prohibits the Company from making
any payments on or in respect of the Securities in accordance
with the terms thereof and of this Indenture.
SECTION 4.6 Compliance Certificates.
(a) The Company shall deliver to the Trustee, within
90 days after the end of each fiscal year, an Officers' Cer-
tificate of the Company stating (i) that a review of the activ-
ities of the Company during the preceding fiscal year has been
made under the supervision of the signing Officers with a view
to determining whether the Company has kept, observed, per-
formed and fulfilled its obligations under this Indenture,
(ii) that, to the best knowledge of such Officer after due
inquiry, the Company has kept, observed, performed and ful-
filled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default
or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which such Officer may have
knowledge, their status and what action the Company is taking
or proposes to take with respect thereto) and (iii) that to the
best of his knowledge after due inquiry no event has occurred
and remains in existence by reason of which payments on account
of the principal of or interest, Additional Payments and Liqui-
dated Damages, if any, on the Securities are prohibited (or, if
such event has occurred, describing the event and what action
the Company is taking or proposes to take with respect
thereto).
(b) So long as not contrary to the then current rec-
ommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursu-
ant to Section 4.7 below shall be accompanied by a written
statement of the Company's independent public accountants (who
shall be a firm of established national reputation) that in
making the examination necessary for certification of such
financial statements, nothing has come to their attention that
would lead them to believe that the Company has violated any
provisions of Article Four or Five hereof or, if any such vio-
lation has occurred, specifying the nature and period of exis-
tence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
<PAGE>
41
(c) The Company shall, so long as any of the Securi-
ties are outstanding, deliver to the Trustee, forthwith upon
any Officer becoming aware of any Default or Event of Default
an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to
take with respect thereto.
SECTION 4.7 Reports.
Whether or not required by the rules and regulations
of the SEC, so long as any Securities are outstanding, Pro-Fac
and the Company shall furnish to the Trustee and to the Holders
of Securities (i) all quarterly and annual financial informa-
tion that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Pro-Fac and the Com-
pany were required to file such Forms, including a 'Manage-
ment's Discussion and Analysis of Financial Condition and
Results of Operations' that describes the financial condition
and results of operations of Pro-Fac, the Company and its Sub-
sidiaries, and, with respect to the annual information only, a
report on the financial statements by Pro-Fac's and the Compa-
ny's certified independent accountants and (ii) all reports
that would be filed with the Commission on Form 8-K if Pro-Fac
and the Company were required to file such reports. In addi-
tion, whether or not required by the rules and regulations of
the Commission, following Consummation of the Exchange Offer,
Pro-Fac and the Company shall file a copy of all such informa-
tion and reports with the Commission for public availability
(unless the Commission shall not accept such a filing) and make
such information available to investors who request it in writ-
ing. For so long as any Transfer Restricted Securities remain
outstanding, each of Pro-Fac and the Company shall furnish to
the Holders and beneficial holders of Transfer Restricted Secu-
rities and to prospective purchasers of Transfer Restricted
Securities designated by the Holders of Transfer Restricted
Securities and to broker-dealers, upon their request, the
information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
SECTION 4.8 Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock.
(a) The Company shall not, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to (collectively,
'incur') any Indebtedness (including Acquired Debt) and shall
not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to incur any Indebtedness (including Acquired
<PAGE>
42
Debt) or to issue any shares of preferred stock; provided, how-
ever, that the Company may incur Indebtedness and issue shares
of Disqualified Stock if (i) the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immedi-
ately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have
been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds there-
from), as if the additional Indebtedness had been incurred or
the Disqualified Stock had been issued, as the case may be, and
the net proceeds therefrom had been applied, at the beginning
of such four-quarter period and (ii) no Default or Event of
Default shall have occurred and be continuing immediately after
such incurrence.
(b) The limitations contained in subsection (a)
above shall not apply to the incurrence (i) by the Company of
Indebtedness (and by Subsidiary Guarantors of related guaran-
tees) under the Seasonal Working Capital Facility in an aggre-
gate principal amount at any time outstanding not to exceed the
amount of the Borrowing Base calculated as of the date of such
incurrence; (ii) (A) by the Company of Indebtedness evidenced
by letters of credit issued in the ordinary course of business
consistent with past practice to support the Company's insur-
ance or self-insurance obligations (including to secure work-
ers' compensation and other similar insurance coverage) or to
support surety bonds or appeal bonds provided by the Company in
the ordinary course of business and (B) by the Company of
Indebtedness (and by Subsidiary Guarantors of related guaran-
tees) available under the Letter of Credit Facility evidenced
by letters of credit with an aggregate face amount not to
exceed $10.0 million; (iii) by the Company of Indebtedness (and
by Subsidiary Guarantors of related guarantees) available under
the Term Loan Facility in an aggregate principal amount at any
time outstanding not to exceed $120.0 million, as reduced by
any mandatory commitment reductions under the Term Loan Facil-
ity; (iv) by the Company of Indebtedness (and by Subsidiary
Guarantors of related guarantees) under the Term Loan in an
aggregate principal amount at any time not to exceed $80.0 mil-
lion, as reduced by any mandatory commitment reductions under
the Term Loans; (v) by the Company of Indebtedness represented
by the Securities (and by Subsidiary Guarantors of Indebtedness
represented by the Guarantees); (vi) by the Company or any Sub-
sidiary in respect of Capital Lease Obligations in an aggregate
principal amount not to exceed $10.0 million at any time out-
standing; (vii) by the Company or any Subsidiary in respect of
purchase money obligations in an aggregate amount not to exceed
<PAGE>
43
$5.0 million at any time outstanding; (viii) by the Company or
any Subsidiary in respect of industrial revenue bonds or simi-
lar securities provided that the net proceeds thereof are
applied to construct new facilities and that the aggregate
principal amount of such industrial revenue bonds does not
exceed 75% of the fair market value of the facilities financed
thereby; (ix) by any Subsidiary of the Company of Indebtedness
to the Company; (x) by the Company of Hedging Obligations for
the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by
the terms of this Indenture to be outstanding; and
(xi) Permitted Refinancing Indebtedness of Indebtedness
incurred by the Company pursuant to clause (v) above or pursu-
ant to subsection (a) above.
(c) Anything contained in this Section 4.8 notwith-
standing, the Company may make demand loans to Pro-Fac for
working capital purposes aggregating in an amount not exceeding
$10.0 million at any time outstanding, each such demand loan
bearing an interest rate equal to the interest rate in effect
on the date of such loan under the Seasonal Facility; provided,
however, that the aggregate loan balance of such demand loans
must be reduced to zero for a period of not less than 15 con-
secutive days in each fiscal year. Except for (i) the demand
loans described in the preceding sentence, (ii) Pro-Fac's guar-
antee under the New Credit Agreement, and (iii) Pro-Fac's Guar-
antee of the Obligations under this Indenture, as long as
Pro-Fac has the right to borrow under the Pro-Fac Marketing
Agreement, Pro-Fac shall not incur any Indebtedness (it being
understood that Pro-Fac's obligations in respect of retained
earnings allocated to its members shall not be deemed to be
Indebtedness).
SECTION 4.9 Limitation on Liens.
The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset now owned or
hereafter acquired, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, except
Permitted Liens, unless (i) in the case of any Lien that
secures an Obligation that is pari passu with the Indebtedness
represented by the Securities, all payments in respect of the
Securities are secured on an equal and ratable basis with the
Obligation so secured and (ii) in the case of any Lien that
secures an Obligation that is subordinated to the Indebtedness
represented by the Securities, all payments in respect of the
<PAGE>
44
Securities are secured on a senior basis reflecting the subor-
dination of the Obligation so secured.
SECTION 4.10 Limitation on Restricted Payments.
The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the
Company's or any of its Subsidiaries' Equity Interests (other
than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company or any Affiliate
of the Company (other than any such Equity Interests owned by
the Company or any Subsidiary of the Company); (iii) purchase,
redeem or otherwise acquire or retire for value prior to its
scheduled final maturity any Indebtedness that is subordinated
to the Securities; or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as
'Restricted Payments'), unless, at the time of such Restricted
Payment:
(a) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence
thereof; and
(b) at the time of such Restricted Payment and after
giving effect thereto as if such Restricted Payment (and
any other Restricted Payments made since the end of the
applicable four-quarter period) had been made at the
beginning of such four-quarter period, the Fixed Charge
Coverage Ratio (calculated in a manner set forth in
clause (i) of Section 4.8(a) above) would have been at
least 1.75 to 1.00; and
(c) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the
Company and its Subsidiaries after the date of this Inden-
ture (including, but not limited to, Restricted Payments
permitted by clauses (i), (ii) and (iii)(b) of the next
succeeding paragraph), is less than the sum of (u) 50% of
the Consolidated Net Income (or, if Consolidated Net
Income is negative, 100% of the Consolidated Net Income)
of the Company for the period (taken as one accounting
period) from June 26, 1994 to the end of the most recently
ended fiscal quarter for which internal financial
<PAGE>
45
statements are available at the time of such Restricted
Payment, plus (v) 100% of the aggregate net cash proceeds
(50% with respect to the first $10.0 million) received by
the Company from the issue or sale since the date of this
Indenture of Equity Interests of the Company (including,
but not limited to, Equity Interests issued as described
in clauses (ii) and (iii)(b) of the next succeeding para-
graph, but excluding amounts contributed to the Company
pursuant to clause (y) and any Equity Interests purchased
with the proceeds of loans by the Company or any of its
Subsidiaries to employees of the Company or any of its
Subsidiaries, and additional contributions of capital by
Pro-Fac in respect of Equity Interests), plus (w) 100% of
the aggregate net cash proceeds received by the Company
from the issue or sale since the date of this Indenture of
debt securities of the Company that have been converted
into such Equity Interests (other than (1) Equity Inter-
ests (or convertible debt securities) sold to a Subsidiary
of the Company, (2) Disqualified Stock or debt securities
that have been converted into Disqualified Stock and
(3) Equity Interests purchased by members of the Company's
or its Subsidiaries' management with the proceeds of loans
from the Company or any of its Subsidiaries), plus (x) to
the extent that any Restricted Investment that was made
after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of
(A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Invest-
ment, plus (y) 40% of the aggregate contributions by
Pro-Fac to the Company pursuant to Section 4.18 hereof
subsequent to the date of this Indenture, plus
(z) $5.0 million.
The foregoing provisions of subsections (b) and (c)
shall not prohibit (i) the payment of any dividend within 60
days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provi-
sions of this Indenture; (ii) the redemption, repurchase,
retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the sub-
stantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than
any Disqualified Stock); (iii) the defeasance, redemption,
repurchase or other retirement of subordinated Indebtedness
(a) with the net proceeds from an incurrence of Permitted Refi-
nancing Indebtedness or (b) in exchange for, or out of the pro-
ceeds of, the substantially concurrent sale of Equity Interests
<PAGE>
46
of the Company (other than (x) Disqualified Stock, (y) Equity
Interests sold to a Subsidiary of the Company and (z) Equity
Interests purchased by members of the Company's or its Subsid-
iaries' management with the proceeds of loans from the Company
or any of its Subsidiaries); and (iv) the payment of amounts
required to fund Pro-Fac's reasonable operating expenses, not
in excess of $250,000, as adjusted to reflect changes in the
Consumer Price Index between the date of this Indenture and the
date of any such payment, in any fiscal year.
SECTION 4.11 Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not permit any
of its Subsidiaries to, (i) sell, lease, convey or otherwise
dispose of any assets (including by way of a sale-and-lease-
back) other than sales of inventory in the ordinary course of
business consistent with past practice (provided that the sale,
lease, conveyance or other disposition of all or substantially
all of the assets of the Company will be governed by the provi-
sions of Section 4.14 and Section 5.1 and not by the provisions
of this Section 4.11), or (ii) issue Equity Interests in any of
its Subsidiaries, or sell Equity Interests in any of its Sub-
sidiaries, in the case of either clause (i) or (ii) above,
whether in a single transaction or a series of related transac-
tions, (A) that have a fair market value in excess of
$1.0 million, or (B) for net proceeds in excess of $1.0 million
(each of the foregoing, an 'Asset Sale'), unless (x) the Com-
pany or the Subsidiary, as the case may be, receives considera-
tion at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Direc-
tors set forth in an Officers' Certificate delivered to the
Trustee) of the assets sold or otherwise disposed of and (y)
any securities and non-cash consideration acquired in connec-
tion with such Asset Sale are Permitted Asset Sale Considera-
tion. A transfer of assets or an issuance of Equity Interests
by a Subsidiary of the Company to the Company or a Subsidiary
Guarantor shall not be deemed to be an Asset Sale and a trans-
fer of assets that constitutes a Restricted Investment and that
is permitted by Section 4.10 above shall not be deemed to be an
Asset Sale.
(b) Within 270 days after any Asset Sale, the Com-
pany or the relevant Subsidiary, as the case may be, may apply
the Net Proceeds from such Asset Sale, at its option, either
(i) to permanently reduce borrowings under the New Credit
Agreement or any successor facility or to permanently repay any
other Senior Indebtedness (and, in each case, correspondingly
to reduce commitments thereunder, if any, unless such
<PAGE>
47
borrowings could be incurred under subsection 4.8(a) above as
of such date), (ii) to acquire properties and assets in the
same line of business as the Company or the relevant Subsid-
iary, as the case may be, was engaged in on the date of the
Asset Sale or a similar business or a business reasonably
related thereto or (iii) to redeem the Securities in whole or
in part to the extent permitted under Article Three above and
Section 7 of the Securities. Pending the final application of
any such Net Proceeds, the Company or the relevant Subsidiary,
as the case may be, may temporarily reduce borrowings under any
revolving credit facility or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture. Any
Net Proceeds from the Asset Sale that are not applied or
invested as provided in the first sentence of this paragraph
will be deemed to constitute 'Excess Proceeds', but such Net
Proceeds shall be deemed to be Excess Proceeds only after the
expiration of the 270 day period described in such sentence.
When the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company shall make an offer to all Holders
of Securities (an 'Asset Sale Offer') to purchase the maximum
principal amount of Securities that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal
to 100% of the principal amount thereof plus accrued and unpaid
interest, Additional Payments and Liquidated Damages thereon,
if any, to the date of purchase. To the extent that the aggre-
gate amount of Securities tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company or the
relevant Subsidiary, as the case may be, may use such remaining
Excess Proceeds for general corporate purposes. If the aggre-
gate principal amount of Securities surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee
shall select the Securities to be purchased as nearly as pos-
sible on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
Notwithstanding the foregoing, to the extent that the
Company or any of its Subsidiaries receives securities or other
non-cash property or assets as proceeds of an Asset Sale, the
Company shall not be required to make any application of such
non-cash proceeds required by the immediately preceding para-
graph until such non-cash property has been converted to cash
or Cash Equivalents.
(c) Notice of an Asset Sale Offer shall be mailed by
first class mail by the Company to all Holders of Securities
not less than 30 days nor more than 60 days before the Asset
Sale Payment Date at their last registered address, with a copy
to the Trustee and the Paying Agent. The Asset Sale Offer
<PAGE>
48
shall remain open from the time of mailing for at least 20
Business Days and until at least 5:00 p.m., New York City time,
on the third Business Day immediately preceding the Asset Sale
Payment Date. The notice, which shall govern the terms of the
Asset Sale Offer, shall include such disclosures as are
required by law and shall state:
(i) that the Asset Sale Offer is being made
pursuant to this Section 4.11 and setting forth
the facts and circumstances relevant to such Asset
Sale;
(ii) the purchase price (including the amount
of accrued interest, Additional Payments and
Liquidated Damages, if any) for each Security and
the Asset Sale Payment Date;
(iii) that any Security not tendered or
accepted for payment will continue to accrue
interest, Additional Payments and Liquidated Dam-
ages in accordance with the terms thereof;
(iv) that any Security accepted for payment
pursuant to the Asset Sale Offer shall cease to
accrue interest, Additional Payments and Liqui-
dated Damages on and after the Asset Sale Payment
Date;
(v) that Holders electing to have Securities
purchased pursuant to an Asset Sale Offer will be
required to surrender their Securities to the Pay-
ing Agent at the address specified in the notice
not later than 5:00 p.m., New York City time, on
the third Business Day immediately preceding the
Asset Sale Payment Date and must complete any form
letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;
(vi) that Holders will be entitled to with-
draw their election if the Paying Agent receives,
not later than 5:00 p.m., New York City time, on
the second Business Day immediately preceding the
Asset Sale Payment Date, a telex or facsimile
transmission (confirmed by overnight delivery of
the original thereof) or letter setting forth the
name of the Holder, the principal amount of Secu-
rities the Holder delivered for purchase, the
Security certificate number (if any) and a
<PAGE>
49
statement that such Holder is withdrawing his
election to have such Securities purchased;
(vii) that if Securities in a principal amount
in excess of the Securityholders' pro rata share
of the Net Proceeds are tendered pursuant to the
Asset Sale Offer, the Company shall purchase Secu-
rities on a pro rata basis among the Securities
tendered (with such adjustments as may be deemed
appropriate by the Company so that only Securities
in denominations of $1,000 or integral multiples
of $1,000 shall be acquired);
(viii) that Holders whose Securities are pur-
chased only in part will be issued new Securities
equal in principal amount to the unpurchased por-
tion of the Securities surrendered; and
(ix) the instructions that Holders must fol-
low in order to tender their Securities.
Not later than the Business Day immediately preceding
the Asset Sale Payment Date, the Company shall (i) accept for
payment, on a pro rata basis among the Securities, Securities
or portions thereof tendered pursuant to the Asset Sale Offer,
(ii) deposit with the Paying Agent money, in immediately avail-
able funds, in an amount sufficient to pay the purchase price
of all Securities or portions thereof so tendered and accepted
and (iii) deliver to the Paying Agent the Securities so
accepted together with an Officers' Certificate setting forth
the Securities or portions thereof tendered to and accepted for
payment by the Company. The Paying Agent shall promptly mail
or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion
of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results
of the Asset Sale Offer on the first Business Day following the
Asset Sale Payment Date. To the extent an Asset Sale Offer is
not fully subscribed to by such Holders, the Company may retain
such unutilized portion of the Net Proceeds. The Paying Agent
shall promptly deliver to the Company the balance of any moneys
held by the Paying Agent after payment to the holders of Secu-
rities as aforesaid. For purposes of this Section 4.11, the
Trustee shall act as Paying Agent.
<PAGE>
50
The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and
any other securities laws or regulations in connection with the
repurchase of Securities pursuant to the Asset Sale Offer. To
the extent that the provisions of any securities laws or regu-
lations conflict with provisions of this Section 4.11, the Com-
pany shall comply with the applicable securities laws and regu-
lations and shall not be deemed to have breached its obliga-
tions under this Section 4.11 by virtue thereof.
SECTION 4.12 Transactions with Affiliates.
The Company shall not, and shall not permit any of
its Subsidiaries to, sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any property
or assets from, or enter into any contract, agreement, under-
standing, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an 'Affiliate Trans-
action'), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Sub-
sidiary than those that would have been obtained in a compa-
rable transaction by the Company or such Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction involving Pro-Fac
(including, without limitation, any amendment to or waiver
under the Pro-Fac Marketing Agreement and any agreement for the
purchase of crops entered into pursuant to the Pro-Fac Market-
ing Agreement) or involving aggregate payments in excess of
$1.0 million, a written resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and such
Affiliate Transaction is approved by a majority of the Disin-
terested Directors and (b) with respect to any Affiliate Trans-
action (other than relating to the Pro-Fac Marketing Agreement
and any agreement for the purchase of crops entered into pursu-
ant to the Pro-Fac Marketing Agreement) involving aggregate
payments in excess of $5.0 million, either (I) an opinion as to
the fairness to the Company or such Subsidiary from a financial
point of view issued by an investment banking firm of national
standing or (II) with respect to any Affiliate Transaction
involving a transfer of tangible assets, a written appraisal
from a nationally recognized appraiser showing such tangible
assets to have a value not less than the value of such pay-
ments, in the case of a transfer of such assets to the Company
or such Subsidiary, and not more than the value of such pay-
ments, in the case of a transfer of such assets from the Com-
pany or such Subsidiary; provided, however, that (x) any
employment agreement entered into by the Company or any of its
<PAGE>
51
Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Subsidiary, (y)
except to the extent referenced in the parenthetical to clause
(a) of this paragraph, the Pro-Fac Marketing Agreement and any
transactions effected pursuant thereto and (z) transactions
permitted by Section 4.10 above, in each case, shall not be
deemed Affiliate Transactions.
SECTION 4.13 Limitation on Sale and
Leaseback Transactions.
The Company shall not, and shall not permit any of
its Subsidiaries to, enter into any sale and leaseback transac-
tion; provided, however, that the Company or its Subsidiaries
may enter into such sale and leaseback transaction if (i) the
Company or such Subsidiary could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such
sale and leaseback transaction pursuant to Section 4.8 above
and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.9 above, (ii) the proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as
determined in good faith by the Company's Board of Directors
and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the Company shall apply or
cause to be applied the proceeds of such transaction in compli-
ance with Section 4.11 above. To the extent that the Company
or any Subsidiary enters into a sale and leaseback transaction,
the Company shall specify to the Trustee the provision of this
Article Four relating to incurrence of Indebtedness pursuant to
which such Attributable Debt would have been permitted to have
been incurred and the amount available under such provision for
future incurrences of Indebtedness or Attributable Debt shall
be correspondingly reduced.
SECTION 4.14 Change of Control.
Upon the occurrence of a Change of Control, each
Holder of Securities will have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Securities pursuant to the
offer described below (the 'Change of Control Offer') at an
offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest, Additional
Payments and Liquidated Damages thereon, if any, to the date of
purchase (the 'Change of Control Payment'). Within 30 days
following any Change of Control, the Company will mail a notice
to each Holder stating: (i) that the Change of Control Offer
<PAGE>
52
is being made pursuant to this Section 4.14 and that all Secu-
rities tendered will be accepted for payment and setting forth
the facts and circumstances relevant to such Change of Control;
(ii) the purchase price and the purchase date, which will be no
earlier than 30 days nor later than 60 days from the date such
notice is mailed (the 'Change of Control Payment Date'); (iii)
that any Security not tendered will continue to accrue interest
and, if applicable, Additional Payments and Liquidated Damages;
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Securities accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest, Additional Payments and Liquidated Damages on and
after the Change of Control Payment Date; (v) that Holders
electing to have any Securities purchased pursuant to a Change
of Control Offer will be required to surrender the Securities,
with the form entitled 'Option of Holder to Elect Purchase' on
the reverse of the Securities completed, to the Paying Agent at
the address specified in the notice prior to the close of busi-
ness on the third Business Day preceding the Change of Control
Payment Date; (vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder,
the principal amount of Securities delivered for purchase, and
a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion
of the Securities surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple
thereof. The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable in connection with the repurchase of the Securi-
ties in connection with a Change of Control.
On or before the Change of Control Payment Date, the
Company will, to the extent lawful, (i) accept for payment
Securities or portions thereof tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Secu-
rities or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee the Securities so accepted
together with an Officers' Certificate stating the Securities
or portions thereof tendered to the Company. The Paying Agent
will promptly mail to each Holder of Securities so accepted the
Change of Control Payment for such Securities, and the Trustee
<PAGE>
53
will promptly authenticate and mail to each Holder a new Secu-
rity equal in principal amount to any unpurchased portion of
the Securities surrendered, if any; provided that each such new
Security will be in a principal amount of $1,000 or an integral
multiple thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practi-
cable after the Change of Control Payment Date.
SECTION 4.15 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create or other-
wise cause or suffer to exist or become effective any encum-
brance or restriction on the ability of any such Subsidiary to
(i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (x) on its Capital Stock or
(y) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to
the Company or any of its Subsidiaries, (ii) make loans or
advances to the Company or any of its Subsidiaries or
(iii) transfer any of its properties or assets to the Company
or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reasons of (a) applicable
law, (b) customary non-assignment provisions in leases or other
contracts entered into in the ordinary course of business and
consistent with past practices, (c) purchase money obligations
for property acquired in the ordinary course of business that
impose restrictions of the nature described in this clause
(iii) on the property so acquired, (d) customary restrictions
imposed on the transfer of copyrighted or patented materials;
(e) the entering into of a contract for the sale or other dis-
position of assets, directly or indirectly, so long as such
restrictions do not extend to assets that are not subject to
such sale or other disposition, (f) provisions in Indebtedness
of Subsidiaries that is permitted by this Indenture to be
incurred that only restrict the transfer of the assets pur-
chased with the proceeds of such Indebtedness, or (g) Permitted
Refinancing Indebtedness, provided that the restrictions con-
tained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in
the agreements governing the Indebtedness being refinanced.
<PAGE>
54
SECTION 4.16 Waiver of Stay; Extension
of Usury Laws.
The Company covenants (to the extent that it may law-
fully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advan-
tage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest, Additional Pay-
ments or Liquidated Damages on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) the
Company hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trus-
tee, but will suffer and permit the execution of every such
power as through no such law had been enacted.
SECTION 4.17 Subsidiary Guarantees.
If the Company shall at any time have a Subsidiary
that is a guarantor of any Senior Indebtedness of the Company
or any Guarantor, the Company shall cause such Subsidiary to
enter into a supplemental indenture pursuant to which such Sub-
sidiary shall become a Subsidiary Guarantor hereunder.
SECTION 4.18 Limitation on Certain Transactions
with Pro-Fac.
As promptly as practicable and, in any event, within
10 Business Days following receipt from the Company of any pay-
ment made in excess of the Commercial Market Value for crops
and other services pursuant to the Pro-Fac Marketing Agreement,
Pro-Fac shall invest in the Company an amount equal to 70% of
such excess as cash in common equity interests (other than Dis-
qualified Stock).
Without the consent of the Holders of at least three-
quarters in principal amount of the Securities outstanding
(including consents obtained in connection with a tender offer
or exchange offer for the Securities), the Company will not
(i) amend the calculation of amounts payable to Pro-Fac under
the Pro-Fac Marketing Agreement in a manner which would
increase the payments made to Pro-Fac, (ii) amend the Pro-Fac
Marketing Agreement to require that Affiliate Transactions
involving Pro-Fac be approved by less than a majority of the
<PAGE>
55
Disinterested Directors or (iii) amend the provisions of this
paragraph.
SECTION 4.19 Limitation on Other Senior
Subordinated Indebtedness.
The Company shall not incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that
is subordinate or junior in right of payment to any Senior
Indebtedness of the Company and senior in right of payment to
the Securities.
Neither Pro-Fac nor any Subsidiary Guarantor shall
incur, create, issue, assume, guarantee, or otherwise become
liable for any Indebtedness that is subordinate in right of
payment to any Senior Indebtedness of Pro-Fac or any such Sub-
sidiary Guarantor, as the case may be, and senior in any
respect in right of payment to the guarantee of Pro-Fac or such
Subsidiary Guarantor, as the case may be, with respect to the
Securities.
SECTION 4.20 Securities Owned by the Company
or an Affiliate of the Company.
The Company shall, as promptly as reasonably practi-
cable, notify the Trustee in writing of any Securities owned by
the Company or any Affiliate of the Company and the Trustee
shall provide to each Holder upon the written request of such
Holder all such information furnished to the Trustee.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc.
The Company may consolidate or merge with or into
(whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one or
more related transactions, to another corporation, Person or
entity, but only if (i) the Company is the surviving corpora-
tion or the entity or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation or,
subject to the final sentence of this paragraph, a limited lia-
bility company or similar entity organized or existing under
<PAGE>
56
the laws of the United States, any state thereof or the Dis-
trict of Columbia; (ii) the entity or Person formed by or sur-
viving any such consolidation or merger (if other than the Com-
pany) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have
been made assumes all the Obligations of the Company under the
Securities and this Indenture pursuant to a supplemental inden-
ture in a form satisfactory to the Trustee in its reasonable
judgment; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) the Company or any entity
or Person formed by or surviving any such consolidation or
merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (a) shall
have Consolidated Net Worth (immediately after the transaction)
equal to or greater than the Consolidated Net Worth of the Com-
pany immediately preceding the transaction and (b) would, after
giving pro forma effect thereto as if such transaction had
occurred at the beginning of the most recently ended four full
fiscal quarter period for which internal financial statements
are available, be permitted to incur at least $1.00 of addi-
tional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.8 above; provided, however, that
nothing in this Section 5.1 shall prohibit the Acquisition,
provided that upon consummation of the Acquisition,
Curtice-Burns shall have entered into a supplemental indenture
of the type described in clause (ii) above. At or prior to
consummation of any transaction otherwise permitted by this
Section 5.1, if the entity or the Person formed by or surviving
any such consolidation or merger or to which such sale, assign-
ment, transfer, lease, conveyance or other disposition shall
have been made is a limited liability company or similar entity
(such transaction being hereinafter referred to as an 'LLC
Restructuring'), the Company shall deliver to the Trustee (i)
an opinion of counsel acceptable to the Trustee in its reason-
able judgment to the effect that (a) the Holders of the out-
standing Securities shall not recognize income, gain or loss
for federal income tax purposes as a result of such LLC
Restructuring and shall be subject to federal income tax on the
same amounts, in the same manner and at the same times as would
have been the case if such LLC Restructuring had not occurred
or (b) the Company has received from, or there has been pub-
lished by, the Internal Revenue Service a ruling to the same
effect; (ii) an opinion of counsel to the effect that, as a
result of the LLC Restructuring, the rights of the Holders of
the outstanding Securities shall not be adversely affected in
any material respect by the application of any bankruptcy,
insolvency, reorganization or similar laws affecting creditors'
rights generally; (iii) an Officers' Certificate stating that
<PAGE>
57
the LLC Restructuring was not effected by the Company with the
intent of preferring the Holders of Securities over the other
creditors of the Company with the intent of defeating, hinder-
ing, delaying or defrauding creditors of the Company or others;
and (iv) such other Opinions of Counsel and Officers' Certifi-
cates customary in the issuance of debt securities as the Trus-
tee may reasonably request.
SECTION 5.2 Successor Entity Substituted.
Upon any consolidation, merger or any transfer of all
or substantially all of the assets of the Company in accordance
with Section 5.1 (including any such transaction involving the
Company and a wholly owned Subsidiary of the Company), the sur-
viving entity formed by such consolidation or into which the
Company is merged or to which such transfer is made shall suc-
ceed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same
effect as if such surviving entity had been named as the Com-
pany herein.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
(a) Each of the following constitute an 'Event of
Default':
(i) default by the Company for 30 days in the
payment when due of interest or Additional Pay-
ments on, or Liquidated Damages with respect to,
the Securities, whether or not such payment is
prohibited by Article Ten hereof;
(ii) default by the Company in payment when
due of the principal of or premium, if any, on the
Securities, whether or not such payment is prohib-
ited by Article Ten hereof;
(iii) failure by the Company or any Subsidiary
to comply with the provisions of Section 4.8, 4.10
or 5.1, or by Pro-Fac to comply with the provi-
sions of Section 4.8 or 4.18;
(iv) failure by the Company or any Guarantor
for 60 days after notice from the Trustee or from
<PAGE>
58
Holders of at least 25% of the aggregate principal
amount of the Securities outstanding to comply
with any of its other agreements in this Indenture
or the Securities;
(v) default under any mortgage, indenture or
instrument under which there may be issued or by
which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or
any of its Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Subsid-
iaries) whether such Indebtedness or guarantee now
exists, or is created after the date of this
Indenture, which default results in the accelera-
tion of such Indebtedness prior to its scheduled
maturity and the principal amount of any such
Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of
which has been so accelerated, aggregates
$2.0 million or more;
(vi) default by any Guarantor under its guar-
antee with respect to the Securities or such guar-
antee shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guar-
antor, or any Person acting on behalf of such
Guarantor, shall deny or disaffirm its Obligations
under such Guarantee;
(vii) failure by the Company or any of its Sub-
sidiaries to pay final judgments aggregating in
excess of $2.0 million, which judgments are not
paid, discharged or stayed for a period of 60
days;
(viii) failure by the Company to file the cer-
tificate of merger with respect to the Merger on
the date hereof and to take all other steps, if
any, required to effectuate the Merger by
5:00 p.m. New York City time on the Business Day
immediately following the date hereof;
(ix) the Company or any Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
<PAGE>
59
(B) consents to the entry of an order
for relief against it in an involuntary case,
(C) consents to the appointment of a
Custodian of it or for all or substantially
all of its property,
(D) makes a general assignment for the
benefit of its creditors or
(E) shall generally not pay its debts
as such debts becomes due or shall admit in
writing its inability to pay its debts gener-
ally; or
(x) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company
or any of its Subsidiaries in an involuntary
case,
(B) appoints a Custodian of the Company
or any of its Subsidiaries for all or sub-
stantially all of its properties, or
(C) orders the liquidation of the Com-
pany or any of its Subsidiaries,
and in each case the order or decree remains
unstayed and in effect for 60 consecutive days;
provided, however, that if the entry of such order
or decree is appealed and dismissed on appeal then
the Event of Default hereunder by reason of the
entry of such order or decree shall be deemed to
have been cured.
(b) For purposes of this Section 6.1, the term 'Cus-
todian' means any receiver, trustee, assignee, liquidator,
sequestrator or similar official charged with maintaining
possession or control over property for one or more creditors.
SECTION 6.2 Acceleration.
If an Event of Default (other than an Event of
Default relating to the Company and specified in Section
6.1(a)(ix) or (x)) occurs and is continuing, Holders of at
least 25% in aggregate principal amount of the outstanding
<PAGE>
60
Securities may, by written notice to the Company and the Trus-
tee, or the Trustee may, by written notice to the Company,
declare the principal of, premium, if any, and accrued interest
and, if applicable, Additional Payments and Liquidated Damages
and any other amounts due under the Indenture and the Securi-
ties to be due and payable immediately. If an Event of Default
relating to the Company and specified in Section 6.1(a)(ix) or
(x) occurs and is continuing, the principal of, premium, if
any, accrued interest and, if applicable, Additional Payments
and Liquidated Damages on all the Securities shall ipso facto
become and be immediately due and payable without any declara-
tion or other act on the part of the Trustee or any Holder.
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment
of principal of or interest, Additional Payments and Liquidated
Damages on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
All rights of action and claims under this Indenture
or the Securities may be enforced by the Trustee even if the
Trustee does not possess any of the Securities or does not pro-
duce any of them in the proceeding. A delay or omission by the
Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event
of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by
law.
SECTION 6.4 Control by Majority.
The Holders of a majority in aggregate principal
amount of the outstanding Securities may direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power con-
ferred on it; provided, however, that the Trustee may refuse to
follow any direction that (i) conflicts with law or this Inden-
ture, (ii) the Trustee determines may be unduly prejudicial to
the rights of any other Securityholder, or (iii) may involve
the Trustee in personal liability unless the Trustee has indem-
nification reasonably satisfactory to it in its sole discretion
against any loss or expense caused by its following such direc-
tion; and provided, further, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsis-
tent with such direction.
<PAGE>
61
SECTION 6.5 Limitation on Suits.
Except as set forth in Section 6.6 hereof and in the
following paragraph, no Holder of any of the Securities has any
right to institute any proceeding with respect to this Inden-
ture or any remedy hereunder unless:
(a) such Holder gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in aggregate princi-
pal amount of the outstanding Securities have made written
request and offered reasonable indemnity to the Trustee
satisfactory to it to institute such proceedings as
Trustee;
(c) the Trustee does not pursue the remedy addressed
in such request within 30 days after receipt of such
notice and offer; and
(d) the Trustee has not within such 30-day period
received directions inconsistent with such written request
from Holders of a majority in principal amount of the out-
standing Securities.
Such limitations shall not apply, however, following
written notification by the Trustee pursuant to Section 7.8 to
the Company of its resignation as Trustee under the Indenture
and prior to the appointment of a successor Trustee, to the
institution of any proceeding with respect to the Indenture or
any remedy thereunder by the Holders of a majority in principal
amount of outstanding Securities with respect to such Holders'
Securities, provided that upon institution of any proceeding or
exercise of any remedy such Holders provide the Trustee with
prompt written notice.
A Securityholder may not use this Indenture to preju-
dice the rights of another Securityholder or to obtain a pref-
erence or priority over such other Securityholder.
SECTION 6.6 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Inden-
ture, the right of any Holder to receive payment of principal
of and interest and, if applicable, Additional Payments and
Liquidated Damages on a Security, on or after the respective
due dates expressed in the Security (including in connection
with an offer to purchase), or to bring suit for the
<PAGE> 62
enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired
or affected without the consent of such Holder.
SECTION 6.7 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a)(i)
or (ii) occurs and is continuing, the Trustee may recover judg-
ment in its own name and as trustee of an express trust against
the Company or any other obligor on the Securities (including
any Guarantor) for the whole amount of principal and accrued
interest, Additional Payments and Liquidated Damages remaining
unpaid, together with interest, Additional Payments and Liqui-
dated Damages overdue on principal and, to the extent that pay-
ment of such interest is lawful, interest on overdue install-
ments of interest, Additional Payments and Liquidated Damages,
in each case at the rate of interest specified on the face of
the Securities and such further amounts as shall be sufficient
to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel.
SECTION 6.8 Trustee May File Proofs of Claim.
The Trustee shall be entitled and empowered to file
such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trus-
tee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Securityholders allowed in any judicial
proceedings relative to the Company or the Subsidiaries of the
Company (or any other obligor upon the Securities), its credi-
tors or its property and shall be entitled and empowered to
collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and
any Custodian in any such judicial proceedings is hereby autho-
rized and directed by each Securityholder to make such payments
to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Securityholders,
to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trus-
tee, its agent and counsel, and any other amounts due the Trus-
tee under Section 7.7. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affect-
ing the Securities or the rights of any Holder thereof, or to
<PAGE>
63
authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 6.9 Priorities.
If the Trustee collects any money pursuant to this
Article Six, it shall pay out such money in the following
order:
First: to the Trustee for amounts due under Sec-
tion 7.7;
Second: to holders of Senior Indebtedness to the
extent required by Article Ten hereof;
Third: to Holders for interest, Additional Pay-
ments and Liquidated Damages accrued on the Secu-
rities, ratably, without preference or priority of
any kind, according to the amounts due and payable
on the Securities for interest, Additional Pay-
ments and Liquidated Damages;
Fourth: to Holders for principal amounts owing
under the Securities, ratably, without preference
or priority of any kind, according to the amounts
due and payable on the Securities for principal;
and
Fifth: to the Company or any other obligor on the
Securities, as their interests may appear, or as a
court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Com-
pany, may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.9.
SECTION 6.10 Undertaking for Costs.
In any suit for the enforcement of any right or rem-
edy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section
6.10 does not apply to a suit by the Trustee, a suit by a
<PAGE>
64
Holder pursuant to Section 6.6, or a suit by Holders of more
than 10% in aggregate principal amount of the outstanding
Securities.
SECTION 6.11 Willful Default.
In the case of an Event of Default occurring by rea-
son of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding pay-
ment of the premium that the Company would have had to pay if
the Company then had elected to redeem the Securities under the
provisions of Article Three above and Section 7 of the Securi-
ties, an equivalent premium shall also become and be immedi-
ately due and payable, to the extent permitted by law, upon the
acceleration of the Securities. If an Event of Default occurs
prior to February 1, 2000 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding the prohibition on redemption of
the Securities prior to February 1, 2000, then, upon accelera-
tion of the Securities, an additional premium shall also become
and be immediately due and payable,to the extent permitted by
law, in an amount equal to 10.0%.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default known to the Trustee has
occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a pru-
dent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of
Default actually known to the Trustee:
(i) The Trustee need perform only those
duties as are specifically set forth in this
Indenture or the TIA and no others and no implied
covenants or obligations shall be read into this
Indenture against the Trustee.
(ii) In the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the
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65
opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming
to the requirements of this Indenture. However,
in the case of any such certificate or opinions
which by any provision hereof are specifically
required to be furnished to the Trustee, the Trus-
tee shall examine such certificates and opinions
to determine whether or not they conform on their
face to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(i) This paragraph does not limit the effect
of paragraph (b) of this Section 7.1.
(ii) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust
Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with
respect to any action it takes or omits to take in
good faith in accordance with a direction received
by it pursuant to Section 6.2 or 6.4.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability or risk in the performance of any of its
duties hereunder or in the exercise of any of its rights or
powers if it shall have reasonable grounds for believing that
repayment of such funds or reasonable indemnity satisfactory to
it against such risk or liability is not assured to it.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a), (b),
(c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree in
writing with the Company. Money held in trust by the Trustee
need not be segregated from other funds except to the extent
required by law.
(g) Notwithstanding Sections 6.4 and 6.5 or any
other provisions of this Indenture authorizing Holders to
instruct or direct the Trustee, the Trustee may refuse to
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66
perform any duty or act or exercise any right or power unless
it is provided adequate funds to enable it to do so and it
receives reasonable indemnity satisfactory to it against any
loss, liability, fee or expense.
SECTION 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in
acting or refraining from acting upon any document reason-
ably believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee shall not
be bound to make any investigation into the facts or mat-
ters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or inves-
tigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally
or by agent or attorney.
(b) Before the Trustee acts or refrains from acting
with respect to any matter contemplated by this Indenture,
it may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to the provisions of Section
12.4 and, if appropriate, Section 12.5. The Trustee shall
be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through attorneys and agents
of its selection and shall not be responsible for the mis-
conduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action
it takes or omits to take in good faith and without negli-
gence which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this
Indenture or the TIA.
(e) The Trustee may consult with counsel and the
advice or opinion of such counsel as to matters of law
shall be full and complete authorization and protection
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67
from liability in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
(f) Notwithstanding Section 7.1(a), the Trustee
shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or
direction of any Holder, unless such Holder shall have
offered the Trustee reasonable indemnity satisfactory to
the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such
request or direction.
SECTION 7.3 Individual Rights of Trustee.
The Trustee in its individual capacity or any other
capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company, or its Subsidiaries and Affil-
iates with the same rights it would have if it were not Trus-
tee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the valid-
ity or adequacy of this Indenture or the Securities, and it
shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any
statement of the Company or any Guarantor in or with respect to
this Indenture or the Securities, or any statement in the Secu-
rities other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults.
If a Default or an Event of Default with respect to
the Securities occurs and is continuing and is known to the
Trustee, the Trustee shall mail to each Securityholder notice
of the Default or Event of Default within 60 days after the
occurrence thereof. Except in the case of a Default or an
Event of Default in payment of interest or Additional Payments
or Liquidated Damages on, or the principal of or premium on,
the Securities, the Trustee may withhold the notice to the
Securityholders and shall be protected in doing so if and so
long as a committee of its Trust Officers in good faith deter-
mines that withholding the notice is in the interest of
Securityholders.
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68
SECTION 7.6 Reports by Trustee to Holders.
To the extent required by TIA SS 313(a), within 60
days after December 15 of each year commencing with 1995 and
for as long as there are Securities outstanding hereunder, the
Trustee shall mail to each Securityholder a brief report dated
as of such date that complies with TIA SS 313(a). The Trustee
also shall comply with TIA SS 313(b) and TIA SS 313(c) and (d).
A copy of such report at the time of its mailing to Security-
holders shall be mailed to the Company and filed with the SEC,
if required, and each stock exchange, if any, on which the
Securities are listed.
The Company shall promptly notify the Trustee if the
Securities become listed on any stock exchange and the Trustee
shall comply with TIA SS 313(d).
SECTION 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee, the Paying
Agent and the Registrar from time to time reasonable compensa-
tion for their respective services rendered hereunder. The
Trustee's, the Paying Agent's and the Registrar's compensation
shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee, the
Paying Agent and the Registrar upon request for all reasonable
out-of-pocket disbursements, expenses and advances incurred or
made by each of them in connection with the performance of its
duties under this Indenture in addition to the compensation for
their respective services under this Indenture. Such expenses
shall include the reasonable compensation, out-of-pocket dis-
bursements and expenses of the Trustee's, the Paying Agent's
and the Registrar's agents and counsel.
The Company shall indemnify the Trustee, the Paying
Agent and the Registrar for, and hold each of them harmless
against, any claim, demand, expense (including but not limited
to reasonable attorneys' fees and expenses), loss or liability
incurred by each of them arising out of or in connection with
the administration of this Indenture and their respective
duties hereunder. Each of the Trustee, the Paying Agent and
the Registrar shall notify the Company promptly of any claim or
threatened claim asserted against it for which it may seek
indemnity. However, failure by the Trustee, the Paying Agent
or the Registrar to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend
the claim and the Trustee shall cooperate in the defense
unless, in the opinion of the Trustee's counsel, the Trustee
<PAGE>
69
has an interest adverse to the Company or a potential conflict
of interest exists between the Trustee and the Company, in
which case the Trustee may have separate counsel and the Com-
pany shall pay the reasonable fees and expenses of such coun-
sel. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee, the Pay-
ing Agent or the Registrar through the Trustee's, the Paying
Agent's or the Registrar's, as the case may be, own willful
misconduct, negligence or bad faith. The Company need not pay
for any settlement made without its consent, which consent
shall not be unreasonably withheld.
To secure the Company's payment obligations in this
Section 7.7, the Trustee and any retiring Trustee under
Section 7.8 shall be entitled to receive payment in full of all
fees and expenses (including the reasonable fees and expenses
of their respective counsel) prior to any payment to Holders of
the Securities and each shall have a Lien prior to the Securi-
ties on all money or property held or collected by it, in its
capacity as Trustee, except money or property held in trust to
pay principal of or interest, Additional Payments or Liquidated
Damages on particular Securities.
When any of the Trustee, the Paying Agent and the
Registrar incurs expenses or renders services after an Event of
Default specified in Section 6.1(a)(ix) or (x) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying
the Company in writing, such resignation to be effective only
upon the appointment of a successor Trustee and its acceptance
thereof as provided in this Section 7.8. The Holders of a
majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company
in writing and may appoint a successor Trustee with the Compa-
ny's consent which consent shall not be unreasonably withheld.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insol-
vent or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
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70
(c) a receiver or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason (the Trustee in
such event being referred to herein as the retiring Trustee),
the Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint
a successor Trustee to replace the successor Trustee appointed
by the Company.
A successor Trustee shall deliver a written accep-
tance of its appointment to the retiring Trustee and to the
Company. Immediately after that, the retiring Trustee shall
transfer all property held by it as Trustee to the successor
Trustee (subject to the Lien provided in Section 7.7), the res-
ignation or removal of the retiring Trustee shall become effec-
tive, and the successor Trustee shall have all the rights, pow-
ers and duties of the Trustee under this Indenture. A succes-
sor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 25% in
principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a suc-
cessor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a succes-
sor Trustee.
Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section
7.7 shall continue for the benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation
or national banking association without any further act shall
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71
be the successor Trustee provided such corporation shall be
otherwise qualified and eligible under this Article Seven.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satis-
fies the requirements of TIA SS 310(a)(1), (2) and (5). The
Trustee shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA
SS 310(b); provided, however, that there shall be excluded from
the operation of TIA SS 310(b)(1) any indenture or indentures
under which other securities, or certificates of interest or
participation in other securities, of the Company are outstand-
ing if the requirements for such exclusion set forth in TIA
SS 310(b)(1) are met. The provisions of TIA SS 310 shall apply
to the Company, as obligor of the Securities.
SECTION 7.11 Preferential Collection of
Claims Against Company.
The Trustee shall comply with TIA SS 311(a), excluding
any creditor relationship listed in TIA SS 311(b). A Trustee
who has resigned or been removed shall be subject to TIA
SS 311(a) to the extent indicated therein. The provisions of
TIA SS 311 shall apply to the Company as obligor on the
Securities.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1 Termination of Company's Obligations.
The Company may terminate its obligations under the
Securities and this Indenture, except those obligations
referred to in the penultimate paragraph of this Section 8.1,
if all Securities previously authenticated and delivered (other
than destroyed, lost or stolen Securities which have been
replaced or paid) have been delivered to the Trustee for can-
cellation and the Company has paid all sums payable by it here-
under, or if:
(a) pursuant to Article Three hereof, the Company
shall have given notice to the Trustee and mailed a notice
of redemption to each Holder of the redemption of all of
the Securities under arrangements satisfactory to the
Trustee for the giving of such notice;
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72
(b) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee or a trustee sat-
isfactory to the Trustee, under the terms of an irrevo-
cable trust agreement in form and substance satisfactory
to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, money or U.S.
Government Obligations maturing as to principal and inter-
est in such amounts and at such times as are sufficient
without consideration of any reinvestment of such inter-
est, to pay principal of and interest and, if applicable,
Additional Payments and Liquidated Damages on (and redemp-
tion premium, if any, on) the outstanding Securities to
maturity or redemption, as the case may be, provided that
the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government
Obligations to the payment of said principal and interest
and, if applicable, Additional Payments and Liquidated
Damages with respect to the Securities; and
(c) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent providing for the
termination of the Company's obligations under the Securi-
ties and this Indenture have been complied with.
Notwithstanding the foregoing paragraph, the Compa-
ny's obligations in Sections 2.5, 2.6, 2.7, 2.8, 2.9, 4.1, 4.2,
7.7, 7.8, 8.4 and 8.5 shall survive until the Securities are no
longer outstanding. After the Securities are no longer out-
standing, the Company's obligations in Sections 7.7, 8.4 and
8.5 in respect thereof shall survive.
After such delivery and irrevocable deposit the Trus-
tee upon request and at the expense of the Company shall
acknowledge in writing the discharge of the Company's obliga-
tions under the Securities and this Indenture except for those
surviving obligations specified above.
SECTION 8.2 Legal Defeasance and Covenant
Defeasance.
(a) The Company may, at its option and at any time,
elect to have all of its Obligations discharged upon the satis-
faction of the conditions of this Section 8.2 with respect to
the outstanding Securities ('Legal Defeasance') except for
(i) the rights of Holders of outstanding Securities to receive
payments in respect of the principal of, premium, if any, and
interest and, if applicable, Additional Payments and Liquidated
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73
Damages on such Securities when such payments are due pursuant
to Section 4.1 hereof, (ii) the Company's Obligations with
respect to the Securities concerning issuing temporary Securi-
ties, registration of Securities, mutilated, destroyed, lost or
stolen Securities and the maintenance of an office or agency
for payment and money for security payments held in trust pur-
suant to Sections 2.5 through 2.10 and 4.2 hereof, (iii) the
rights, powers, trusts, duties and immunities of the Trustee,
and the Company's Obligations in connection therewith, pursuant
to the provisions of this Indenture, including Sections 7.7 and
7.8 hereof and (iv) the provisions of this Article Eight. Sub-
ject to compliance with this Section 8.2, the Company may exer-
cise its option under this paragraph (a) notwithstanding the
prior exercise of its option under paragraph (b) below with
respect to the Securities.
(b) The Company may, at its option and at any time,
elect to have the Obligations of the Company released upon the
satisfaction of the conditions of this Section 8.2 with respect
to Article Four (except the Obligations of the Company con-
tained in Sections 4.1, 4.2, 4.3 (with respect to the Company
only), 4.16 and 4.17 thereof) and Article Five ('Covenant
Defeasance') and, thereafter, the Company may omit to comply
with and shall have no liability in respect of any term, condi-
tion or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1, and the
Events of Default specified in Sections 6.1(a)(v) and (vii)
shall no longer be deemed to be Events of Default, but, except
as specified above, the remainder of this Indenture and the
Securities shall be unaffected thereby.
(c) In order to exercise either Legal Defeasance or
Covenant Defeasance:
(i) the Company shall irrevocably deposit
with the Trustee, in trust, for the benefit of the
Holders of the Securities, cash in United States
dollars, U.S. Government Obligations, or a combi-
nation thereof, in such amounts as shall be suffi-
cient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the
principal of, premium, if any, interest and, if
applicable, Additional Payments on, and Liquidated
Damages with respect to, the outstanding
<PAGE>
74
Securities on the stated maturity or on the appli-
cable redemption date, as the case may be, of such
principal or installment of principal of, premium,
if any, or interest or Additional Payments on, or
Liquidated Damages with respect to, the outstand-
ing Securities;
(ii) in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an
opinion of counsel acceptable to the Trustee in
its reasonable judgment confirming that (1) the
Company has received from, or there has been pub-
lished by, the Internal Revenue Service a ruling
or (2) since the date of this Indenture, there has
been a change in the applicable federal income tax
law, in either case to the effect that and based
thereon, such opinion of counsel shall confirm
that the Holders of the outstanding Securities
will not recognize income, gain or loss for fed-
eral income tax purposes as a result of such Legal
Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at
the same times as would have been the case if such
Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an
opinion of counsel acceptable to the Trustee in
its reasonable judgment confirming that the Hold-
ers of the outstanding Securities will not recog-
nize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the
same amounts, in the same manner and at the same
times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall
have occurred and be continuing on the date of
such deposit (except as the result of the incur-
rence of Indebtedness the proceeds of which are
applied to such defeasance) or, insofar as
Sections 6.1(a)(ix) and (x) are concerned, at any
time in the period ending on the 91st day after
the date of such deposit (it being understood that
this condition shall not be deemed satisfied until
the expiration of such period);
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75
(v) such Legal Defeasance or Covenant Defea-
sance shall not result in a breach or violation
of, or constitute a default under any material
agreement or instrument (other than this Inden-
ture) to which the Company or any of its Subsid-
iaries is a party or by which the Company or any
of its Subsidiaries is bound;
(vi) the Company shall have delivered to the
Trustee an opinion of counsel to the effect that
the 91st day following the deposit, the trust
funds will not be subject to the effect of any
applicable Bankruptcy Law;
(vii) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the
intent of preferring the Holders of Securities
over the other creditors of the Company with the
intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(viii) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions prece-
dent provided for relating to the Legal Defeasance
or the Covenant Defeasance have been complied
with.
(d) All money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
paragraph (d), the 'Trustee') pursuant to paragraph (c) above
in respect of the outstanding Securities shall be held in trust
and applied by the Trustee receiving such deposit, in accor-
dance with the provisions of such Securities and this Inden-
ture, to the payment, either directly or through any Paying
Agent (other than the Company) as the Trustee may determine, to
the Holders of such Securities of all sums due and to become
due thereon in respect of principal, premium, if any, and
interest and, if applicable, Additional Payments and Liquidated
Damages, but such money need not be segregated from other funds
except to the extent required by law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to
paragraph (c) above or the principal and interest, Additional
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76
Payments and Liquidated Damages received in respect thereof
other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Securities.
Anything in this Section 8.2 to the contrary notwith-
standing, the Trustee shall deliver or pay to the Company from
time to time upon the request, in writing, by the Company any
money or U.S. Government Obligations held by it as provided in
paragraph (c) above which, in the opinion of a nationally rec-
ognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.3 Application of Trust Money.
The Trustee shall hold in trust money or U.S. Govern-
ment Obligations deposited with it pursuant to Sections 8.1 and
8.2, and shall apply the deposited money and the money from
U.S. Government Obligations in accordance with this Indenture
to the payment of principal of and interest and, if applicable,
Additional Payments and Liquidated Damages on the Securities.
SECTION 8.4 Repayment to Company.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee
shall promptly pay to the Company, upon receipt by the Trustee
of an Officers' Certificate, any excess money, determined in
accordance with Sections 8.2(c)(i) and (d), held by it at any
time. The Trustee and the Paying Agent shall pay to the Com-
pany, upon receipt by the Trustee or the Paying Agent, as the
case may be, of an Officers' Certificate of the Company, any
money held by it for the payment of principal or interest,
Additional Payments and Liquidated Damages that remains
unclaimed for two years after the date upon which such payment
became due; provided, however, that the Trustee and the Paying
Agent before being required to make any payment may, but need
not, at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York
or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified therein
which shall be at least 30 days from the date of such publica-
tion or mailing any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the
Company, Securityholders entitled to money must look solely to
the Company for payment as general creditors unless an appli-
cable abandoned property law designates another Person, and all
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77
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 8.5 Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with this
Indenture by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such applica-
tion, then and only then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture
until such time as the Trustee or the Paying Agent, as the case
may be, is permitted to apply all such money or U.S. Government
Obligations in accordance with this Indenture; provided, how-
ever, that if the Company has made any payment of interest,
Additional Payments or Liquidated Damages on or principal of
any Securities because of the reinstatement of their obliga-
tions, the Company shall be subrogated to the rights of the
holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders.
Notwithstanding Section 9.2, the Company, the Guaran-
tors and the Trustee may amend, waive or supplement this Inden-
ture or the Securities without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency,
provided that such amendment or supplement does not
adversely affect the rights of any Holder;
(b) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(c) to comply with any requirements of the SEC in
order to effect or maintain the qualification of the
Indenture under the TIA;
(d) to evidence the succession in accordance with
Article Five hereof of another Person to the Company or a
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78
Guarantor and the assumption by any such successor of the
Obligations of the Company or a Guarantor, as the case may
be, herein, in the Securities and in the Guarantees;
(e) to provide for one or more Subsidiary Guarantors
pursuant to Section 4.17 or for the release of one or more
Subsidiary Guarantors pursuant to Section 11.3;
(f) to evidence and provide for the acceptance of
appointment hereunder by a separate or successor Trustee
with respect to the Securities;
(g) to make any change that provides additional
rights or benefits to the Holders; or
(h) to make any other change that does not adversely
affect the legal rights of any Holder under this
Indenture;
provided, however, that in making such change, the Trustee may
rely upon an opinion of counsel stating that such change does
not adversely affect the rights of any Holder.
SECTION 9.2 With Consent of Holders.
Subject to the second paragraph of Section 4.18, Sec-
tion 6.6 and the provisions of this Section 9.2, and as other-
wise provided herein, the Company and the Trustee may amend or
supplement this Indenture or the Securities or a supplemental
indenture with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstand-
ing. Subject to Section 6.6 and the provisions of this Section
9.2, the Holders of at least a majority in principal amount of
the outstanding Securities (including consents obtained in con-
nection with a tender offer or exchange offer for the Securi-
ties) may waive any existing Default or Event of Default or
compliance with any provision of this Indenture or the Securi-
ties without notice to any other Securityholder. However,
without the consent of each Securityholder affected, an amend-
ment, supplement or waiver may not:
(a) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver
of any provision of this Indenture or the Securities;
(b) reduce the principal of or change the fixed
maturity of any Security or alter the provisions with
respect to the redemption of the Securities;
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79
(c) reduce the rate of or change the time for pay-
ment of interest, Additional Payments or Liquidated Dam-
ages on any Security;
(d) waive a Default or Event of Default in the pay-
ment of principal of or premium, if any, or interest on
the Securities (except a rescission of acceleration of the
Securities by the Holders of at least a majority in aggre-
gate principal amount of the Securities and a waiver of
the payment default that resulted from such acceleration);
(e) make any Security payable in money other than
that stated in the Securities;
(f) make any change in the provisions of this Inden-
ture relating to waivers of past Defaults of the right of
Holders of Securities to receive payments of principal of
or premium, if any, or interest, Additional Payments or
Liquidated Damages on the Securities;
(g) waive a redemption payment with respect to any
Security;
(h) make any change in the Obligation of the Company
to make or consummate a Change of Control Offer or modify
any of the provisions or definitions relating thereto in a
manner that adversely affects the rights of any Holder of
the Securities; or
(i) make any change in the amendment and waiver pro-
visions contained in this Article Nine.
It shall not be necessary for the consent of the
Holders under this Section 9.2 to approve the particular form
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.2 becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the amend-
ment, supplement or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental
indenture.
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80
SECTION 9.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or
the Securities shall comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of that Security or
portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or sub-
sequent Holder may revoke the consent as to his Security or
portion of a Security. Such revocation shall be effective only
if the Trustee receives written notice of revocation before the
date the amendment, supplement or waiver becomes effective.
Notwithstanding the above, nothing in this paragraph shall
impair the right of any Securityholder under SS 316(b) of the
TIA.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then notwithstanding the second and third sen-
tences of the immediately preceding paragraph, those Persons
who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to consent
to such amendment, supplement or waiver or to revoke any con-
sent previously given, whether or not such Persons continue to
be Holders after such record date. Such consent shall be
effective only for actions taken within 90 days after such
record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every Securityholder.
SECTION 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the
terms of a Security, the Trustee shall (in accordance with the
specific direction of the Company) request the Holder of the
Security to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an
appropriate notation on the Security about the changed terms
and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
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81
Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect
the validity and effect of such amendment, supplement or
waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or
waiver authorized pursuant to this Article Nine if the amend-
ment, supplement or waiver does not adversely affect the
rights, duties or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive,
if requested, a reasonable indemnity satisfactory to it and to
receive, and (subject to Section 7.1) shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of any amendment, supplement
or waiver authorized pursuant to this Article Nine is autho-
rized or permitted by this Indenture. The Company may not sign
an amendment until its Board of Directors approves it.
SECTION 9.7 Effect on Senior Indebtedness.
Anything to the contrary contained in this
Article Nine notwithstanding, no amendment of this Indenture
shall materially and adversely affect the rights of the lenders
under the New Credit Agreement without the consent of such
lenders.
ARTICLE X
SUBORDINATION
SECTION 10.1 Securities Subordinated to Senior
Indebtedness.
The Company covenants and agrees, and the Trustee and
each Holder of the Securities, by its acceptance thereof, like-
wise covenants and agrees, that all Securities shall be issued
subject to the provisions of this Article Ten; and the Trustee
and each Person holding any Note, whether upon original issue
or upon transfer, assignment or exchange thereof, accepts and
agrees that the payment of all Obligations on the Securities by
the Company shall, to the extent and in the manner herein set
forth, be subordinated to the prior payment in cash or Cash
Equivalents when due of the principal of, and premium, if any,
and accrued and unpaid interest on and, subject to
Section 10.13, all other amounts owing in respect of, all
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82
existing and future Senior Indebtedness of the Company; that
the subordination is for the benefit of, and shall be enforce-
able directly by, the holders of Senior Indebtedness, and that
each holder of Senior Indebtedness whether now outstanding or
hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Indebtedness in reliance upon
the covenants and provisions contained in this Indenture and
the Securities.
SECTION 10.2 No Payment on Securities in
Certain Circumstances.
(a) Upon the occurrence of any default beyond the
applicable grace period in the payment of any principal of or
interest on or other amounts due on any Senior Indebtedness of
the Company (a 'Payment Default'), no payment shall be made by
the Company with respect to the Securities unless and until
such Payment Default shall have been cured or waived or shall
have ceased to exist, such Senior Indebtedness has been dis-
charged or paid in full or the benefits of this sentence have
been waived by or on behalf of the holders of such Senior
Indebtedness of the Company, immediately after which the Com-
pany must resume making any and all required payments, includ-
ing missed payments, in respect of its obligations under the
Securities.
(b) Upon (1) the occurrence of a continuing event of
default (other than a Payment Default) relating to Senior
Indebtedness of the Company, as such event of default is
defined therein or in the instrument or agreement under which
it is outstanding, which event of default, pursuant to the
instruments governing such Senior Indebtedness, entitles the
holders (or a specified portion of the holders) of such Senior
Indebtedness to immediately accelerate without further notice
(except such notice as may be required to effect such accelera-
tion) the maturity of such Senior Indebtedness (a 'Non-payment
Default') and (2) the receipt by the Trustee and the Company
from a Senior Representative of written notice (a 'Payment
Blockage Notice') of such occurrence, no payment is permitted
to be made by the Company in respect of the Securities for a
period (a 'Payment Blockage Period') commencing on the date of
receipt by the Trustee of such notice and ending on the ear-
liest to occur of the following events (subject to any blockage
of payments that may then be in effect due to a Payment Default
on Senior Indebtedness of the Company): (w) such Non-payment
Default has been cured or waived or has ceased to exist; (x) a
179-consecutive-day period commencing on the date such written
notice is received by the Trustee has elapsed; (y) such Payment
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83
Blockage Period has been terminated by written notice to the
Trustee from the Senior Representative, whether or not such
Non-payment Default has been cured or waived or has ceased to
exist; and (z) such Senior Indebtedness of the Company has been
discharged or paid in full, immediately after which, in the
case of clause (w), (x), (y) or (z), the Company must resume
making any and all required payments, including missed pay-
ments, in respect of its obligations under the Securities.
Notwithstanding the foregoing, (a) not more than one Payment
Blockage Period may be commenced in any period of 365 consecu-
tive days and (b) no default or event of default with respect
to the Senior Indebtedness of the Company that was the subject
of a Payment Blockage Notice which existed or was continuing on
the date of the giving of any Payment Blockage Notice shall be
or serve as the basis for the giving of a subsequent Payment
Blockage Notice whether or not within a period of 365 consecu-
tive days unless such default or event of default shall have
been cured or waived for a period of at least 120 consecutive
days after such date.
(c) In the event that, notwithstanding the fore-
going, any payment or distribution of assets of the Company
whether in cash, property or securities (other than securities
that are subordinated at least to the same extent as the Secu-
rities are to Senior Indebtedness of the Company), shall be
received by the Trustee or the Holders of Securities at a time
when such payment or distribution is prohibited by this
Section 10.2, such payment or distribution shall be held in
trust for the benefit of the holders of Senior Indebtedness of
the Company and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior
Indebtedness of the Company remaining unpaid or unprovided for
or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instru-
ments evidencing any of such Senior Indebtedness of the Company
may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness
of the Company held or represented by each, for application to
the payment of all Senior Indebtedness of the Company remaining
unpaid to the extent necessary to pay or to provide for the
payment of all such Senior Indebtedness in full in cash and
Cash Equivalents after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness.
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84
SECTION 10.3 Payment Over of Proceeds
upon Dissolution, Etc.
(a) Upon any distribution to creditors of the Com-
pany of the assets of the Company in a liquidation or dissolu-
tion of the Company or in a bankruptcy, reorganization, insol-
vency, receivership or similar proceeding relating to the Com-
pany, (i) the holders of all Senior Indebtedness of the Company
then outstanding shall be entitled to be paid in full in cash
or Cash Equivalents (including interest accruing subsequent to
a bankruptcy or insolvency, whether or not such interest is an
allowed claim enforceable against the Company in bankruptcy)
before the Holders are entitled to receive any payment on or
with respect to the Securities; and (ii) the holders of all
Senior Indebtedness of the Company shall be entitled to be paid
in full in cash (including interest accruing subsequent to a
bankruptcy or insolvency, whether or not such interest is an
allowed claim enforceable against the Company in bankruptcy)
before the Holders are entitled to receive any cash payment on
or with respect to the Securities. Until all Senior Indebted-
ness of the Company is paid in full in cash or Cash Equiva-
lents, any distribution to which the Holders would be entitled
but for the subordination provisions shall be made to holders
of Senior Indebtedness of the Company as their interests may
appear, and until all Senior Indebtedness of the Company is
paid in full in cash (or in Cash Equivalents subsequently con-
verted to cash), any cash distribution to which the Holders
would be entitled but for the subordination provisions of this
Article Ten shall be first, exchanged for Cash Equivalents pre-
viously applied to the payment of Senior Indebtedness (and not
subsequently converted to cash), and second, made to holders of
Senior Indebtedness of the Company as their interests may
appear, subject to Section 7.7 hereof.
(b) In the event that, notwithstanding the fore-
going, any payment or distribution of assets of the Company
whether in cash, property or securities (other than securities
that are subordinated at least to the same extent as the Secu-
rities are to Senior Indebtedness of the Company), shall be
received by the Trustee or the Holders of Securities at a time
when such payment or distribution is prohibited by this
Section 10.3, such payment or distribution shall be held in
trust for the benefit of the holders of Senior Indebtedness of
the Company and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior
Indebtedness of the Company remaining unpaid or unprovided for
or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any
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85
instruments evidencing any of such Senior Indebtedness of the
Company may have been issued, ratably according to the aggre-
gate amounts remaining unpaid on account of the Senior Indebt-
edness of the Company held or represented by each, for applica-
tion to the payment of all Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay or to provide
for the payment of all such Senior Indebtedness in full in cash
and Cash Equivalents after giving effect to any concurrent pay-
ment or distribution to the holders of such Senior
Indebtedness.
(c) The consolidation of the Company with, or the
merger of the Company with or into, another corporation or the
liquidation or dissolution of the Company following the convey-
ance or transfer of all or substantially all of its assets, to
another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of
the Senior Indebtedness shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of
this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Com-
pany's obligations hereunder in accordance with Article Five
hereof.
SECTION 10.4 Payments May Be Paid
Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in
this Indenture shall prevent (i) the Company, except under the
conditions described in Sections 10.2 and 10.3, from making
payments at any time for the purpose of making payments of
principal of and interest, Additional Payments and Liquidated
Damages on the Securities, or from depositing with the Trustee
any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohib-
ited by Section 10.2 or 10.3, the application by the Trustee of
any moneys deposited with it for the purpose of making such
payments of principal of, and interest, Additional Payments and
Liquidated Damages on, the Securities to the Holders entitled
thereto unless at least one Business Day prior to the date upon
which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in
Section 10.2(b) or in Section 10.7. The Company shall give
prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
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86
SECTION 10.5 Subrogation.
Subject to the payment in full in cash or Cash Equiv-
alents of all Senior Indebtedness, the Holders of the Securi-
ties shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior
Indebtedness until the Securities shall be paid in full; and,
for the purposes of such subrogation, no such payments or dis-
tributions to the holders of the Senior Indebtedness by or on
behalf of the Company or by or on behalf of the Holders by vir-
tue of this Article Ten which otherwise would have been made to
the Holders shall, as between the Company and the Holders of
the Securities, be deemed to be a payment by the Company to or
on account of the Senior Indebtedness, it being understood that
the provisions of this Article Ten are and are intended solely
for the purpose of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
SECTION 10.6 Obligations of the Company
Unconditional.
Nothing contained in this Article Ten or elsewhere in
this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to
the Holders the principal of and any interest, Additional Pay-
ments and Liquidated Damages on the Securities as and when the
same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of
the Holders and creditors of the Company other than the holders
of the Senior Indebtedness, nor shall anything herein or
therein prevent the Holder of any Security or the Trustee on
its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to
the rights of the holders of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders of the
Securities.
SECTION 10.7 Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit
the making of any payment to or by the Trustee in respect of
the Securities pursuant to the provisions of this Article Ten.
Regardless of anything to the contrary contained in this
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87
Article Ten or elsewhere in this Indenture, the Trustee shall
not be charged with knowledge of the existence of any default
or event of default with respect to any Senior Indebtedness or
of any other facts which would prohibit the making of any pay-
ment to or by the Trustee unless and until the Trustee shall
have received notice in writing from the Company or a Senior
Representative therefor specifically setting forth the prohibi-
tion against such payment, and, prior to the receipt of any
such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no
such facts exist.
In the event that the Trustee determines in good
faith that any evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness to participate
in any payment or distribution pursuant to this Article Ten,
the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of
Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of
such Person under this Article Ten, and if such evidence is not
furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such person
to receive such payment.
SECTION 10.8 Reliance on Judicial Order or
Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article Ten, the Trustee, subject
to the provisions of Article Seven hereof, and the Holders of
the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganiza-
tion proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, delivered to
the Trustee or the Holders of the Securities, for the purpose
of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness
and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this
Article Ten.
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88
SECTION 10.9 Trustee's Relation to Senior
Indebtedness.
The Trustee and any agent of the Company or the Trus-
tee shall be entitled to all the rights set forth in this
Article Ten with respect to any Senior Indebtedness which may
at any time be held by it in its individual or any other capac-
ity to the same extent as any other holder of Senior Indebted-
ness and nothing in this Indenture shall deprive the Trustee or
any such agent of any of its rights as such holder.
With respect to the holders of Senior Indebtedness,
the Trustee undertakes to perform or to observe only such of
its covenants and obligations as are specifically set forth in
this Article Ten, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness.
Whenever a distribution is to be made or a notice
given to holders or owners of Senior Indebtedness, the distri-
bution may be made and the notice may be given to their Senior
Representative, if any.
SECTION 10.10 Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Indebtedness.
No right of any present or future holders of any
Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or
notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Securities and without impairing
or releasing the subordination provided in this Article Ten or
the obligations hereunder of the Holders of the Securities to
the holders of the Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of pay-
ment or extend the time of payment of, or renew or alter,
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89
Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness, or any instrument evidencing the
same or any agreement under which Senior Indebtedness is out-
standing; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for
the payment or collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Com-
pany and any other Person.
SECTION 10.11 Holders Authorize Trustee To
Effectuate Subordination of
Securities.
Each Holder of Securities by its acceptance of them
authorizes and expressly directs the Trustee on its behalf to
take such action as may be necessary or appropriate to effec-
tuate, as between the holders of Senior Indebtedness and the
Holders of Securities, the subordination provided in this
Article Ten, and appoints the Trustee its attorney-in-fact for
such purposes, including, in the event of any dissolution,
winding-up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency, receivership, reorganiza-
tion or similar proceedings or upon an assignment for the bene-
fit of creditors or otherwise) tending towards liquidation of
the business and assets of the Company, the filing of a claim
for the unpaid balance of its Securities and accrued interest,
Additional Payments and Liquidated Damages in the form required
in those proceedings.
If the Trustee does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30
days before the expiration of the time to file such claim or
claims, then the holders of the Senior Indebtedness are, or
their Senior Representative is, hereby authorized to have the
right to file and hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Securities.
Nothing herein contained shall be deemed to authorize the Trus-
tee or the holders of Senior Indebtedness or their Senior Rep-
resentative to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the
rights of any Holder thereof, or to authorize the Trustee or
the holders of Senior Indebtedness or their Senior Representa-
tive to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 10.12 This Article Ten Not To
Prevent Events of Default.
If the Company fails to make any payment on the Secu-
rities when due or within any applicable grace period, whether
or not such failure is on account of the subordination provi-
sions contained in Article Ten, such failure shall constitute
an Event of Default under this Indenture and shall enable the
Holders to accelerate the maturity of the Securities pursuant
to Section 6.2.
SECTION 10.13 Trustee's Compensation
Not Prejudiced.
Notwithstanding anything contained herein, nothing in
this Article Ten will apply to amounts due to the Trustee pur-
suant to other sections in this Indenture, including, but not
limited to Section 7.7.
ARTICLE XI
GUARANTEE OF SECURITIES
SECTION 11.1 Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and
severally, guarantees (such guarantee to be referred to herein
as the 'Guarantee') to each Holder of a Security authenticated
and delivered by the Trustee and to the Trustee and its succes-
sors and assigns, that: (i) the principal of and interest and,
if applicable, Additional Payments and Liquidated Damages on
the Securities and any other amounts owing under the Indenture,
including all amounts due to the Trustee under Section 7.7,
will be promptly paid in full when due, subject to any appli-
cable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and
interest on any interest and, if applicable, Additional Pay-
ments and Liquidated Damages, to the extent lawful, of the
Securities and all other Obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time
of payment or renewal of any Securities or of any such other
Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or
renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration or otherwise, subject, how-
ever, in the case of clauses (i) and (ii) above, to the
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limitations set forth in Section 11.4. Each Guarantor hereby
agrees that its Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof,
the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might other-
wise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, present-
ment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and in
this Guarantee. If any Securityholder or the Trustee is
required by any court or otherwise to return to the Company,
any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or any Guar-
antor, any amount paid by the Company or any Guarantor to the
Trustee or such Securityholder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and
effect. Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the
purposes of this Guarantee, notwithstanding any stay, injunc-
tion or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in
Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for
the purpose of this Guarantee.
SECTION 11.2 Severability.
In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.3 Release of a Subsidiary Guarantor.
Upon the sale or disposition of all of the Equity
Interests of a Subsidiary Guarantor by the Company, or upon the
consolidation or merger of a Subsidiary Guarantor with or into
any entity or the sale, conveyance, assignment, transfer, lease
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or other disposition of all or substantially all of its proper-
ties and assets to any entity (in each case, other than the
Company or an Affiliate of the Company), such Subsidiary Guar-
antor shall be automatically and unconditionally released from
all obligations under its guarantee of the Securities; provided
that the proceeds received by the Company, or any Subsidiary of
the Company, from such transaction shall be applied pursuant to
the provisions of Section 4.11 above or of Article Three above
and Section 7 of the Securities. The Trustee shall deliver an
appropriate instrument evidencing such release upon receipt of
a request by the Company accompanied by an Officers' Certifi-
cate certifying as to the compliance with this Section 11.3.
Any Guarantor not so released remains liable for the full
amount of principal of and interest and, if applicable, Addi-
tional Payments and Liquidated Damages on the Securities as
provided in this Article Eleven.
SECTION 11.4 Limitation of Subsidiary Guarantor's
Liability.
Notwithstanding anything contained in this
Article Eleven to the contrary, at all times, if any, during
which any Subsidiary Guarantor is the obligor under the New
Credit Agreement or any guarantee related thereto or any other
guarantee of Participating Indebtedness (as defined below) (any
such Subsidiary Guarantor being at all such times (and only at
such times), a 'Participating Guarantor'), each Subsidiary
Guarantor and by its acceptance hereof each Holder hereby con-
firms that it is the intention of all such parties that the
Guarantee by such Subsidiary Guarantor pursuant to its Guaran-
tee not constitute a fraudulent transfer or conveyance for pur-
poses of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal
or state law. To effectuate the foregoing intention, the Obli-
gations of each Subsidiary Guarantor under the Guarantee and
each other guarantee of Participating Indebtedness shall be
limited, collectively, to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of
such Participating Guarantor and after giving effect to any
rights of contribution of such Participating Guarantor in
respect of the obligations of such other Participating Guaran-
tor under its Guarantee or pursuant to Section 11.6 or pursuant
to any other agreement providing for an equitable distribution
among such Participating Guarantors and other Affiliates of the
Company of payments made under guarantees by such parties,
result in the obligations of such Participating Guarantor under
the Guarantee not constituting such fraudulent transfer or con-
veyance. For the purposes of this Section 11.4, 'Participating
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Indebtedness' means, as to any Subsidiary Guarantor, any
Indebtedness of the Company that is guaranteed by such Subsid-
iary Guarantor pursuant to a guaranty (i) the incurrence of
which is not prohibited by the terms of this Indenture or any
agreement governing any other Participating Indebtedness then
outstanding (or, if so prohibited by the terms of this Inden-
ture or any such agreement, is permitted as a result of a con-
sent or waiver thereunder) and (ii) that contains a limitation
of liability and confirmation of intention regarding ratability
of payments on substantially the terms set forth in this sub-
section.
SECTION 11.5 Contribution.
In order to provide for just and equitable contribu-
tion among the Guarantors, the Guarantors agree, among them-
selves, that in the event any payment or distribution is made
by any Guarantor (a 'Funding Guarantor') under the Guarantee,
such Funding Guarantor shall be entitled to a contribution from
all other Guarantors in a pro rata amount based on the Adjusted
Net Assets of each Guarantor (including the Funding Guarantor)
for all payments, damages and expenses incurred by that Funding
Guarantor in discharging the Company's Obligations with respect
to the Securities or any other Guarantor's Obligations with
respect to the Guarantee. 'Adjusted Net Assets' of such Guar-
antor at any date shall mean the lesser of the amount by which
(x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed
and contingent liabilities), but excluding liabilities under
the Guarantee, of such Guarantor at such date and (y) the pre-
sent fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the prob-
able liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities and after
giving effect to any collection from any Subsidiary of such
Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding debt in respect of the Guaran-
tee, as they become absolute and matured.
SECTION 11.6 Waiver of Subrogation.
Each Guarantor hereby irrevocably waives any claim or
other rights which it may now or hereafter acquire against the
Company that arise from the existence, payment, performance or
enforcement of such Guarantor's obligations under the Guarantee
and this Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, and
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any right to participate in any claim or remedy of any Holder
of Securities against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or
receive from the Company, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or
security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the pre-
ceding sentence and the Securities shall not have been paid in
full, such amount shall have been deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders of the Securities, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Securities, whether matured or
unmatured, in accordance with the terms of this Indenture.
Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated
by this Indenture and that the waiver set forth in this Section
11.6 is knowingly made in contemplation of such benefits.
SECTION 11.7 Agreement To Subordinate.
Each Guarantor agrees, and each Securityholder by
accepting a Security agrees, that all payments pursuant to the
Guarantee of such Guarantor are subordinated in right of pay-
ment to the prior payment in full of all Senior Indebtedness of
such Guarantor, to the same extent and manner that all payments
pursuant to the Securities are subordinated in right of payment
to the prior payment in full of all Senior Indebtedness of the
Company.
SECTION 11.8 Execution of Guarantee.
To evidence its Guarantee to the Securityholders
specified in Section 11.1, each Guarantor hereby agrees that a
notation of such Guarantee shall be endorsed on each Security
authenticated and delivered by the Trustee. Each Guarantor
hereby agrees that its Guarantee set forth in Section 11.1
shall remain in full force and effect notwithstanding any fail-
ure to endorse on each Security a notation of such Guarantee.
Each such Guarantee shall be signed on behalf of each Guarantor
by two Officers, or an Officer and an Assistant Secretary or
one Officer shall sign and one Officer or an Assistant Secre-
tary (each of whom shall, in each case, have been duly autho-
rized by all requisite corporate actions) shall attest to such
Guarantee prior to the authentication of the Security on which
it is endorsed, and the delivery of such Security by the Trus-
tee, after the authentication thereof hereunder, shall
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<PAGE>
constitute due delivery of such Guarantee on behalf of such
Guarantor. Such signatures upon the Guarantee may be by manual
or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such
officer who shall have signed the Guarantee shall cease to be
such officer before the Security on which such Guarantee is
endorsed shall have been authenticated and delivered by the
Trustee or disposed of by the Company, such Security neverthe-
less may be authenticated and delivered or disposed of as
though the person who signed the Guarantee had not ceased to be
such officer of the Guarantor.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with the duties imposed by the TIA or with another
provision which is required to be included in this Indenture by
the TIA, the imposed duties or the required provision shall
control, as the case may be.
SECTION 12.2 Notices.
Any notice or communication shall be sufficiently
given if in writing and delivered in Person or mailed by first-
class mail or by telecopier, followed by first-class mail, or
by overnight service guaranteeing next-day delivery, addressed
as follows:
(a) if to the Company:
PF ACQUISITION CORP.
90 Linden Place
P.O. Box 681
Rochester, New York 14603
Attention: Treasurer
Telecopier Number: (716) 383-1606
96
<PAGE>
with copies to:
HOWARD, DARBY & LEVIN
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith, Esq.
Telecopier Number: (212) 841-1010
and
HARRIS BEACH & WILCOX
130 East Main Street
Rochester, New York 14604
Attention: Thomas M. Hampson, Esq.
Telecopier Number: (716) 232-6925
(b) if to Pro-Fac:
PRO-FAC COOPERATIVE, INC.
90 Linden Place
P.O. Box 681
Rochester, New York 14603
Attention: Treasurer
Telecopier Number: (716) 383-1606
with copies to:
HOWARD, DARBY & LEVIN
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith, Esq.
Telecopier Number: (212) 841-1010
and
HARRIS BEACH & WILCOX
130 East Main Street
Rochester, New York 14604
Attention: Thomas M. Hampson, Esq.
Telecopier Number: (716) 232-6925
97
<PAGE>
(c) if to the Trustee:
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Telecopier Number: (212) 425-0542
The Company, Pro-Fac or the Trustee by written notice
to the other may designate additional or different addresses
for subsequent notices or communications.
Any notice or communication mailed to a Security-
holder, including any notice delivered in connection with TIA
SS 310(b), TIA SS 313(c), TIA SS 314(a) and TIA SS 315(b), shall be
mailed to him, first-class postage prepaid, at his address as
it appears on the registration books of the Registrar and shall
be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its suffi-
ciency with respect to other Securityholders. Except for a
notice to the Trustee, which is deemed given only when
received, if a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3 Communications by Holders with
Other Holders.
Securityholders may communicate pursuant to TIA
SS 312(b) with other Securityholders with respect to their
rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and any other Person shall have the
protection of TIA SS 312(c).
SECTION 12.4 Officers' Certificate and Opinion of
Counsel as to Conditions Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee at the request of the Trustee
(a) an Officers' Certificate in form and substance satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (b) an
98
<PAGE>
Opinion of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of counsel, all such con-
ditions have been complied with and (c) where applicable, a
certificate or opinion by an independent certified public
accountant satisfactory to the Trustee that complies with TIA
SS 314(c).
SECTION 12.5 Statements Required in Officers'
Certificate and Opinion of Counsel.
Each Officers' Certificate and Opinion of Counsel
with respect to compliance with a condition or covenant pro-
vided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provi-
sions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such Offic-
ers' Certificate or rendering such Opinion of Counsel has
read such covenant or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
contained in such Officers' Certificate or Opinion of
Counsel are based;
(c) a statement that, in the opinion of such Person,
he has made such examination or investigation as is neces-
sary to enable him to express an informed opinion as to
whether or not such covenant or condition has been com-
plied with; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been com-
plied with; provided, however, that with respect to mat-
ters of law, an Officers' Certificate may be based upon an
Opinion of Counsel, unless the signers know, or in the
exercise of reasonable care should know, that such Opinion
of Counsel is erroneous, and, provided, further, that with
respect to matters of fact, an Opinion of Counsel may rely
on an Officers' Certificate or certificates of public
officials, unless the signer knows, or in the exercise of
reasonable care should know, that any such document is
erroneous.
99
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SECTION 12.6 Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules in accordance
with the Trustee's customary practices for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may
make reasonable rules for its functions.
SECTION 12.7 Legal Holidays.
If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeed-
ing day that is not a Legal Holiday, and no interest, Addi-
tional Payments or Liquidated Damages shall accrue for the
intervening period.
SECTION 12.8 Governing Law.
The internal laws of the State of New York shall gov-
ern this Indenture, the Securities and the Guarantees without
regard to principles of conflicts of law.
SECTION 12.9 No Recourse Against Others.
A trustee, director, officer, employee, stockholder,
member or beneficiary, as such, of the Company or any Guarantor
shall not have any liability for any Obligations of the Company
under the Securities, this Indenture or the Guarantees or for
any claim based on, in respect of or by reason of such Obliga-
tions or their creation. Each Security holder by accepting a
Security waives and releases all such liability.
SECTION 12.10 Successors.
All agreements of the Company in this Indenture and
the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.11 Counterparts.
The parties may sign any number of counterparts of
this Indenture. Each such counterpart shall be an original,
but all of them together represent the same agreement.
SECTION 12.12 Severability.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
100
<PAGE>
validity, legality and enforceability of the remaining provi-
sions shall not in any way be affected or impaired thereby, and
a Holder shall have no claim therefor against any party hereto.
SECTION 12.13 Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and
headings of the Articles and Sections of this Indenture have
been inserted for convenience of reference only, and are not to
be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 12.14 Certain Registration Rights.
Any Holder of Securities which are not freely trans-
ferable without registration under the Securities Act (other
than by reason of such Holder being an Affiliate of the Com-
pany) shall have the right to require the Company, at the Com-
pany's option, to (i) file a shelf registration statement under
the Securities Act with respect to the Securities of all such
Holders and use its best efforts to cause such Registration
Statement to be declared effective or (ii) file and use its
best efforts to consummate an offer to exchange, registered
under the Securities Act, for any and all of the Securities a
like aggregate principal amount of Securities, to be issued
under this Indenture, identical to the Securities in all mate-
rial respects. The foregoing rights shall be set forth and
shall be subject to the limitations contained in the Registra-
tion Rights Agreement.
101
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed as of the date first written
above.
PF ACQUISITION CORP.,
as Issuer
By /s/ Roy A. Myers
Name: Roy A. Myers
Title: General Manager
PRO-FAC COOPERATIVE, INC.,
as Guarantor
By /s/ Roy A. Myers
Name: Roy A. Myers
Title: President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By /s/ Thomas J. Bogert
Name: Thomas J. Bogert
Title: Assistant Vice President
<PAGE>
Exhibit A
(FACE OF SECURITY)
[Legend if Security is a Transfer Restricted Security]
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE 'SECURITIES ACT'), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THERE-
FROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLI-
CABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT
TO THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
<PAGE>
PF ACQUISITION CORP.
(to be merged with and into Curtice-Burns Foods, Inc.)
No. $__________
12 1/4% SENIOR SUBORDINATED NOTE DUE 2005
PF ACQUISITION CORP. promises to pay to __________ or
registered assigns the principal sum of ________________
______________ Dollars on February 1, 2005.
Interest Payment Dates: February 1, August 1, commencing
February 1, 1995 and at maturity
Record Dates: January 15 and July 15
Pursuant to the Indenture (defined below), the pay-
ment of principal of and premium, if any, and interest and, if
applicable, Additional Payments and Liquidated Damages on this
Security is unconditionally guaranteed by Pro-Fac Cooperative,
Inc., a New York cooperative corporation ('Pro-Fac'), and such
other Persons as may from time to time execute endorsements of
guarantees hereon (together with Pro-Fac, 'Guarantors').
PF ACQUISITION CORP.
By:
Authorized Signature
By:
Authorized Signature
Dated: _________________
[SEAL]
Certificate of Authentication
This is one of the 12 1/4% Senior Subordinated Notes Due
2005 referred to in the within-mentioned Indenture.
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
Authorized Signatory
<PAGE>
2
(REVERSE OF SECURITY)
PF ACQUISITION CORP.
(to be merged with and into Curtice-Burns Foods, Inc.)
12 1/4% SENIOR SUBORDINATED NOTE DUE 2005
1. Interest. PF ACQUISITION CORP., a New York cor-
poration (the 'Company'), promises to pay, until the principal
hereof is paid or made available for payment, interest on the
principal amount set forth on the reverse side hereof at a rate
of 12 1/4% per annum, together with Additional Payments until the
date on which the Exchange Offer is Consummated and Liquidated
Damages as provided in the Registration Rights Agreement.
Interest and, if applicable, Additional Payments and Liquidated
Damages on the Securities will accrue from and including the
most recent date to which interest and, if applicable, Addi-
tional Payments and Liquidated Damages have been paid or, if no
interest and, if applicable, Additional Payments or Liquidated
Damages has been paid, from and including November 3, 1994
through but excluding the date on which interest and, if appli-
cable, Additional Payments and Liquidated Damages are paid.
Interest and, if applicable, Additional Payments and Liquidated
Damages shall be payable in arrears on February 1, August 1 and
at the stated maturity (each an 'Interest Payment Date'), com-
mencing February 1, 1995. Interest and, if applicable, Addi-
tional Payments and Liquidated Damages will be computed on the
basis of a 360-day year of twelve full 30-day months. The Com-
pany shall pay interest on overdue principal and on overdue
interest and, if applicable, Additional Payments and Liquidated
Damages (to the full extent permitted by law) at a rate of 12 1/4%
per annum.
2. Method of Payment. The Company will pay inter-
est and, if applicable, Additional Payments and Liquidated Dam-
ages on the Securities (except defaulted interest) to the Per-
sons who are registered Holders of Securities at the close of
business on the January 15 or July 15 next preceding the Inter-
est Payment Date (or, if any such January 15 or July 15 is not
a business day, at the close of business on the business day
immediately preceding such January 15 or July 15). Holders
must surrender Securities to a Paying Agent to collect princi-
pal payments. The Company will pay principal, premium, if any,
and interest and, if applicable, Additional Payments and Liqui-
dated Damages in money of the United States that at the time of
<PAGE>
3
payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar. Initially, IBJ
Schroder Bank & Trust Company (the 'Trustee') will act as Pay-
ing Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to Holders.
Neither the Company nor any of its Subsidiaries may act as Pay-
ing Agent, Registrar or co-Registrar.
4. Indenture. The Company issued the Securities
under an Indenture dated as of November 3, 1994 (the 'Inden-
ture') among the Company, Pro-Fac and the Trustee. This Secu-
rity is one of an issue of Securities of the Company issued, or
to be issued, under the Indenture. The terms of the Securities
include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code SS 77aaa-77bbbb) as amended from time to time.
The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for
a statement of them. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture.
The Securities are unsecured senior subordinated obligations of
the Company limited in aggregate principal amount to
$160,000,000. The Indenture limits, among other things, the
incurrence of Indebtedness and preferred stock by the Company
and its Subsidiaries; the creation of Liens by the Company and
its Subsidiaries; purchases, redemptions, and other acquisi-
tions or retirements of equity interests of the Company and its
Subsidiaries; transactions by the Company and its Subsidiaries
with their Affiliates; and the ability of the Company to merge
with or into another entity. The limitations are subject to a
number of important qualifications and exceptions. The Company
must report to the Trustee annually on compliance with the lim-
itations contained in the Indenture.
5. Guarantees. This Security is initially entitled
to the benefits of the unsecured senior subordinated Guarantee
of Pro-Fac and may thereafter be entitled to certain other
unsecured senior subordinated Guarantees made for the benefit
of the Holders. Reference is hereby made to Article Eleven of
the Indenture and to the Guarantees endorsed on this Security
for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors,
the Trustee and the Holders.
6. Subordination. The Securities and the Guaran-
tees are subordinated in right of payment, in the manner and to
<PAGE>
4
the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Indebtedness of
the Company, whether outstanding on the date of the Indenture
or thereafter created, incurred, assumed or guaranteed. Each
Holder by his acceptance hereof agrees to be bound by such pro-
visions and authorizes and expressly directs the Trustee, on
his behalf, to take such action as may be necessary or appro-
priate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for
such purposes.
7. Optional Redemption. Except as set forth below,
the Securities are not redeemable at the option of the Company
prior to February 1, 2000. At any time on or after February 1,
2000, the Securities will be redeemable, at the option of the
Company, in whole or in part, at the redemption prices
(expressed as percentages of the principal amount) set forth
below, plus accrued interest and, if applicable, Additional
Payments and Liquidated Damages to the redemption date, if
redeemed during the 12-month period beginning February 1, of
the years indicated below:
%
-------
2000............................... 104.594
2001............................... 103.063
2002............................... 101.531
2003 and thereafter................ 100.000
Notwithstanding the foregoing, at any time on or
prior to February 1, 1998, the Company may redeem up to $56.0
million aggregate principal amount of Securities (provided that
at least $104.0 million aggregate principal amount of Securi-
ties remains outstanding immediately after the occurrence of
such redemption), at a redemption price equal to 110.0% of the
principal amount of such Securities, plus accrued interest,
Additional Payments and Liquidated Damages to the date of
redemption, with the proceeds of any offering of Capital Stock
(other than a public offering pursuant to a registration state-
ment on Form S-8 or an offering of Disqualified Stock) or the
proceeds of any Asset Sale generating Net Proceeds in excess of
$20.0 million to the extent such proceeds are not otherwise
applied in accordance with the terms of the Indenture.
8. Notice of Redemption. Notice of redemption will
be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of Securities to be redeemed at
its registered address. On and after the Redemption Date,
unless the Company defaults in making the redemption payment,
<PAGE>
5
interest, Additional Payments and Liquidated Damages cease to
accrue on Securities or portions thereof called for redemption.
9. Offers to Purchase. Sections 4.11 and 4.14 of
the Indenture provide that after an Asset Sale (as defined in
the Indenture), or upon the occurrence of a Change of Control
(as defined in the Indenture), and subject to further limita-
tions contained therein, the Company shall make an offer to
purchase certain amounts of Securities in accordance with the
procedures set forth in the Indenture.
10. Registration Rights. Any Holder of Securities
which are not freely transferable without registration under
the Securities Act (other than by reason of such Holder being
an Affiliate of the Company) shall have the right to require
the Company, at the Company's option, to (i) file a shelf reg-
istration statement under the Securities Act with respect to
the Securities of all such Holders and use its best efforts to
cause such Registration Statement to be declared effective or
(ii) file and use its best efforts to consummate an offer to
exchange, registered under the Securities Act, for any and all
of the Securities a like aggregate principal amount of Securi-
ties, to be issued under this Indenture, identical to the Secu-
rities in all material respects. The foregoing rights shall be
set forth and shall be subject to the limitations contained in
the Registration Rights Agreement.
11. Denominations, Transfer, Exchange. The Securi-
ties are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay to
it any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any
Security or portion of a Security selected for redemption, or
transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
12. Persons Deemed Owners. The registered holder of
a Security may be treated as the owner of it for all purposes.
13. Unclaimed Money. If money for the payment of
principal or interest, Additional Payments or Liquidated Dam-
ages remains unclaimed for two years, the Trustee or Paying
Agent will pay the money back to the Company at its request.
After that, Holders entitled to the money must look to the
<PAGE>
6
Company for payment as general creditors unless an 'abandoned
property' law designates another Person.
14. Amendment, Supplement, Waiver. The Company and
the Trustee may, without the consent of the holders of any out-
standing Securities, amend, waive or supplement the Indenture
or the Securities for certain specified purposes, including,
among other things, curing ambiguities, defects or inconsisten-
cies, maintaining the qualification of the Indenture under the
Trust Indenture Act of 1939 or making any other change that
does not adversely affect the rights of any Holder. Other
amendments and modifications of the Indenture or the Securities
may be made by the Company and the Trustee with the consent of
the holders of not less than a majority of the aggregate prin-
cipal amount of the outstanding Securities, subject to certain
exceptions requiring the consent of the Holders of the particu-
lar Securities to be affected.
15. Successor Corporation. When a successor corpo-
ration assumes all the obligations of its predecessor under the
Securities and the Indenture and the transaction complies with
the terms of Article Five of the Indenture, the predecessor
corporation will be released from those obligations.
16. Defaults and Remedies. Events of Default are
set forth in the Indenture. Subject to certain limitations in
the Indenture, if an Event of Default other than an Event of
Default specified in Section 6.1(a)(ix) or (x) of the Indenture
occurs and is continuing, then the Holders of not less than 25%
in aggregate principal amount of the outstanding Securities
may, or the Trustee may, declare the principal of, premium, if
any, plus accrued interest, Additional Payments and Liquidated
Damages, if any, to be due and payable immediately. If an
Event of Default specified in Section 6.1(a)(ix) or (x) of the
Indenture occurs and is continuing, the principal of, premium,
if any, and accrued interest and, if applicable, Additional
Payments and Liquidated Damages on all of the Securities shall
ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any
Holder. Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee
may require reasonable indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exer-
cise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a
default in payment of principal or interest, Additional
<PAGE>
7
Payments or Liquidated Damages) if it determines that withhold-
ing notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
17. Trustee Dealings with Company. The Trustee, in
its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
18. No Recourse Against Others. A director, offi-
cer, employee, member or stockholder, as such, of the Company
or any Guarantor shall not have any liability for any Obliga-
tions of the Company under the Securities, the Guarantees or
the Indenture or for any claim based on, in respect of or by
reason of, such Obligations or their creation. Each
Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consid-
eration for the issue of the Securities and the Guarantees.
19. Discharge. The Company's obligations pursuant
to the Indenture will be discharged, except for certain speci-
fied obligations, subject to the terms of the Indenture, upon
the payment of all the Securities or upon the irrevocable
deposit with the Trustee of money or U.S. Government Obliga-
tions sufficient to pay when due principal or the interest,
Additional Payments and Liquidated Damages on the Securities to
maturity or redemption, as the case may be.
20. Authentication. This Security shall not be
valid until the Trustee manually signs the certificate of
authentication on the other side of this Security.
21. Abbreviations. Customary abbreviations may be
used in the name of a Securityholder or an assignee, such as:
TEN COM (= tenants in common), TENANT (= tenants by the entire-
ties), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act.
22. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company will cause CUSIP numbers to be printed
on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of
such numbers as printed on the Securities and reliance may be
placed only on the other identification numbers printed hereon.
<PAGE>
8
[The Transferor Certificate (Exhibit B to the Inden-
ture) will be attached to the Senior Subordinated Note.]
The Company will furnish to any Securityholder upon
written request and without charge a copy of the Indenture.
Requests may be made to:
PF ACQUISITION CORP.
90 Linden Place
P.O. Box 681
Rochester, New York 14603
Attention: Treasurer
<PAGE>
9
[FORM OF NOTATION ON SECURITY
RELATING TO GUARANTEE]
For value received, each Guarantor (which term
includes any successor Person under the Indenture) has, jointly
and severally, unconditionally guaranteed, to the extent set
forth in the Indenture and subject to the provisions in the
Indenture, that (i) the principal of and interest and, if
applicable, Additional Payments and Liquidated Damages on the
Securities will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by accelera-
tion or otherwise and interest on the overdue principal, if
any, and interest and, if applicable, Additional Payments and
Liquidated Damages on any interest, to the extent lawful, of
the Securities and all other Obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time
of payment or renewal of any Securities or of any such other
Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or
renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration or otherwise.
The Obligations of the Guarantors to the Holders of
Securities and to the Trustee pursuant to the Guarantee are
expressly set forth in Article Eleven of the Indenture and ref-
erence is hereby made to the Indenture for the precise terms of
the Guarantee. The Indebtedness evidenced by the Guarantee is,
to the extent and in the manner provided in the Indenture, sub-
ordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, as defined in the Inden-
ture, of the Guarantors, and this Guarantee is issued subject
to such provisions. Each Holder of a Security, by accepting
the same, (i) agrees to and shall be bound by such provisions,
(ii) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate
to effectuate such subordination as provided in the Indenture
and (iii) appoints the Trustee as attorney-in-fact of such
Holder for such purpose.
<PAGE>
10
This Guarantee shall not be valid until the Trustee
manually signs the certificate of authentication on the Secu-
rity upon which this Guarantee is noted.
Guarantor:
PRO-FAC COOPERATIVE, INC.
By: ________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to
_______________________________________________________________
(Insert assignee's social security or tax ID number) __________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type assignee's name, address and zip code) and irre-
vocably appoint
_______________________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
_______________________________________________________________
Date:______________ Your signature:____________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:___________________________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the
Company pursuant to Section 4.11 or 4.14 of the Indenture,
check the Box: [ ]
If you wish to have a portion of this Security pur-
chased by the Company pursuant to Section 4.11 or 4.14 of the
Indenture, state the amount you wish to have purchased:
$_____________
Date: ________________ Your Signature: ____________________
Tax Identification No.:______________
(Sign exactly as your name appears on the other side of this
Security)
Signature Guarantee: _______________________
<PAGE>
Exhibit B
[FORM OF TRANSFEROR CERTIFICATE]
[Letterhead of Selling Holder or U.S. Registered
Broker-Dealer Acting in Such Person's Behalf]
PF Acquisition Corp. Date: _______________
(to be merged with and into
Curtice-Burns Foods, Inc.)
90 Linden Place
P.O. Box 681
Rochester, New York 14603
Attention: Treasurer
Dear Ladies and Gentlemen:
This certificate relates to $__________ aggregate
principal amount of % Senior Subordinated Notes Due 2005
(the 'Senior Subordinated Notes'), of PF Acquisition Corp., a
New York corporation (the 'Company'), held in:* [ ] book-
entry or [ ] definitive form by ___________________ (the
'Transferor').
I. The Transferor:*
[ ] has requested the Trustee by written order to
deliver in exchange for its beneficial interest in the Global
Security held by the depository a Security or Securities in
definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in
such Global Security (or the portion thereof indicated above);
or
[ ] has requested the Trustee by written order to
exchange or register the transfer of a Security or Securities.
II. In connection with such request and in respect
of each such Security, the Transferor does hereby certify that
the Transferor is familiar with the Indenture relating to the
above captioned Securities and as provided in Section 2.6 of
<PAGE>
2
such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below)
because:*
[ ] Such Security is being acquired for the Trans-
feror's own account, without transfer (in satisfaction of Sec-
tion 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a 'quali-
fied institutional buyer' (as defined in Rule 144A under the
Securities Act of 1933, as amended (the 'Securities Act')) in
reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B), Section 2.6(b)(i) or Section 2.6(d)(i)(B) of the
Indenture) or pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (in satisfac-
tion of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the
Indenture).
[ ] Such Security is being transferred in accordance
with Rule 144 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
[ ] Such Security is being transferred in reliance
on and in compliance with an exemption from the registration
requirements of the Securities Act, other than Rule 144A, 144
or Rule 904 under the Securities Act. An Opinion of Counsel to
the effect that such transfer does not require registration
under the Securities Act accompanies this Certificate (in sat-
isfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of
the Indenture).
_________________________________
[INSERT NAME OF TRANSFEROR]
By: _____________________________
Dated: _________________
<PAGE>
Exhibit C
[Additional Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCES-
SOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURI-
TIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSI-
TORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF
THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUM-
STANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REP-
RESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT AND SUCH CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
- --------------------------------------------------------------------
CURTICE-BURNS FOODS, INC.
and
THE SUBSIDIARY GUARANTORS NAMED HEREIN
and
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
_______________
FIRST SUPPLEMENTAL INDENTURE
dated as of November 3, 1994
to
INDENTURE
dated as of November 3, 1994
among
PF ACQUISITION CORP., as Issuer,
and
PRO-FAC COOPERATIVE, INC., as Guarantor,
and
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
_______________
$160,000,000
12 1/4% Senior Subordinated Notes due 2005
- --------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of November 3,
1994 (the 'First Supplemental Indenture') among CURTICE-BURNS
FOODS, INC., a New York corporation (the 'Company'), certain
subsidiaries of the Company listed on the signature pages
hereof (collectively, the 'Designated Subsidiaries') and IBJ
SCHRODER BANK & TRUST COMPANY, as Trustee (the 'Trustee').
WHEREAS, PF Acquisition Corp., a New York corporation
('PFAC'), and Pro-Fac Cooperative, Inc., a New York cooperative
corporation ('Pro-Fac'), have heretofore executed and delivered
to the Trustee an Indenture dated as of November 3, 1994 (the
'Indenture') providing for the issuance of $160,000,000 aggre-
gate principal amount of 12 1/4% Senior Subordinated Notes due
2005 (the 'Notes') of PFAC and of the related guarantee (the
'Guarantee') of Pro-Fac; and
WHEREAS, pursuant to an Agreement and Plan of Merger
dated as of September 27, 1994 among the Company, PFAC and Pro-
Fac, PFAC is merging with and into the Company, with the Com-
pany continuing as the surviving corporation (the 'Merger')
and, in connection therewith, the Company is assuming all of
PFAC's debts, liabilities, duties and obligations, including
PFAC's Obligations in respect of the Notes and under the Inden-
ture; and
WHEREAS, in connection with the Merger and related
transactions, the Designated Subsidiaries have guaranteed cer-
tain Senior Indebtedness of the Company and, as a consequence
thereof, are required, pursuant to Section 4.17 of the Inden-
ture, to become Subsidiary Guarantors under the Indenture; and
WHEREAS, the Company desires by this First Supplemen-
tal Indenture, pursuant to and as contemplated by Sections 5.1
and 9.1 of the Indenture, to expressly assume the covenants,
agreements and undertakings of PFAC in respect of the Notes and
under the Indenture; and
WHEREAS, the Designated Subsidiaries desire by this
First Supplemental Indenture, pursuant to and as contemplated
by Sections 4.17 and 9.1 of the Indenture, to become Subsidiary
Guarantors under the Indenture; and
WHEREAS, the execution and delivery of this First
Supplemental Indenture have been authorized by resolutions of
the respective Boards of Directors of the Company and the Des-
ignated Subsidiaries; and
<PAGE>
2
WHEREAS, all conditions and requirements necessary to
make this First Supplemental Indenture a valid, binding and
legal instrument in accordance with its terms have been per-
formed and fulfilled by the parties hereto and the execution
and delivery thereof have been in all respects duly authorized
by the parties hereto;
NOW, THEREFORE, in consideration of the above prem-
ises, each party agrees, for the benefit of the others and for
the equal and ratable benefit of the Holders of the Securities,
as follows:
ARTICLE XIII
ASSUMPTION OF OBLIGATIONS OF PFAC
SECTION 13.1 Assumption. The Company hereby expressly
and unconditionally assumes each and every covenant, agreement
and undertaking of PFAC in the Indenture as if the Company had
been the original Issuer of the Notes, and also hereby
expressly and unconditionally assumes each and every covenant,
agreement and undertaking in each Note outstanding on the date
of this First Supplemental Indenture.
SECTION 13.2 Note. To evidence its assumption of the
Obligations of PFAC in respect of the Notes and under the
Indenture as set forth in Section 1.1 hereof, the Company
shall, simultaneously with the Consummation of the Exchange
Offer, execute and deliver a Note in the form set forth as
Exhibit A to the Indenture, but identifying the Company as the
Issuer.
ARTICLE XIV
SUBSIDIARY GUARANTORS
SECTION 14.1 Guarantees. Each Designated Subsid-
iary hereby guarantees the Obligations of the Company in
respect of the Notes and of the Indenture and agrees to become
a Subsidiary Guarantor under the Indenture as if each such Des-
ignated Subsidiary had been an original Guarantor of the Obli-
gations of the Company in respect of the Notes and under the
Indenture.
SECTION 14.2 Notation on Security Relating to Guar-
antee. To evidence its guarantee of the Obligations of the
<PAGE>
3
Company as set forth in Section 2.1 hereof, each Designated
Subsidiary shall, simultaneously with the execution and deliv-
ery of this First Supplemental Indenture, execute and deliver
an endorsement in the form set forth in Exhibit A to the Inden-
ture, but identifying such Designated Subsidiary as Guarantor.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1 Terms Defined. For all purposes of
this First Supplemental Indenture, except as otherwise defined
or unless the context otherwise requires, terms used in capi-
talized form in this First Supplemental Indenture and defined
in the Indenture have the meanings specified in the Indenture.
SECTION 15.2 Indenture. Except as amended hereby,
the Indenture and the Securities are in all respects ratified
and confirmed and all the terms shall remain in full force and
effect.
SECTION 15.3 Governing Law. THIS FIRST SUPPLEMEN-
TAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 15.4 Successors. All agreements of the
Company in this First Supplemental Indenture and the Securities
shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 15.5 Multiple Counterparts. The parties
may sign multiple counterparts of this First Supplemental
Indenture. Each signed counterpart shall be deemed an origi-
nal, but all of them together represent the same agreement.
<PAGE>
4
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed as of the
date first written above.
CURTICE-BURNS FOODS, INC.
By: /s/ Roy A. Myers
Name: Roy A. Myers
Title: Chief Executive Officer
HUSMAN SNACK FOODS COMPANY, INC.
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
FINGER LAKES PACKAGING COMPANY, INC.
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
CURTICE-BURNS MEAT SNACKS, INC.
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
CURTICE-BURNS EXPRESS, INC.
By: /s/ Roy A. Myers
Name: Roy A. Myers
Title: President
<PAGE>
5
PRO-FAC HOLDING COMPANY OF IOWA, INC.
By: /s/ Roy A. Myers
Name: Roy A. Myers
Title: Vice President
SEASONAL EMPLOYERS, INC.
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
QUALITY SNAX OF MARYLAND, INC.
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
NALLEY'S CANADA LIMITED
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
KENNEDY ENDEAVORS, INCORPORATED
By: /s/ William D. Rice
Name: William D. Rice
Title: Vice President
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By: /s/ Thomas J. Bogert
Name: Thomas J. Bogert
Title: Assistant Vice President
<PAGE>
PF ACQUISITION CORP.
$160,000,000
12 1/4% Senior Subordinated Notes
Due 2005
PURCHASE AGREEMENT
Dated November 3, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Page
ARTICLE 1. DEFINITIONS....................................... 2
ARTICLE 2. PURCHASE AND SALE OF THE NOTES.................... 8
Section 2.1 Issue of the Notes.......................... 8
Section 2.2 Sale and Purchase of the Notes;
the Closing.............................. 9
Section 2.3 Failure to Deliver.......................... 10
Section 2.4 Further Action.............................. 10
ARTICLE 3. CLOSING CONDITIONS................................ 11
Section 3.1 Conditions to Obligations of
the Purchasers........................... 11
Section 3.1.1 Opinions of Counsel......................... 11
Section 3.1.2 Representations and Warranties
True; No Event of Default................ 12
Section 3.1.3 Compliance with Agreements.................. 12
Section 3.1.4 Accountant's Letter......................... 12
Section 3.1.5 Officers' Certificates...................... 12
Section 3.1.6 Completion of Other
Transactions............................. 13
Section 3.1.7 Consents; Permits........................... 14
Section 3.1.8 Purchase Permitted by
Applicable Laws; Legal
Investment............................... 14
Section 3.1.9 Solvency Letter............................. 15
Section 3.1.10 Full Subscription........................... 15
Section 3.2 Conditions to Obligations of
the Company.............................. 15
Section 3.2.1 Sale of Notes............................... 15
Section 3.2.2 Purchasers' Representations and
Warranties True.......................... 15
Section 3.2.3 Offering by the Placement Agent............. 15
Section 3.2.4 Sale of Notes Not Enjoined.................. 16
Section 3.2.5 Financing; Acquisition...................... 16
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.................... 17
Section 4.1 Representations and Warranties
by the Company and Pro-Fac............... 17
Section 4.1.1 Organization, Standing and
Qualification; Requisite
Corporate Power.......................... 17
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.1.2 Subsidiaries................................ 18
Section 4.1.3 Capitalization.............................. 19
Section 4.1.4 No Violation................................ 19
Section 4.1.5 Due Execution, etc.......................... 20
Section 4.1.6 Governmental Consents....................... 21
Section 4.1.7 No Material Adverse Change.................. 21
Section 4.1.8 Full Disclosure............................. 21
Section 4.1.9 Financial Statements........................ 22
Section 4.1.10 Outstanding Indebtedness.................... 23
Section 4.1.11 Use of Proceeds............................. 23
Section 4.1.12 Pending Litigation.......................... 23
Section 4.1.13 Title to and Condition of
Properties............................... 23
Section 4.1.14 Environmental Protection.................... 23
Section 4.1.15 Taxes....................................... 24
Section 4.1.16 Compliance with Laws........................ 24
Section 4.1.17 Labor Relations............................. 25
Section 4.1.18 Private Offering............................ 25
Section 4.1.19 Bank Credit Agreement and
Merger Agreement
Representations and
Warranties............................... 26
Section 4.1.20 Intellectual Property....................... 27
Section 4.1.21 Brokers..................................... 27
Section 4.1.22 Investment Company Act...................... 28
Section 4.1.23 Solvency.................................... 28
Section 4.1.24 Insurance................................... 28
Section 4.2 Purchaser Representations and
Warranties............................... 28
ARTICLE 5. COMPLIANCE WITH THE SECURITIES ACT................ 32
Section 5.1 Compliance with the Securities
Act...................................... 32
Section 5.2 Certificates Evidencing the
Notes.................................... 33
Section 5.3 Information................................. 34
ARTICLE 6. SUBSTITUTION OF PURCHASERS........................ 34
Section 6.1 Substitution of Purchasers.................. 34
ARTICLE 7. MISCELLANEOUS..................................... 35
Section 7.1 Access to Information....................... 35
Section 7.2 Notices..................................... 36
Section 7.3 Expenses.................................... 36
Section 7.4 Home Office Payment......................... 37
Section 7.5 Termination................................. 38
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.6 Survival of Representations and
Warranties............................... 38
Section 7.7 Assignments................................. 38
Section 7.8 No Waiver; Modifications in
Writing.................................. 39
Section 7.9 Counterparts................................ 39
Section 7.10 Headings.................................... 39
Section 7.11 Consent to Jurisdiction and
Service of Process....................... 40
Section 7.12 Governing Law............................... 40
Section 7.13 Entire Agreement............................ 40
Section 7.14 Severability................................ 40
Section 7.15 Delivery.................................... 40
Section 7.16 Attorneys' Fees............................. 40
Section 7.17 Consent to Joint Representation............. 41
Section 7.18 Reliance Authorized......................... 41
Section 7.19 Indemnity................................... 41
EXHIBITS
Exhibit A Form of Indenture
Exhibit B Form of Managed Accounts Letter
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Opinion of Howard, Darby & Levin
Exhibit E Form of Opinion of Harris Beach & Wilcox
Exhibit F Form of Opinion of Cahill Gordon & Reindel
Exhibit G Form of Solvency Certificate
Exhibit H Form of Solvency Opinion
Exhibit I Form of Placement Agent Letter
SCHEDULES
Schedule 4.1.2. Subsidiaries of Curtice-Burns and Pro-Fac
</TABLE>
-iii-
c/o DILLON, READ & CO. INC.
535 Madison Avenue
New York, New York 10022
__________________
PURCHASE AGREEMENT
__________________
November 3, 1994
To Each of the Purchasers
Named on the Signature
Pages Hereof
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of
Merger dated as of September 27, 1994 (the 'Merger Agreement')
among Pro-Fac Cooperative, Inc., a New York cooperative
corporation ('Pro-Fac'), PF Acquisition Corp., a New York
corporation and a wholly owned subsidiary of Pro-Fac (the
'Company'), and Curtice-Burns Foods, Inc., a New York
corporation ('Curtice-Burns'), the Company has made an offer to
purchase all of the issued and outstanding shares of Class A
Common Stock and Class B Common Stock, each $.99 par value per
share (collectively, the 'Common Stock'), of Curtice-Burns and,
upon acceptance for payment of the Common Stock pursuant to
such offer, proposes to merge with and into Curtice-Burns (the
'Merger') such that all of the issued and outstanding shares of
Common Stock not tendered and accepted for payment pursuant to
such offer will be converted into the right to receive the cash
consideration specified in the Merger Agreement (other than
shares of Common Stock owned by Pro-Fac or its subsidiaries or
Curtice-Burns or its subsidiaries (which shall be canceled) or
shares of Common Stock as to which stockholders of Curtice-
Burns have exercised appraisal rights provided in connection
with the Merger). The Merger will be financed in part through
the issuance by the Company of its 12 1/4% Senior Subordinated
Notes Due 2005 (the 'Notes'), in an aggregate principal amount
of $160,000,000, pursuant to a trust indenture dated as of
November 3, 1994 (the 'Indenture'), among the Company, Pro-Fac,
as Parent Guarantor, and IBJ Schroder Bank & Trust Company, as
trustee (the 'Trustee'). The Notes will be guaranteed by Pro-
Fac on an unsecured senior subordinated basis. In connection
<PAGE>
2
with and as a result of the Merger, Curtice-Burns, as the
surviving corporation, will assume all of the obligations of
the Company under the Notes, the Indenture and this Agreement.
In addition, certain Subsidiaries of Curtice-Burns specified in
Schedule 4.1.2 hereto (the 'Subsidiary Guarantors' and,
together with Pro-Fac, as Parent Guarantor, the 'Guarantors')
will guarantee the Notes on an unsecured senior subordinated
basis by execution of a supplemental indenture.
The Notes will be offered and sold to the Purchasers
identified in the signature pages hereof (each, a 'Purchaser')
pursuant to an exemption from the registration requirements
under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the 'Act'). The Company
has prepared a preliminary offering memorandum dated October 7,
1994 (the 'Preliminary Offering Memorandum') and has prepared a
final offering memorandum dated October 24, 1994 (the 'Offering
Memorandum'), relating to the Company and the Notes.
The Company, the Guarantors and each person a
signatory hereto hereby agrees as set forth below. Capitalized
terms used but not defined herein shall have the meaning given
such terms in Article 1 hereof.
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall
have the meanings indicated below:
'Account' shall have the meaning specified in Section
2.2 of this Agreement.
'Accredited Investor' means an 'accredited investor',
as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
'Affiliate' means, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person.
'Agreement' means this Purchase Agreement, as the
same may be supplemented, amended or modified in accordance
with the terms hereof.
'Bank' means Springfield Bank for Cooperatives, a
corporation established under the laws of the United States of
<PAGE>
3
America and continuing as a federally chartered instrumentality
of the United States under the Farm Credit Act of 1971, as
amended.
'Bank Credit Agreement' means the Term Loan, Term
Loan Facility and Seasonal Loan Agreement dated as of
November 3, 1994 by and among the Bank, Curtice-Burns and the
Company.
'Bank Financing Documents' means the Bank Credit
Agreement and each of the agreements, documents and instruments
required to be entered into by Curtice-Burns, the Company or
any Guarantor on or prior to the Closing Date in accordance
with the terms thereof.
'Book Entry Notes' shall have the meaning set forth
in Section 2.2.
'Business Day' means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in The City of New York, State of New York are
authorized or obligated by law or executive orders to close.
'Capital Stock' means, with respect to any Person,
any and all shares, interests, participations, rights in or
other equivalents (however designated) of such Person's capital
stock, and any rights (other than debt securities convertible
into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
'Charter Documents' means, with respect to any
Person, the Certificate or Articles of Incorporation and
By-laws, as amended or restated to the date hereof or the
Closing Date, as applicable, of such Person.
'Closing' shall have the meaning specified in Section
2.2 of this Agreement.
'Closing Date' shall have the meaning specified in
Section 2.2 of this Agreement.
'Code' means the Internal Revenue Code of 1986, as
amended.
'Commission' means the United States Securities and
Exchange Commission, as from time to time constituted, and any
<PAGE>
4
body or bodies hereafter performing any of the duties performed
by the Commission.
'Contract Default' shall have the meaning specified
in Section 4.1.4 of this Agreement.
'control' means, with respect to any specified
Person, the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
'controlling' and 'controlled' have meanings correlative to the
foregoing.
'Default' and 'Event of Default' shall have the
meanings specified in Sections 1.1 and 6.1, respectively, of
the Indenture.
'Definitive Note' shall have the meaning specified in
Section 2.2 of this Agreement.
'Documents' means each of the Merger Documents, the
Note Documents and the Bank Financing Documents.
'DTC' shall mean The Depository Trust Company.
'Environmental Laws' means the common law and all
federal, state, local and foreign laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of public or employee
health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of Hazardous Materials into the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling
of Hazardous Materials, and (iii) underground storage tanks,
and related piping, and emissions, discharges, releases or
threatened releases therefrom.
'ERISA' means the Employee Retirement Income Security
Act of 1974, as amended.
'Exchange Act' means the Securities Exchange Act of
1934, as amended.
<PAGE>
5
'Exchange Notes' means the notes the terms of which
are substantially identical to the Notes offered and sold
hereby, issued in exchange for the Notes pursuant to the
Exchange Offer.
'Exchange Offer' means the registration of Exchange
Notes by Curtice-Burns and the Guarantors under the Securities
Act pursuant to a registration statement under which Curtice-
Burns and each Guarantor offer each holder of Notes the
opportunity to exchange all outstanding Notes held by such
holder for Exchange Notes in an aggregate principal amount
equal to the aggregate principal amount of Notes held by such
holder, all in accordance with the terms and conditions of the
Registration Rights Agreement.
'Exchange Offer Registration Statement' means the
registration statement filed in connection with an Exchange
Offer by the Company.
'Financing' shall have the meaning specified in
Section 3.1.6(a) of this Agreement.
'GAAP' means generally accepted accounting
principles, set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession of the United
States of America, which are applicable as of the date of
determination.
'Global Note' shall have the meaning set forth in
Section 2.2.
'Guarantee' means each guarantee in respect of the
Notes pursuant to Article Eleven of the Indenture.
'Hazardous Material' means any pollutant,
contaminant, chemical, or industrial, toxic or hazardous
substance, constituent or waste, including, without limitation,
petroleum including crude oil or any fraction thereof, or any
petroleum product.
'Lien' means any mortgage, charge, pledge, lien
(statutory or other), privilege, security interest,
hypothecation, cessation and transfer, lease of real property,
<PAGE>
6
assignment for security, claim, deposit arrangement, or
preference or priority or other encumbrance upon or with
respect to any property of any kind, real or personal, movable
or immovable, now owned or hereafter acquired. A Person shall
be deemed to own subject to a Lien any property which such
Person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
'Material Adverse Effect' means a material adverse
effect on the business, condition (financial or otherwise),
results of operations or properties of the Pro-Fac Companies,
taken as a whole.
'Merger Documents' means the Merger Agreement, the
Stockholder Agreement and each of the agreements, documents and
instruments required to be entered into by any Pro-Fac Company
on or prior to the Closing Date in accordance with the terms
thereof.
'Note Documents' means this Agreement, the Notes, the
Indenture, the Guarantees of the Notes by Pro-Fac and the
Subsidiary Guarantors, and the Registration Rights Agreement,
collectively, together with any exhibits, schedules or other
attachments hereto or thereto, as they may be amended or
supplemented from time to time in accordance with the
respective terms thereof.
'Permitted Liens' shall have the meaning specified in
Section 1.1 of the Indenture.
'Person' means an individual, partnership,
corporation, trust or unincorporated organization or a
government or agency or political subdivision thereof.
'Placement Agent' shall have the meaning specified in
Section 2.2 of this Agreement.
'Pro-Fac Companies' means each of Pro-Fac, the
Company, Curtice-Burns and each of the Subsidiaries of Curtice-
Burns.
'Purchase Price' shall have the meaning specified in
Section 2.2 of this Agreement.
'Purchasers' means (i) each Person who accepts and
agrees to the terms hereof as indicated by such Person's
<PAGE>
7
signature on the execution pages of this Agreement or a
counterpart thereof, (ii) each Person, if any, on whose behalf
another Person executes this Agreement and whose funds are used
for the purchase of any Notes hereunder and, with respect to
whom, the Person so executing this Agreement executes and
delivers to the Company simultaneously with or prior to the
Closing Date a representation letter in the form of Exhibit B
hereto, and (iii) subject to Article 6 of this Agreement, each
Substitute Purchaser.
'Qualified Institutional Buyer' shall have the
meaning specified in Rule 144A under the Securities Act.
'Registration Rights Agreement' means the
Registration Rights Agreement dated as of the Closing Date
among the Company, Pro-Fac and the Purchasers substantially in
the form of Exhibit C hereto, as amended and supplemented from
time to time in accordance with the terms thereof.
'Securities Act' means the Securities Act of 1933, as
amended.
'Solvency' shall have a meaning correlative to the
meaning of the term 'Solvent.'
'Solvent' means, with respect to any Person, as of
any date, (i) the fair value of the aggregate assets of such
Person will exceed the total liabilities (including, without
limitation, subordinated, unmatured, unliquidated, disputed and
contingent liabilities) of such Person, (ii) the present fair
salable value of the aggregate assets of such Person will be
greater than probable liabilities of such Person on its debts
as they become absolute and matured, (iii) such Person will be
able to pay its debts and other liabilities (including
contingent liabilities and other commitments) as they mature,
(iv) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, (v) such
Person will not have an unreasonably small capital for the
businesses in which it is engaged, as now conducted by such
Person and as such businesses are proposed to be conducted and
(vi) with respect to the transactions contemplated by this
Agreement, the Merger Agreement and the other Documents, such
Person is not entering into such transactions with the
intention to hinder, delay or defraud creditors. In computing
the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount
that, in
<PAGE>
8
light of all the facts and circumstances existing at
such time, represents the maximum amount that can reasonably be
expected to become an actual or matured liability.
'Stockholder Agreement' means the Stockholder
Agreement dated as of September 27, 1994 by and among Pro-Fac,
the Company and Agway Holdings, Inc., a Delaware corporation.
'Subsidiary' means with respect to any Person, any
other Person of which a majority of the equity ownership or the
voting securities is at the time owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such
Person, or by such Person and one or more other Subsidiaries of
such Person.
'Substitute Purchaser' shall have the meaning
specified in Section 6.1 of this Agreement.
'Tax' or 'Taxes' means all taxes, including all
foreign and United States federal, state, county or local
income, excise, withholding, sales, franchise, property, gains,
transfer, employment or other taxes and all interest and
penalties related thereto.
'United States Person' shall have the meaning
specified under Rule 902(o) under the Securities Act.
ARTICLE 2. PURCHASE AND SALE OF THE NOTES
Section 2.1. Issue of the Notes. The Company has
authorized the issuance and sale to you and each other
Purchaser of $160,000,000 aggregate principal amount of its
12 1/4% Senior Subordinated Notes Due 2005, to be issued pursuant
to the Indenture. Each Note will be issued in the principal
amount of $1,000 or any integral multiple of $1,000 and shall
otherwise be in the form of the Note set forth as Exhibit A to
the Indenture. The Notes shall be guaranteed by the Parent
Guarantor and, upon the consummation of the Merger, by the
Subsidiary Guarantors, each on an unsecured senior subordinated
basis.
Each Purchaser will have the registration rights with
respect to the Notes that are set forth in the Registration
Rights Agreement, for so long as the Notes are Transfer
Restricted Securities (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the
Company will agree to file with the Commission under the
<PAGE>
9
circumstances set forth therein (i) a registration statement
under the Securities Act (the 'Exchange Offer Registration
Statement') relating to the New Notes (as defined in the
Registration Rights Agreement) to be offered in exchange for
the Notes (the 'Exchange Offer') and (ii) under certain
circumstances set forth therein, a shelf registration statement
pursuant to Rule 415 under the Securities Act relating to
resale by holders of the Notes.
Section 2.2. Sale and Purchase of the Notes; the
Closing. In reliance upon the representations and warranties
made herein and subject to the satisfaction or waiver of the
terms and conditions set forth herein, the Company hereby
agrees to issue and sell to each Purchaser, and each Purchaser
hereby agrees, severally and not jointly, to purchase from the
Company at the Closing on the Closing Date, the principal
amount of Notes set forth below such Purchaser's name on the
signature pages hereof, for a purchase price equal to 100% of
the principal amount of such Notes. The Purchasers may include
Dillon, Read & Co. Inc. (the 'Placement Agent') or persons who
may be deemed affiliated or associated with the Placement
Agent.
The sale and purchase of the Notes shall take place
at a closing (the 'Closing') at the offices of Howard, Darby &
Levin, 1330 Avenue of the Americas, New York, New York 10019,
no earlier than 10:00 a.m. on November 3, 1994 (the 'Closing
Date').
Payment of the purchase price (the 'Purchase Price')
for the Notes hereunder shall be made by each Purchaser by
10:00 a.m. (New York City time) on November 3, 1994 by federal
funds check or by wire transfer of immediately available funds
to one or more accounts (collectively, the 'Account')
designated by the Placement Agent in a notice to the Purchasers
prior to the Closing. If the Closing occurs, interest will
accrue on the Notes beginning on the Closing Date. If the
Closing does not occur, the Company shall pay to each Purchaser
an amount of interest on the Purchase Price deposited into the
Account by such Purchaser equal to the interest such Purchaser
would have received on the Notes from the Closing Date to but
not including the date such Purchase Price is returned to such
Purchaser.
If a Purchaser is an Accredited Investor who is not a
Qualified Institutional Buyer, then one or more Notes in
definitive form, registered in such names and permitted
<PAGE>
10
denominations as such Purchaser may request in writing not less
than two business days prior to the Closing Date, in an amount
corresponding to the amount of Notes sold to such Purchaser (a
'Definitive Note'), shall be delivered to such Purchaser by the
Company upon the deposit by such Purchaser of funds into the
Account in accordance with the preceding paragraph. For each
Purchaser who is a Qualified Institutional Buyer, one or more
Notes in global form (a 'Global Note') registered in the name
of Cede & Co., as nominee of The Depository Trust Company
('DTC'), which will act as depository, representing all Notes
purchased by such Purchasers, who are Qualified Institutional
Buyers, shall be delivered to DTC by the Company on the
business day immediately preceding the Closing Date (each such
beneficial interest in the Global Note being herein referred to
as a 'Book-Entry Note'). Each such Book-Entry Note shall be
delivered to such Purchaser upon the deposit by such Purchaser
of funds into the Account in accordance with the preceding
paragraph. At the Closing, the Placement Agent shall release
the Purchase Price from the Account to the Company. The forms
of the Definitive Notes and the Global Notes in definitive form
shall be made available to the Placement Agent for inspection
not later than 9:30 a.m. on the business day immediately
preceding the Closing Date.
Section 2.3. Failure to Deliver. If at the Closing
any of the conditions to the Closing specified in this
Agreement (other than the conditions specified in Section 3.2
hereof) shall not have been satisfied to the reasonable
satisfaction of any Purchaser or waived by such Purchaser, such
Purchaser shall, at its election and notwithstanding anything
to the contrary in this Agreement, be relieved of all further
obligations under this Agreement without thereby waiving any
other rights such Purchaser may have by reason of such nonful-
fillment or failure; provided, however, that if the Closing
shall not have occurred on or prior to 3:00 p.m. on the Closing
Date, then each Purchaser to which Notes have been delivered
pursuant to Section 2.2 shall return such Notes (through DTC,
if such Notes are Book-Entry Notes) to the Company and the
Purchase Price applicable to such Notes shall be released from
the Account to such Purchaser. Nothing in this Section 2.3
shall operate to relieve either of the Company or Pro-Fac from
any of its obligations hereunder.
Section 2.4. Further Action. During the period from
the date hereof to the Closing Date, (a) the Company and Pro-
Fac shall use their respective reasonable best efforts and take
all action reasonably necessary or appropriate to cause their
<PAGE>
11
respective representations and warranties contained in
Section 4.1 to be true and correct as of the Closing Date after
giving effect to the transactions contemplated by this
Agreement, the Merger Agreement and the other Documents, as if
made at and as of such time and (b) each Purchaser shall use
its reasonable best efforts and take all action reasonably
necessary or appropriate to cause the representations and
warranties of such Purchaser contained in Section 4.2 hereof to
be true and correct as of the Closing Date as if made at and as
of such time.
ARTICLE 3. CLOSING CONDITIONS
Section 3.1. Conditions to Obligations of the
Purchasers. The obligation of each Purchaser to purchase and
pay for the Notes to be purchased by it hereunder shall be
subject to the satisfaction or waiver by such Purchaser of each
of the following conditions on or before the Closing Date:
Section 3.1.1. Opinions of Counsel. The Placement
Agent and such Purchaser shall have received the following
opinions:
(a) favorable opinions, dated the Closing Date and
addressed to the Placement Agent and each Purchaser, from
Howard, Darby & Levin, special counsel to the Company and
Pro-Fac and, after the effectiveness of the Merger,
Curtice-Burns, substantially in the form of Exhibit D
hereto, and covering such other matters as may reasonably
be requested by the Purchasers;
(b) favorable opinions, dated the Closing Date and
addressed to the Placement Agent and each Purchaser, from
Harris Beach & Wilcox, counsel to the Company and Pro-Fac
and, after the effectiveness of the Merger, Curtice-Burns,
substantially in the form of Exhibit E hereto, and
covering such other matters as may reasonably be requested
by the Purchasers;
(c) favorable opinions, dated the Closing Date and
addressed to the Placement Agent and each Purchaser, from
Cahill Gordon & Reindel, special counsel to the
Purchasers, substantially in the form of Exhibit F hereto;
and
(d) such other opinions of counsel covering matters
incidental to the transactions contemplated by this
<PAGE>
12
Agreement and the Merger Agreement as you may reasonably
request.
Section 3.1.2. Representations and Warranties True;
No Event of Default. Each of the representations and
warranties made by each of the Company and Pro-Fac contained in
Section 4.1 hereof shall have been true and correct in all
material respects when made and shall be true and correct in
all material respects on and as of the Closing Date, as if made
on and as of such time, in each case, after giving effect to
the transactions contemplated by this Agreement, the Merger
Agreement and each of the other Documents, except to the extent
that any such representation or warranty was expressly made as
of any other date, in which case such representation or
warranty shall have been true and correct at and as of such
date. There shall exist on and as of the Closing Date, after
giving effect to the transactions contemplated by this
Agreement, the Merger Agreement and the other Documents, no
Default or Event of Default.
Section 3.1.3. Compliance with Agreements. Each of
the Company, Pro-Fac and Curtice-Burns shall have performed and
complied in all material respects with all agreements,
covenants and conditions contained herein, in the other
Documents and any other document contemplated hereby and
thereby that are required to be performed or complied with by
such Person on or before the Closing Date.
Section 3.1.4. Accountant's Letter. The Placement
Agent shall have received a 'cold comfort' letter addressed to
itself and the Company, dated the Closing Date, from Price
Waterhouse LLP, independent public accountants to the Company,
Pro-Fac and Curtice-Burns, in form and substance reasonably
satisfactory to the Placement Agent.
Section 3.1.5. Officers' Certificates. Each
Purchaser and the Placement Agent shall have received
(i) certificates, dated the Closing Date and signed by the
Chief Executive Officer or the President or, in the case of
Pro-Fac, the General Manager, and attested by the Secretary or
any Assistant Secretary of each of the Company and Pro-Fac,
certifying (a) that the conditions set forth in Sections 3.1.2,
3.1.3, 3.1.6 and 3.1.7 of this Agreement have been satisfied on
and as of such date and (b) as to such other matters as the
Placement Agent may reasonably request and (ii) a certificate,
dated the Closing Date and signed by the Vice President-Finance
of the Company, in the form attached hereto as Exhibit G,
<PAGE>
13
certifying as to the Solvency, prior to and immediately after
giving effect to the transactions contemplated by this
Agreement, the Merger Agreement and the other Documents, of
Curtice-Burns and each Guarantor, taken individually.
Section 3.1.6. Completion of Other Transactions.
(a) Each of the Bank and the Company shall have entered into
the Bank Credit Agreement providing for senior bank financing
(the 'Financing') substantially as described in the Offering
Memorandum in all material respects. Each of the Bank
Financing Documents shall have been duly authorized, executed
and delivered by the parties thereto (other than Curtice-Burns
and the Subsidiary Guarantors), shall not have been terminated
and shall be in full force and effect. No event shall have
occurred and be continuing, and no event shall have failed to
occur (other than the Merger and the execution of the Bank
Financing Documents by Curtice-Burns and the Subsidiary
Guarantors), the occurrence or continuance or failure to occur
of which would relieve the Bank of its obligation to advance
funds, or preclude it from advancing funds, to the Company
pursuant to the terms of the Bank Credit Agreement, and,
substantially concurrently with the Closing hereunder, the Bank
shall have advanced funds in amounts equal to approximately
$80,000,000 under the term loan portion of the Bank Credit
Agreement, $97,500,000 under the term loan facility portion of
the Bank Credit Agreement and such additional amounts as are
necessary under the seasonal facility portion of the Bank
Credit Agreement for the purpose of funding the Merger and
related transactions, including the refinancing of existing
indebtedness.
(b) Each of the Merger Documents shall have been
duly authorized, executed and (other than the Certificate of
Merger) delivered by the parties thereto, shall not have been
terminated, and shall be in full force and effect. None of the
parties to the Merger Documents shall be in material breach of
any of their respective material obligations thereunder. The
conditions precedent to the transactions contemplated by the
Merger Agreement (other than the receipt of funds) shall have
been duly satisfied or waived; provided, however, that no party
to the Merger Agreement shall have waived any such conditions
which waiver, singly or in the aggregate, is likely to have a
Material Adverse Effect. Substantially simultaneously with the
sale of the Notes hereunder to the Purchasers, the closing
contemplated by the Merger Agreement shall have been
consummated in accordance with the terms of the Merger
Agreement.
<PAGE>
14
(c) Each of the Note Documents shall have been duly
authorized, executed and delivered by the respective parties
thereto (other than any Note Documents to be executed by
Curtice-Burns or any Subsidiary Guarantor), shall not have been
terminated and shall be in full force and effect. The
Placement Agent shall have received on behalf of such Purchaser
a conformed copy of the Indenture and an original copy of this
Agreement and the Registration Rights Agreement. Pro-Fac shall
have duly authorized the issuance and sale of its Guarantee of
the Notes pursuant to this Agreement and the Indenture.
(d) The Notes to be issued and sold to the
Purchasers hereunder shall have been executed by the Company
and delivered to the Trustee pursuant to the Indenture and the
Trustee shall have authenticated such Notes in accordance with
the Indenture.
Section 3.1.7. Consents; Permits. Substantially
simultaneously with the Closing hereunder, all consents,
permits, agreements, approvals and other authorizations that
may be required from, and all such filings and declarations
that may be required with, any Person pursuant to any law,
statute, regulation, or rule (federal, provincial, state, local
and foreign) or pursuant to any order, decree or other
agreements to which any of the Company, Pro-Fac or Curtice-
Burns is a party or by which any of them are bound, in
connection with this Agreement, the Merger Agreement, each of
the other Documents and the transactions contemplated hereby
and thereby shall have been obtained or made, as the case may
be, except such consents, permits, agreements, approvals and
other authorizations which, if not obtained or made, are not
likely to have a Material Adverse Effect. All applicable
waiting periods (including under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976) shall have expired without
any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse
conditions on the Merger or any such transactions described in
the preceding sentence.
Section 3.1.8. Purchase Permitted by Applicable
Laws; Legal Investment. The purchase of and payment for the
Notes to be purchased by such Purchaser hereunder and the
consummation of the transactions contemplated by the Merger
Agreement and the Bank Credit Agreement (a) shall not be
prohibited by any applicable law, court order or injunction
(temporary or permanent), or governmental regulation, release,
interpretation or opinion (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System)
<PAGE>
15
whether domestic or foreign and (b) shall not, in such Purchaser's
reasonable judgment, subject such Purchaser to any penalty, tax,
liability or other material adverse effect (other than income
taxes payable on the interest paid on the Notes).
Section 3.1.9. Solvency Letter. The Placement Agent
shall have received a letter, dated the Closing Date, from
American Appraisal Associates with respect to the solvency of
the Pro-Fac Companies, substantially in the form of Exhibit H
hereto.
Section 3.1.10. Full Subscription. Each Purchaser
shall have accepted delivery of and made payment for Notes to
be purchased by it hereunder at the Closing Date pursuant to
this Agreement such that together with funds from the other
financing sources described in the Offering Memorandum, the
Company and Pro-Fac will have sufficient funds to consummate
the Merger and the other transactions contemplated by the
Merger Agreement.
Section 3.2. Conditions to Obligations of the
Company. The obligation of the Company to issue and sell the
Notes pursuant to this Agreement shall be subject to the
satisfaction or waiver of each of the following conditions on
or before the Closing Date:
Section 3.2.1. Sale of Notes. Each Purchaser shall
have delivered payment to the Company in respect of its
purchase of the Notes pursuant to this Agreement.
Section 3.2.2. Purchasers' Representations and
Warranties True. The representations and warranties of each of
the Purchasers contained in Section 4.2 of this Agreement shall
have been true and correct in all material respects when made
and shall be true and correct in all material respects on and
as of the Closing Date, after giving effect to the transactions
contemplated by the Note Documents, as if made on and as of
such time.
Section 3.2.3. Offering by the Placement Agent. The
Company and Pro-Fac shall have received a letter, dated the
Closing Date and addressed to them from the Placement Agent in
form and substance satisfactory to them, substantially in the
form of Exhibit I hereto. The Company and Pro-Fac shall have
also received such assurances as they may reasonably request
from the Placement Agent that the Notes have been offered and
<PAGE>
16
sold in accordance with all applicable state securities laws or
'blue sky' laws.
Section 3.2.4. Sale of Notes Not Enjoined. The sale
of the Notes by the Company hereunder and the consummation of
the transactions contemplated by the Documents shall not have
been enjoined (temporarily or permanently) at the time of the
Closing or be prohibited by any applicable law or governmental
regulation, release, interpretation or opinion (including
Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System) whether domestic or foreign.
Section 3.2.5. Financing; Acquisition. (a) Each of
the Bank and the Company shall have entered into the Bank
Credit Agreement providing for the Financing, which Bank Credit
Agreement shall be substantially as described in the Offering
Memorandum in all material respects. The Bank Financing
Documents shall have been duly authorized, executed and
delivered by the parties thereto (other than Curtice-Burns and
the Subsidiary Guarantors), shall not have been terminated and
shall be in full force and effect. No event shall have
occurred and be continuing, or shall have failed to occur
(other than the Merger and the execution of the Bank Financing
Documents by Curtice-Burns and the Subsidiary Guarantors), the
occurrence or continuance or failure to occur of, which would
relieve the Bank of its obligation to advance funds, or
preclude it from advancing funds, to the Company pursuant to
the terms of the Bank Credit Agreement, and, substantially
concurrently with the Closing hereunder, the Bank shall have
advanced funds in amounts equal to approximately $80,000,000
under a term loan portion of the Bank Credit Agreement,
$97,500,000 under the term loan facility portion of the Bank
Credit Agreement and such additional amounts as are necessary
under the seasonal facility portion of the Bank Credit
Agreement for the purpose of funding the Merger and related
transactions.
(b) Substantially simultaneously with the sale of
the Notes hereunder to the Purchasers, the closing contemplated
by each of the Merger Agreement and the Bank Credit Agreement
shall have been consummated in accordance with its terms in all
material respects. Substantially simultaneously with the
Closing hereunder, all consents, permits, agreements, approvals
and other authorizations that may be required from, and all
such filings and declarations that may be required with, any
Person pursuant to any law, statute, regulation, or rule
(federal, provincial, state, local and foreign) or pursuant to
any order, decree or other agreements to which any of the
Company, Pro-Fac
<PAGE>
17
or Curtice-Burns is a party or by which any of
them are bound, in connection with this Agreement, the Merger
Agreement, each of the other Documents and the transactions
contemplated hereby and thereby shall have been obtained or
made, as the case may be, except such consents, permits,
agreements, approvals and other authorizations which, if not
obtained or made, are not likely to have a Material Adverse
Effect. All applicable waiting periods (including under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976) shall
have expired without any action being taken or threatened by
any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Merger or any such
transactions described in the preceding sentence.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties by the
Company and Pro-Fac. Each of the Company and Pro-Fac jointly
and severally hereby represents and warrants to each of the
Purchasers as follows:
Section 4.1.1. Organization, Standing and
Qualification; Requisite Corporate Power. The Company is a
newly formed entity with no operating history other than as
described in the Offering Memorandum and has not entered into
any transactions other than in connection with the Merger and
the Financing. Each of the Company, Curtice-Burns and each
Guarantor is (i) a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation; (ii) has all requisite corporate power and
authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be
conducted; and (iii) is duly qualified or licensed and, if
applicable, in good standing as a foreign corporation, and is
authorized to do business, in each jurisdiction in which the
ownership or leasing of any property or the character of its
operations makes such qualification, license or authorization
necessary, except for such jurisdictions where the failure to
be so qualified, licensed or authorized is not likely to have a
Material Adverse Effect. Each of the Company, Curtice-Burns
and each Guarantor has all requisite corporate power and
authority (i) to execute, deliver and perform its obligations
under each of the Documents to which it is a party, (ii) with
respect to the Company and Curtice-Burns, to issue or assume
the Notes, as the case may be, in the manner and for the
purpose contemplated by this Agreement, and (iii) with respect
to the Guarantors, to execute
<PAGE>
18
and deliver its Guarantee of the
Notes and to incur and perform its obligations thereunder.
Section 4.1.2. Subsidiaries. (a) The Company has
no Subsidiaries and all of the outstanding shares of Capital
Stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable (except to the
extent provided in Section 630 of the New York Business
Corporation Law).
(b) Curtice-Burns has only the Subsidiaries listed
on Schedule 4.1.2 and all of the outstanding shares of Capital
Stock of Curtice-Burns and each of its Subsidiaries have been
duly authorized and validly issued and are fully paid and
non-assessable (except to the extent provided in Section 630 of
the New York Business Corporation Law).
(c) Prior to the Closing, (i) Pro-Fac has no
Subsidiaries other than the Company and Pro-Fac Holding Company
of Iowa, Inc. and (ii) all of the outstanding shares of Capital
Stock of Pro-Fac have been duly authorized and validly issued
and are fully paid and nonassessable (except to the extent
provided in Section 47 of the New York Cooperative Corporations
Law).
(d) Set forth in Schedule 4.1.2 is a true and
complete schedule setting forth (i) the name and jurisdiction
of incorporation of each Subsidiary of Pro-Fac and (ii) the
number of shares of Capital Stock and other equity securities
and the percentage of the issued and outstanding Capital Stock
and other equity securities of Curtice-Burns and the Subsidiary
Guarantors held by Pro-Fac, both directly and indirectly, each
as will exist immediately after the Closing, after giving
effect to the transactions contemplated by this Agreement, the
Merger Agreement and the other Documents. All of the
outstanding shares of Capital Stock of each of Curtice-Burns
and its Subsidiaries will have been duly authorized and validly
issued, will be fully paid and nonassessable (except to the
extent provided in Section 630 of the New York Business
Corporation Law) and such shares of Capital Stock of Pro-Fac's
Subsidiaries will be owned beneficially by Pro-Fac and, with
the exception of the Capital Stock of Curtice-Burns, of record
by Curtice-Burns, and such shares of Capital Stock of Curtice-
Burns will be owned of record by Pro-Fac, each free and clear
of any Lien, except Permitted Liens. None of the Subsidiaries
of Curtice-Burns has any material indebtedness not reflected in
the financial statements included in the Offering Memorandum.
After giving effect
<PAGE>
19
to the transactions contemplated by this
Agreement, the Merger Agreement and the other Documents, as of
and for the twelve months ended June 25, 1994, excluding the
Subsidiary Guarantors, the Subsidiaries of Curtice-Burns
represented less than 5% of the consolidated assets and less
than 5% of the consolidated income of Curtice-Burns.
Section 4.1.3. Capitalization. After giving effect
to the transactions contemplated by the Merger Agreement in
respect to stock of Curtice-Burns, there are: (i) no
outstanding subscriptions, warrants, options, calls or
commitments of any character relating to or entitling any
Person to purchase or otherwise acquire any stock of Curtice-
Burns or any of its Subsidiaries; (ii) no obligations or
securities convertible into or exchangeable for shares of any
Capital Stock of Curtice-Burns or any of its Subsidiaries, or
any commitments of any character relating to or entitling any
Person to purchase or otherwise acquire any such obligations or
securities; and (iii) no preemptive or similar rights to
subscribe for or to purchase any Capital Stock of Curtice-Burns
or any of its Subsidiaries. After giving effect to the
transactions contemplated by the Merger Agreement in respect of
existing agreements relating to stock of Curtice-Burns, except
as set forth herein and in the Registration Rights Agreement
and the Indenture, none of Curtice-Burns or any of its
Subsidiaries has entered into any agreement to register its
equity or debt securities under the Securities Act and, except
as set forth in the Offering Memorandum, there are no
understandings or agreements with respect to the voting of any
of the Capital Stock of Curtice-Burns or its Subsidiaries.
Section 4.1.4. No Violation. (a) None of the Pro-
Fac Companies is in (i) violation of its respective Charter
Documents or (ii) default or breach (with or without notice or
lapse of time or both), in the performance or observance of any
material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement,
deed of trust, note, lease or other agreement or instrument to
which it is a party or by which it may be bound or to which any
of its properties may be subject (any such default or breach
being hereafter referred to as a 'Contract Default'), except
for (x) such Contract Defaults which are not likely to have a
Material Adverse Effect and (y) such Contract Defaults as would
occur but for the repayment of the Indebtedness evidenced by
the agreement under which such Contract Default would occur out
of the proceeds of the financing for the Merger and related
transactions.
<PAGE>
20
(b) The execution and delivery by any of the the
Pro-Fac Companies of this Agreement or any of the other
Documents to which it is a party, the performance by each such
Person of its obligations hereunder and thereunder, the
consummation of the transactions contemplated hereby and
thereby, including, without limitation, the Guarantee of the
Notes by Pro-Fac and the Subsidiary Guarantors or the issuance,
sale and delivery of the Notes, do not and will not (i) violate
any provision of the Charter Documents of any such Person, or
(ii) violate or conflict with any statute, law, rule or
regulation or any judgment, decree or order of any court or
governmental authority, domestic or foreign, to which any such
Person or any of their respective properties may be subject,
(iii) constitute a Contract Default or (iv) result in or
require the imposition of, any Lien upon or with respect to any
of the properties now or hereafter owned by any such Person
(other than the Liens contemplated by the Bank Financing
Documents and Permitted Liens), except in the case of
clauses (ii), (iii) and (iv) above, for conflicts, Contract
Defaults or Liens, as the case may be, (x) that, individually
or in the aggregate, are not likely to have a Material Adverse
Effect or (y) which will have been cured (including by
repayment of the Indebtedness evidenced by the agreement under
which such Contract Default would occur out of the proceeds of
the financing for the Merger and related transactions) or
waived by consents obtained prior to the effectiveness of the
Merger.
Section 4.1.5. Due Execution, etc. This Agreement,
the Merger Agreement, the Guarantee of the Notes by Pro-Fac,
and each other Document has been duly authorized by all
necessary corporate action by each of the Pro-Fac Companies (to
the extent each is a party hereto and thereto), and assuming
due authorization and execution by the other parties hereto or
thereto, each Document constitutes the legal, valid and binding
obligation of each such Pro-Fac Company (to the extent each is
a party hereto and thereto) enforceable against each of them
(to the extent each is a party hereto and thereto) in
accordance with the respective terms hereof and thereof, except
(i) as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in
effect relating to or generally affecting creditors' rights and
general principles of equity, (ii) that the remedies of
specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought and (iii) as rights to indemnity and
contribution thereunder may be limited by applicable laws.
<PAGE>
21
Section 4.1.6. Governmental Consents. Based upon
and assuming the accuracy of the representations and warranties
of the Purchasers set forth herein and the representations of
the Placement Agent to be set forth in the letter delivered
pursuant to Section 3.2.3 hereof, no consent, order, approval
or authorization of, or filing, registration or qualification
with, any court, governmental, administrative or judicial
authority or regulatory body (domestic or foreign) (other than
any filings, consents, approvals, registrations or
qualifications (i) that have been previously obtained,
(ii) that are required under state securities or 'blue sky'
laws or, in the case of the Exchange Notes, the Securities Act
and the Trust Indenture Act of 1939 and (iii) the failure of
which to obtain is not likely to have a Material Adverse
Effect, a material adverse effect on the ability of any of the
Pro-Fac Companies to perform any of its material obligations
under any of the Documents to which it is a party or a material
adverse effect on the legality, validity or enforceability of
any of the Documents, and except, in the case of the Merger,
any filings required to comply with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and the regulations
thereunder and the filing of a certificate of merger with the
Secretary of State of the State of New York) is required on the
part of any Pro-Fac Company as a condition to the valid
(a) authorization, issuance, sale and delivery of the Notes,
(b) execution, delivery and performance of this Agreement, the
Merger Agreement or any of the other Documents by the Pro-Fac
Companies (to the extent each is a party thereto) or (c) the
consummation of the transactions contemplated hereby and
thereby.
Section 4.1.7. No Material Adverse Change. Other
than as described in the Offering Memorandum, since June 25,
1994 up to and including the Closing Date, there has not been
any material adverse change in the business, condition
(financial or otherwise), results of operations or properties
of any of the Pro-Fac Companies, taken as a whole.
Section 4.1.8. Full Disclosure. As of the date
thereof, the Offering Memorandum does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances
under which they were made, not misleading. There is no fact
known to Pro-Fac or the Company that Pro-Fac and the Company
have not disclosed to you in the Offering Memorandum or herein
that has, or that is likely to have, a Material Adverse Effect
or will materially adversely affect the ability of Pro-Fac and
<PAGE>
22
the Company to perform their obligations under this Agreement,
the Merger Agreement and the Bank Credit Agreement.
Section 4.1.9. Financial Statements. (a) The
Offering Memorandum includes (i) audited consolidated balance
sheets of Curtice-Burns as of the last day of its fiscal years
for 1993 and 1994 and related audited consolidated statements
of operations and retained earnings and cash flows for its
fiscal years 1992, 1993 and 1994 (collectively, the
'Curtice-Burns' Financial Statements'), audited by
Curtice-Burns' independent certified public accountants, whose
reports thereon are included therewith, and (ii) audited
balance sheets of Pro-Fac as of the last day of its fiscal
years for 1993 and 1994 and related audited statements of net
proceeds, cash flows and changes in shareholders' and members'
capitalization for its fiscal years 1992, 1993 and 1994
(collectively, the 'Pro-Fac Financial Statements' and, together
with the Curtice-Burns' Financial Statements, the 'Financial
Statements'), audited by Pro-Fac's independent certified public
accountants whose reports thereon are included therewith.
Except as otherwise stated in the notes thereto, the Financial
Statements have been prepared in accordance with GAAP applied
on a consistent basis and as of the dates and for the periods
indicated, the Curtice-Burns' Financial Statements present
fairly, in all material respects, the consolidated financial
position and results of operations and cash flows of
Curtice-Burns and the Pro-Fac Financial Statements present
fairly, in all material respects, the financial position and
results of operations and cash flows of Pro-Fac. Except as
reflected in the Financial Statements and the notes thereto,
neither Curtice-Burns nor Pro-Fac has any liabilities, absolute
or contingent, material to its business, condition (financial
or otherwise), results of operations or properties, other than
liabilities incurred since the last date of the Financial
Statements in connection with the ordinary conduct of its
business. The selected financial data (other than the pro
forma financial data) relating to Pro-Fac and Curtice-Burns,
respectively, included in the Offering Memorandum have been
compiled on a basis consistent with that of, or calculated
using the information in, the audited financial statements of
Pro-Fac and the audited consolidated financial statements of
Curtice-Burns as of the relevant dates and for the relevant
periods, as the case may be, and present fairly, in all
material respects, the information shown therein.
(b) The pro-forma financial statements and the
related notes thereto included in the Offering Memorandum have,
<PAGE>
23
except as specifically stated therein, been prepared in all
material respects in accordance with the applicable
requirements of GAAP and Rule 11-02 of Regulation S-X
promulgated under the Securities Act, include all adjustments
necessary to present fairly, in all material respects, the
pro-forma financial condition and results of operations at the
respective dates and for the respective periods indicated and
are based upon good faith estimates and assumptions believed by
the Company and Pro-Fac to be reasonable.
Section 4.1.10. Outstanding Indebtedness. Prior to
the Closing, the Company has and will have no material
outstanding indebtedness other than accrued fees and other
transaction costs incurred in connection with the Merger.
Section 4.1.11. Use of Proceeds. The net proceeds
from the sale of the Notes will be used solely for the purposes
set forth in the Offering Memorandum. None of the transactions
contemplated by this Agreement (including the use of the
proceeds from the sale of the Notes) will violate or result in
a violation of Section 7 of the Exchange Act or any regulation
issued pursuant thereto, including Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System.
Section 4.1.12. Pending Litigation. (a) Except as
described in the Offering Memorandum, there is no action, suit,
proceeding or investigation pending or, to the knowledge of
Pro-Fac and the Company, threatened against or, to the
knowledge of Pro-Fac and the Company, affecting any of the Pro-
Fac Companies or any of their respective properties or assets,
before any court or before any governmental, administrative or
regulatory authority or agency or arbitration board or tribunal
or similar body, which are, individually or in the aggregate,
likely to have a Material Adverse Effect.
(b) Except as described in the Offering Memorandum,
none of the Pro-Fac Companies is, on the date hereof, and after
giving effect to the transactions contemplated hereby, by the
Merger Agreement and by the other Documents, none of the Pro-
Fac Companies will be, subject to or in any way affected by,
any judgment, order, decree, rule or regulation of any court,
governmental authority or arbitration board or tribunal which
is likely to have a Material Adverse Effect.
Section 4.1.13. Title to and Condition of
Properties. Each of the Pro-Fac Companies (a) has good and
marketable title to all the properties and other assets (real or
<PAGE>
24
personal, tangible, intangible or mixed) owned by it, or
purported to be owned by it, free and clear of all Liens,
except for Permitted Liens, and (b) enjoys peaceful and
undisturbed possession under all leases to which it is a party
as lessee or sublessee, except for such leases that, in the
aggregate, are not material to the business, condition
(financial or otherwise), results of operations or properties
of the Pro-Fac Companies.
Section 4.1.14. Environmental Protection. Except as
described in the Offering Memorandum, there is no claim pending
or, to the knowledge of Pro-Fac or the Company, threatened or
contemplated under any Environmental Law against any Pro-Fac
Company which is likely to have a Material Adverse Effect; and
there are no past or present actions or conditions including,
without limitation, the release of any Hazardous Material that
are likely to form the basis of any such claim against any Pro-
Fac Company which are likely to have a Material Adverse Effect.
Section 4.1.15. Taxes. Each Pro-Fac Company has
filed all material Tax returns that are required to be filed by
it (which returns properly reflect, and do not understate, the
taxable income or the liability for Taxes of such Pro-Fac
Company) and have paid all Taxes due or claimed to be due,
except for such Taxes being diligently contested in good faith
and by appropriate proceedings and for which appropriate
reserves have been established on the balance sheet of Pro-Fac
or the consolidated balance sheet of Curtice-Burns included in
the Offering Memorandum in accordance with GAAP. No claims or
investigations for additional Taxes, interest or penalties are
now being asserted or, to the knowledge of Pro-Fac or the
Company, threatened against any Pro-Fac Company by any taxing
authority except for such claims for which appropriate reserves
have been established on the balance sheet of Pro-Fac or the
consolidated balance sheet of Curtice-Burns included in the
Offering Memorandum. None of the Pro-Fac Companies have, nor
will any of them have, any material liabilities for Taxes,
including interest and penalties thereon and related expenses,
except for ordinary and normal Taxes which are not yet due and
payable and such liabilities for which appropriate reserves on
the balance sheet of Pro-Fac or the consolidated balance sheet
of Curtice-Burns included in the Offering Memorandum have been
established.
Section 4.1.16. Compliance with Laws. None of the
Pro-Fac Companies is, or after giving effect to the
transactions contemplated by the Documents will be, in violation of
<PAGE>
25
any statute, law, ordinance, governmental rule or
regulation, or any judgment, order or decree (federal, state,
provincial, local or foreign) to which any of them is, or will
be, subject which is likely to have a Material Adverse Effect.
None of the Pro-Fac Companies has failed to obtain any
franchises, certificates, licenses, permits or other
governmental rights or authorizations, necessary to the
ownership or operation of their respective properties or the
conduct of their respective businesses (including matters
relating to environmental laws or regulations), after giving
effect to the transactions contemplated by the Documents,
except for such failures which are not likely to have a
Material Adverse Effect. All such franchises, certificates,
licenses, permits, rights and authorizations are in full force
and effect, and none of the Pro-Fac Companies is in violation
of any provision thereof in any material respect, except for
such violations are not likely to have a Material Adverse
Effect.
Section 4.1.17. Labor Relations. (a) No labor
strike, dispute, slowdown, stoppage, grievance, controversy or
other similar problem currently exists or is imminent with
respect to the employees of any of the Pro-Fac Companies that
is likely to have a Material Adverse Effect.
(b) None of the Pro-Fac Companies is engaged in any
unfair labor practice that is likely to have, singly or in the
aggregate, a Material Adverse Effect. There is (a) no unfair
labor practice complaint pending or, to the knowledge of the
management of Pro-Fac or the Company, threatened against any of
the Pro-Fac Companies before the National Labor Relations Board
and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements so pending or
threatened, and (b) to the knowledge of the management of Pro-
Fac or the Company, no union organizing activity taking place,
that in each case, is likely to have, singly or in the
aggregate, a Material Adverse Effect.
Section 4.1.18. Private Offering. (a) Based upon
and assuming the accuracy of the representations and
warranties, of the Purchasers set forth herein and the
representations of the Placement Agent to be set forth in the
letter delivered pursuant to Section 3.2.3 hereof, (i) the
issuance and sale of the Notes hereunder (and the offering of
such Notes pursuant to the Offering Memorandum) is exempt from
the registration and prospectus delivery requirements under the
Securities Act and (ii) it is not necessary to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
<PAGE>
26
(b) None of the Pro-Fac Companies, nor, to the
knowledge of the Company and Pro-Fac, any Person authorized to
act on behalf of any of the Pro-Fac Companies (other than the
Placement Agent, as to whom no such representation or warranty
is made) has taken or will take any action which would require
registration of the offering and sale of the Notes pursuant to
this Agreement under the Securities Act or would violate
applicable state or 'blue sky' laws or any rules, regulations
or policies adopted thereunder. In the case of each offer or
sale of the Notes no form of general solicitation or general
advertising was used by any of the Pro-Fac Companies or any of
their respective officers, directors or employees including,
but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees had been invited by any general
solicitation or general advertising. No securities of the same
class as the Notes have been issued and sold by the Company or
Pro-Fac within the six-month period immediately prior to the
date hereof. Each of the Company and Pro-Fac agrees that it
will not, and will not authorize anyone to, offer any similar
securities for issuance or sale to, or solicit any offer to
acquire any of the same from, or otherwise approach or
negotiate with respect thereto with any Person if the sale of
the Notes and any such securities would be integrated as a
single offering for the purposes of the Securities Act,
including Regulation D promulgated thereunder, except as may
otherwise be required pursuant to this Agreement, the
Registration Rights Agreement or the Indenture.
Section 4.1.19. Bank Credit Agreement and Merger
Agreement Representations and Warranties. (a) A true and
correct copy of the executed Merger Agreement, Bank Credit
Agreement and each of the other Documents have been delivered
to the Placement Agent and Cahill Gordon & Reindel, special
counsel to the Purchasers, at the Closing, each as amended
through the Closing Date. Each of the Merger Agreement, Bank
Credit Agreement and each of the other Documents described in
the Offering Memorandum conforms in all material respects to
the description thereof in the Offering Memorandum.
(b) The representations and warranties of each of
the parties to the Merger Agreement made therein are true and
correct in all material respects, except to the extent that any
such representation or warranty was expressly made as of a
specific date, in which case such representation or warranty
was true and correct in all material respects at such date.
<PAGE>
27
(c) The representations and warranties of each of
the Pro-Fac Companies set forth in the Bank Financing Documents
are true and correct in all material respects, except to the
extent that any such representation or warranty was expressly
made as of a specific date, in which case such representation
and warranty was true and correct in all material respects at
such date.
Section 4.1.20. Intellectual Property. Each Pro-Fac
Company owns, or has the right to use pursuant to valid and
effective agreements, (i) all patents, trademarks, trade names
and registered copyrights owned by the Pro-Fac Companies which
are material to their businesses taken as a whole
(collectively, the 'Proprietary Intellectual Property') and
(ii) all patents, trademarks, tradenames, copyrights,
technology and processes used by the Pro-Fac Companies in their
respective businesses which are material to their businesses
taken as a whole and are used pursuant to a license or other
right granted by a third party (collectively, the 'Licensed
Intellectual Property,' and together with the Proprietary
Intellectual Property, the 'Intellectual Property'). The
consummation of the Merger and the other transactions
contemplated hereby will not alter or impair any of the Pro-Fac
Companies' rights to use or interest in any of the Intellectual
Property, except where such alterations or impairments are not
likely to have a Material Adverse Effect. No claims are
pending or, to the knowledge of the Company or Pro-Fac,
threatened against the Pro-Fac Companies by any person with
respect to the use of any of the Intellectual Property or
challenging or questioning the validity or effectiveness of any
license or agreement relating to the same which are likely to
have a Material Adverse Effect. To the knowledge of the
Company or Pro-Fac, the current use by the Pro-Fac Companies of
the Intellectual Property does not infringe on the rights of
any person, except for such infringements which in the
aggregate are not likely to have a Material Adverse Effect. To
the knowledge of the Company or Pro-Fac, there are no pending
material claims or charges brought by any Pro-Fac Company
against any person with respect to the use of any of the
Intellectual Property or the enforcement of any of rights of
the Pro-Fac Companies relating to the Intellectual Property.
Section 4.1.21. Brokers. Other than as disclosed in
the Offering Memorandum, (a) none of the Pro-Fac Companies has
employed any broker, finder, commission agent or other Person
in connection with the offer and sale of the Notes and the
transactions contemplated by the Note Documents, and (b) none
<PAGE>
28
of the Pro-Fac Companies is under any obligation to pay any
broker's fee or commission in connection with such
transactions, other than certain fees payable to the Placement
Agent by the Company and Pro-Fac for investment banking
services rendered in connection with such transactions,
including the offer and sale of the Notes, which fees are the
sole obligation of the Company and Pro-Fac.
Section 4.1.22. Investment Company Act. None of the
Pro-Fac Companies is subject to regulation under the Investment
Company Act of 1940, as amended.
Section 4.1.23. Solvency. Each of the Pro-Fac
Companies, individually, is, and the Pro-Fac Companies taken as
a whole are, in each case both before and after giving effect
to the issuance of the Notes and the execution, delivery and
performance of this Agreement, the Merger Agreement and the
other Documents, Solvent.
Section 4.1.24. Insurance. Each of the Pro-Fac
Companies has insurance in such amounts and covering such risks
and liabilities as are in accordance with normal industry
practice.
Section 4.2. Purchaser Representations and
Warranties. Each Purchaser severally represents and warrants
to the Company and Pro-Fac as follows:
(a) Such Purchaser understands that the Notes are
being offered in a transaction not involving any public
offering in the United States within the meaning of the
Securities Act, that the Notes have not been registered
under the Securities Act and that (i) the Notes may be
offered, resold, pledged or otherwise transferred only
(A) to a Person who the seller reasonably believes is a
Qualified Institutional Buyer in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the
requirements of Rule 144, outside the United States to a
foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act or in accordance with
another exemption from the registration requirements of
the Securities Act (and based upon an opinion of counsel,
reasonably acceptable to the Company, if the Company so
requests), (B) to the Company or (C) pursuant to an
effective registration statement, and, in each case, in
accordance with any applicable securities laws of any
State of the United States or any other applicable jurisdiction and
<PAGE>
29
(ii) the Purchaser will, and each subsequent holder is
required to, notify any subsequent purchaser from it of
the resale restrictions set forth in (i) above.
(b) Such Purchaser understands that the certificates
evidencing the Notes will, unless otherwise agreed by the
Company and the holder thereof, bear a legend
substantially to the following effect:
THE SECURITY (OR ITS PREDECESSOR)
EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE 'SECURITIES ACT'),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO
THE COMPANY, IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY
<PAGE>
30
ANY PURCHASER FROM IT TO THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
(c) Such Purchaser is an Institutional Accredited
Investor (as defined in the Offering Memorandum) or an
entity in which all of the equity owners are Institutional
Accredited Investors (each within the meaning of
Regulation D under the Securities Act).
(d) (i) Any purchase of the Notes by such Purchaser
will be for its own account of for the account of one or
more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of
which is an 'accredited investor' within the meaning of
Rule 501(a)(7) under the Securities Act and for each of
which it exercises sole investment discretion or (ii) such
purchaser is a 'bank,' within the meaning of Section 3
(a)(2) of the Securities Act, or a 'savings and loan
association' or other institution described in Section 3
(a)(5)(A) of the Securities Act that is acquiring the
Notes as fiduciary for the account of one or more
institutions for which it exercises sole investment
discretion.
(e) Such Purchaser is acquiring Notes having a
minimum purchase price of not less than $100,000 for its
own account or for any separate account for which it is
acting.
(f) Such Purchaser has such knowledge and experience
in financial and business matters that it is capable of
evaluating the merits and risks of purchasing Notes.
(g) Such Purchaser is not acquiring the Notes with a
view to any distribution thereof that would violate the
Securities Act or the securities laws of any State of the
United States or any other applicable jurisdiction or with
any present intention of offering or selling any of the
Notes in a transaction that would violate the Securities
Act or the securities laws of any State of the United
States or any other applicable jurisdiction; provided that
the disposition of its property and the property of any
accounts for which it is acting as fiduciary shall remain
at all times within its control.
(h) Such Purchaser has received a copy of the
Offering Memorandum and acknowledges that it has had
access to
<PAGE>
31
such financial and other information, and has
been afforded the opportunity to ask such questions of
representatives of Pro-Fac, the Company and Curtice-Burns
and receive answers thereto, as it deems necessary in
connection with its decision to purchase the Notes.
(i) Such Purchaser is not acquiring the Notes for or
on behalf of (within the meaning of ERISA), and will not
transfer the Notes to, any pension or welfare plan (as
defined in Section 3 of ERISA), except that such a
purchase for or on behalf of a pension or welfare plan
shall be permitted:
(i) to the extent such purchase is made by or
on behalf of a bank collective investment fund
maintained by the purchaser in which, at any time
while the Notes are held by the purchaser, no plan
(together with any other plans maintained by the same
employer or employee organization) has an interest in
excess of 10% of the total assets in such collective
investment fund and the conditions of Section III of
Prohibited Transaction Class Exemption 91-38 issued
by the Department of Labor are satisfied;
(ii) to the extent such purchase is made by or
on behalf of an insurance company pooled separate
account maintained by the purchaser in which, at any
time while the Notes are held by the purchaser, no
plan (together with any other plans maintained by the
same employer or employee organization) has an
interest in excess of 10% of the total of all assets
in such pooled separate account and the conditions of
Section III of Prohibited Transaction Class Exemption
90-1 issued by the Department of Labor are satisfied;
(iii) to the extent such purchase is made on
behalf of a plan by (A) an investment advisor
registered under the Investment Advisers Act of 1940
that had as of the last day of its most recent fiscal
year total assets under its management and control in
excess of $50.0 million and had stockholders' or
partners' equity in excess of $750,000, as shown in
its most recent balance sheet prepared in accordance
with generally accepted accounting principles, (B) a
bank as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 with equity capital
in excess of $1.0 million as of the last day of its most
<PAGE>
32
recent fiscal year, (C) an insurance company
which is qualified under the laws of more than one
state to manage, acquire or dispose of any assets of
a plan, which insurance company has as of the last
day of its most recent fiscal year, net worth in
excess of $1.0 million and which is subject to
supervision and examination by state authority having
supervision over insurance companies or (D) a savings
and loan association, the accounts of which are
insured by the Federal Savings and Loan Insurance
Corporation, that has made application for and been
granted trust powers to manage, acquire or dispose of
assets of a plan by a State or Federal authority
having supervision over savings and loan
associations, which savings and loan association has,
as of the last day of its most recent fiscal year,
equity capital or net worth in excess of $1.0 million
and, in any case, such investment adviser, bank,
insurance company or savings and loan is otherwise a
qualified professional asset manager, a such term is
used in Prohibited Transaction Class Exemption 84-14
issued by the Department of Labor, and the assets of
such plan when combined with the assets of other
plans established or maintained by the same employer
(or affiliate thereof) or employee organization and
managed by such investment adviser, bank, insurance
company or savings and loan, do not represent more
than 20% of the total client assets managed by such
investment advisor, bank, insurance company or
savings and loan, and the conditions of Section I of
such exemption are otherwise satisfied; or
(iv) to the extent such plan is a governmental
plan (as defined in Section 3 of ERISA) which is not
subject to the provisions of Title I of ERISA or
Section 4975 of the Code.
ARTICLE 5. COMPLIANCE WITH THE SECURITIES ACT
Section 5.1. Compliance with the Securities Act.
(a) None of the Notes may be sold, transferred or otherwise
disposed of (any such sale, transfer or other disposition, a
'sale'), except in compliance with this Section 5 and at all
times in compliance with the requirements of applicable state
and federal securities laws.
<PAGE>
33
(b) Each Purchaser acknowledges that the transfer
agent for the Notes will not register the transfer of such
Notes unless such transfer agent has received from the
prospective transferor (or a U.S. registered broker-dealer on
its behalf) a certificate in the form of Exhibit B to the
Indenture, in the case of transfers of the type described in
clause (A)(1)(c) of the legend set forth in Section 4.2(b) of
this Agreement, or in the case of transfers of the type
described in clause (A)(1)(d) of the legend set forth in
Section 4.2(b) of this Agreement, notification from the Company
to the effect that it has received the opinion of counsel
described in such legend.
Section 5.2. Certificates Evidencing the Notes.
(a) Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of
the Securities Act or applicable state securities or 'blue sky'
laws, the Notes (and all Notes or other securities issued in
exchange therefor or substitution thereof) shall bear the
legend set forth in Section 4.2(b) of this Agreement.
(b) In addition to any other legend required
pursuant to Section 5.2(a) above, a Global Note will bear the
following legend:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF
THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND SUCH CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
<PAGE>
34
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL,
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
(c) The certificates representing such Notes, and
each certificate issued in transfer thereof, shall also bear
any legend required under any applicable state securities or
'blue sky' laws.
(d) Each Purchaser consents to the Company making a
notation on its records or giving instructions to any transfer
agent of the Notes in order to implement the restrictions on
transfer mentioned in this Section 5.
Section 5.3. Information. (a) The Company hereby
agrees that it will provide the information as required
pursuant to Rule 144A(d)(4) under the Securities Act to each
Purchaser or any subsequent holder of Notes or, upon the
request of any Purchaser or the request of any such subsequent
holder, to any prospective purchaser designated by any such
Purchaser or such subsequent holder.
(b) Upon the request of the holder of a Note, the
Company will inform such holder if such Note (or any
predecessor Note) was held during the three year period
preceding such request by the Company, or, to the best
knowledge of the Company, a Person who was an affiliate of the
Company at the time of the sale of the Note by such person.
(c) The provisions of this Section 5.3 shall not
apply to any sale of a Note in a transaction that is registered
under the Securities Act pursuant to the terms of the
Registration Rights Agreement.
ARTICLE 6. SUBSTITUTION OF PURCHASERS
Section 6.1. Substitution of Purchasers. If (i) one
or more of the Purchasers does not purchase all or part of the
Notes (a 'Non-Purchaser') which such Non-Purchaser(s) has
agreed to purchase hereunder, and (ii) one or more other
Purchasers or one or more other Persons (a 'Substitute
Purchaser') is willing to assume the obligations of the
Non-Purchaser(s) under this Agreement, then the obligations of
the Non-Purchaser(s) to purchase Notes pursuant to this
Agreement may be assumed by the Substitute Purchaser(s), and
such Substitute
<PAGE>
35
Purchaser(s) shall be substituted for the Non-
Purchaser(s) under this Agreement, by such Substitute
Purchaser(s) executing and delivering a copy of this Agreement
and thereby becoming a party hereto. The inclusion of this
Section 6.1 in this Agreement, and the assumption by a
Substitute Purchaser of the obligations of a Non-Purchaser
pursuant to this Section 6.1, shall not constitute a waiver of
any rights that any Pro-Fac Company may have against such Non-
Purchaser if such Non-Purchaser has defaulted in its
obligations under this Agreement.
ARTICLE 7. MISCELLANEOUS
Section 7.1. Access to Information. (a) The
Company and Pro-Fac shall, from time to time, prior to the
Closing Date, provide to you upon request, or with respect to
Curtice-Burns or its Subsidiaries, use best efforts to provide
to you upon request, during normal business hours such other
information with respect to the offering of the Notes, the
operations, business, assets, properties or financial condition
of the Pro-Fac Companies as you may reasonably request.
(b) The Company and Pro-Fac shall provide to the
holder of a Note all of the information required to be
furnished by the Company and Pro-Fac pursuant to Section 4.7 of
the Indenture.
Section 7.2. Notices. Prior to the Closing, and
thereafter with respect to matters pertaining to this Agreement
only, all notices and other communications provided for or
permitted hereunder shall be made by hand delivery, first-class
mail (registered or certified, return receipt requested),
telecopier or commercial courier guaranteeing next day
delivery:
(a) if to the Purchasers at the address of each
Purchaser set forth on the counterpart signature pages
attached hereto, or at such other address as such
Purchaser may have furnished in writing to the Company,
with a copy to Cahill Gordon & Reindel, 80 Pine Street,
New York, New York 10005, Attention: John Schuster, Esq.
(telecopy number (212) 269-5420); and
(b) if to the Company or Pro-Fac, at 90 Linden
Place, P.O. Box 681, Rochester, New York 14603, Attention:
President (telecopy number (716) 383-1850) or at such
other address as the Company or Pro-Fac may have furnished
in writing to you, with copies to Howard, Darby & Levin,
<PAGE>
36
1330 Avenue of the Americas, New York, New York 10019,
Attention: Scott F. Smith, Esq. (telecopy number
(212) 841-1010); and Harris Beach & Wilcox, 130 East Main
Street, Rochester, New York 14604, Attention: Thomas M.
Hampson, Esq. (telecopy number (716) 232-6925).
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited
in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next business day after
timely delivery to the courier, if sent by commercial courier
guaranteeing next day delivery.
Section 7.3. Expenses. Whether or not the Notes are
sold hereunder, the Company and Pro-Fac agree, jointly and
severally, to pay all expenses relating to this Agreement and
the other Note Documents, including without limitation:
(a) the cost of printing and reproducing the Notes,
the other Note Documents, and any other documents
contemplated hereby or thereby;
(b) the cost, if any, of delivering to the home
office of each Purchaser or the office of the designee of
each Purchaser insured to the satisfaction of each
Purchaser, the Notes purchased by each such Purchaser at
the Closing;
(c) subject to Section 7.16, all reasonable out-of-
pocket expenses of the Purchasers relating to any
amendment, or modification of, or any waiver, or consent
or preservation of rights under, the Notes, the Note
Documents, or any other documents or instruments
regardless of whether such amendment, modification,
waiver, consent or preservation of rights becomes
effective;
(d) the reasonable fees and expenses of Cahill
Gordon & Reindel (some or all of which may be paid by the
Placement Agent pursuant to an agreement between the
Company, Pro-Fac and the Placement Agent);
(e) all taxes in connection with the issuance, sale
and delivery of the Notes to you and the execution and
delivery of the Note Documents and any other agreements
and instruments contemplated thereby and any modification
<PAGE>
37
of any of such Notes, Note Documents, or such other
agreements and instruments; and
(f) all other reasonable expenses, including
reasonable fees and expenses of counsel and accountants,
incurred by the Company and Pro-Fac in connection with the
transactions contemplated by the Note Documents.
The obligations of the Company and Pro-Fac under this
Section 7.3 shall survive termination of this Agreement and the
payment of all amounts due and payable under the Notes.
In addition, the Company and Pro-Fac, jointly and
severally, agree to pay any and all stamp, transfer and other
similar taxes payable as determined to be payable in connection
with the execution and delivery at the Closing Date of this
Agreement or the original issuance of the Notes, and to save
and hold each of the Purchasers harmless from and against any
and all liabilities with respect to or resulting from any delay
in paying, or omitting to pay, such taxes.
Section 7.4. Home Office Payment. Payment of
interest on all or any portion of the principal, premium, if
any, and interest of any Note which is not held by an initial
holder of the Notes shall be made by check to the holder
thereof.
The Company agrees, that, notwithstanding any
provision in the Indenture to the contrary, it shall initiate
deposit with the Paying Agent (as defined in the Indenture) by
10:00 a.m. (New York City time) on the date of payment as
provided in the Indenture any payments of principal, premium,
if any, and interest due on any certificated Notes. The Paying
Agent shall immediately after receipt of funds from the Company
initiate payment to each initial holder of the Notes by wire
transfer (or, upon the written request of the holder of any
certificated Note, by check) in immediately available funds on
the date of payment, to such account as may be specified by
separate written notice to the Company (or, if no such notice
is given, to the account specified by such holder on the
signature pages hereof), with a copy to the Trustee and the
Paying Agent, by such holder of a Note (providing sufficient
information with such wire transfer to identify the source and
application of the funds and requesting the bank to send a
credit advice thereof to such holder of a Note); provided, that
such notice shall be effective with respect to any interest
payment date under the Notes if, such notice shall be received
by the Trustee and the Paying Agent not later than five Business Days
<PAGE>
38
prior to such interest payment date. The Paying
Agent shall not be required to initiate a wire payment prior to
receipt of funds from the Company, and shall be entitled to
assume that the payment instructions for a holder of a Note
remain in effect until the Trustee and the Paying Agent receive
written notice of any change. The final payment of principal
on a Note may be made only upon presentment of such Note to the
Trustee.
Section 7.5. Termination. This Agreement may be
terminated (as to the party electing to so terminate it) at any
time prior to the Closing Date:
(a) by the Company or Pro-Fac if any of the
conditions specified in Section 3.2 hereof have not been
satisfied or waived by the Company and Pro-Fac pursuant to
the terms of this Agreement by 12:00 midnight, New York
City time, on November 4, 1994 or at such earlier date
that it becomes no longer reasonably possible that any
such condition can be satisfied; or
(b) by any Purchaser if any of the conditions
specified in Section 3.1 hereof have not been satisfied or
waived pursuant to the terms of this Agreement by 12:00
midnight, New York City time, on November 4, 1994 or at
such earlier date that it becomes no longer reasonably
possible that any such condition can be satisfied.
Section 7.6. Survival of Representations and
Warranties. All representations and warranties contained
herein will survive the execution and delivery of this
Agreement, regardless of (a) any investigation made by any
other party, (b) acceptance of any of the Notes any payment
therefor or (c) payment or prepayment of the Notes upon
redemption or otherwise.
Section 7.7. Assignments. This Agreement shall be
binding upon the Company, Pro-Fac and the Purchasers and each
of their respective successors and permitted assigns. The
rights of any Purchaser under this Agreement shall not be
assigned, and the duties of any Purchaser under this Agreement
shall not be delegated, without the written consent of the
Company (which consent shall not be unreasonably withheld)
except to a wholly-owned Subsidiary of such Purchaser;
provided, however, that such Purchaser shall remain obligated
to pay the Purchase Price in accordance with Section 2.2
hereof. Notwithstanding the foregoing, nothing contained in
this Section 7.7 shall prohibit transfers of Notes in
accordance with the terms
<PAGE>
39
of this Agreement, the Notes and the
Indenture, and the rights and interests of the Purchasers
hereunder may be assigned to and shall inure to the benefit of
any transferee of the Notes pursuant to Section 5 hereof until
the date which is the earlier of (i) the consummation of the
Registered Exchange Offer and (ii) the sale of the respective
Notes under a Registration Statement (as defined in the Regis-
tration Rights Agreement) with respect to the Notes.
Section 7.8. No Waiver; Modifications in Writing.
No failure or delay on the part of the Company, Pro-Fac or any
Purchaser in exercising any right, power or remedy hereunder
shall 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. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may
be available to the Company, Pro-Fac or any Purchaser at law or
in equity or otherwise. No waiver of or consent to any
departure by the Company or Pro-Fac from any provision of this
Agreement shall be effective unless signed in writing by the
parties entitled to the benefit thereof; provided that notice
of any such waiver shall be given to each party hereto as set
forth above. Except as otherwise provided herein, no
amendment, modification or termination of any provision of this
Agreement shall be effective unless signed in writing by or on
behalf of each Purchaser. Any amendment, supplement or modifi-
cation of or to any provision of this Agreement, any waiver of
any provision of this Agreement, and any consent to any
departure by the Company or Pro-Fac from the terms of any
provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made
or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company or Pro-Fac in
any case shall entitle the Company or Pro-Fac to any other or
further notice or demand in similar or other circumstances.
Section 7.9. Counterparts. This Agreement may be
executed in any number of counterparts and by the parties
hereto 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 7.10. Headings. The headings in this
Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
<PAGE>
40
Section 7.11. Consent to Jurisdiction and Service of
Process. Each of the Company and Pro-Fac hereby agrees that
any legal suit, action or proceeding brought by any of the
other parties to enforce any rights under or with respect to
the Notes, this Agreement or the transactions contemplated
hereby may be instituted in any state or federal court in The
City of New York, State of New York, waives to the fullest
extent permitted by law any objection which it may now or
hereafter have to the laying of venue of any such suit, action
or proceeding and irrevocably submit to the non-exclusive
jurisdiction of any such court in any such suit, action or
proceeding.
Section 7.12. 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 CONFLICTS
OF LAW PRINCIPLES THEREOF).
Section 7.13. Entire Agreement. This Agreement,
together with the other Note Documents, is intended by the
parties hereto to constitute the final expression of their
agreement and to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings other than
those set forth or referred to herein and therein. This
Agreement, together with the other Note Documents, supersedes
all prior agreements and understandings between the parties
with respect to such subject matter.
Section 7.14. Severability. In the event that any
one or more of the provisions contained herein, or the
application thereof in any circumstances, is held to be
invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and unenforceability of any such
provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected.
Section 7.15. Delivery. Each Purchaser which is
acquiring Definitive Notes pursuant to Section 2.2 hereby
appoints the Placement Agent or the Trustee to accept delivery
of the Notes to be purchased by such Purchaser at the Closing
and execute a receipt for such Notes on its behalf.
Section 7.16. Attorneys' Fees. In any action or
proceeding brought to enforce any provision of this Agreement
or any other document or instrument contemplated hereby, or
<PAGE>
41
where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover attorneys'
fees in addition to any other available remedy.
Section 7.17. Consent to Joint Representation. Each
Purchaser understands that (1) Cahill Gordon & Reindel has
acted as counsel to the Placement Agent in connection with the
offer and sale of the Notes and that Cahill Gordon & Reindel
has and continues to represent the Placement Agent on an on-
going basis in connection with other matters, (2) that Cahill
Gordon & Reindel has also acted as special counsel to the
Purchasers (except to the extent that any Purchasers have
retained separate counsel, in lieu of Cahill Gordon & Reindel),
and (3) the Placement Agent will be earning a fee for the
placement of the Notes. Each Purchaser acknowledges and agrees
that it has had adequate opportunity to consult counsel of its
choice with respect to the advisability of the representation
by Cahill Gordon & Reindel of the Placement Agent and of the
Purchasers. By its execution hereof each Purchaser confirms
its consent to such representation by Cahill Gordon & Reindel
of the Placement Agent and the Purchasers unless such Purchaser
has retained separate counsel, in lieu of Cahill Gordon &
Reindel, to represent it in connection with the purchase of the
Notes.
Section 7.18. Reliance Authorized. Cahill Gordon &
Reindel shall be entitled to rely, without limitation, on the
provisions related to it contained in Section 7.19 hereto.
Section 7.19. Indemnity. Pro-Fac and the Company
shall, jointly and severally, pay, indemnify, and hold each
Purchaser and each of their respective officers, directors,
agents and representatives (each, an 'Indemnified Person')
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including reasonable fees
and expenses of counsel and reasonable allocated costs of
in-house counsel) of any kind or nature whatsoever with respect
to any investigation, litigation or proceeding related to any
action taken, or omitted to be taken, by Pro-Fac or the Company
in connection with the Merger or the financing thereof (whether
or not any Indemnified Person is a party to such investigation,
litigation or proceeding) (all the foregoing, collectively, the
'Indemnified Liabilities'); provided, however, that neither
Pro-Fac nor the Company shall have any obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such
<PAGE>
42
Indemnified Person. The agreements in this section shall
terminate upon the consummation of an Exchange Offer or the
sale of any Notes pursuant to a Shelf Registration Statement
(as defined in the Registration Rights Agreement).
<PAGE>
43
If this Agreement is satisfactory, the Purchaser
should so indicate by signing six counterparts of this
Agreement in the space provided below, providing the
information indicated thereon, and delivering such counterparts
to the Company or Pro-Fac, whereupon this Agreement shall
become binding upon execution by the Company and Pro-Fac in
accordance with its terms.
Very truly yours,
PF ACQUISITION CORP.
By: /s/ Roy A. Myers
----------------
Title: President
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
----------------
Title: General Manager
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
AMERICAN SKANDIA TRUST, a
Massachusetts business trust,
on behalf of its Federated High
Yield Portfolio
By: /s/ Gordon Boronow
Name: Gordon Boronow
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $250,000
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through the account
of its custodian, PNC Bank, N.A., maintained at The Depository
Trust Company. By accepting this signature page, the Company
and Pro-Fac will be deemed to acknowledge and agree that:
(1) American Skandia Trust ('AST') is a 'series company' as
defined in Rule 18f-2(a) promulgated under the Investment
Company Act of 1940, as amended, and the Purchaser is a
portfolio of assets specifically allocated to a series of
shares of AST as contemplated by such rule; (2) all persons
extending credit to, contracting with or having any claim
against the Purchaser (including any claims arising hereunder)
shall only look to the assets specifically allocated to the
Purchaser for payment under such credit, contract or claim and
not to any assets specifically allocated to another series of
shares of AST or to any other assets of AST; and (3) neither
the shareholders nor the directors of AST, nor any of AST's
officers, employees or agents, whether past, present or future,
shall be liable for such credit, contract or claim.
<PAGE>
2
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Amoco Global Fixed
Lazard Freres Asset Management,
__as discretionary investment manager
Name of Purchaser (Print)
By: /s/ Ira Handler
Name: Ira Handler
Title:
Address: Mail Code 13103A
200 East Randolf Drive
Chicago, IL 60680-0703
Telephone: _________________________
Telecopy: __________________________
Principal Amount of
Notes to be Purchased: $235,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Banque Nationale de Paris___________
Name of Purchaser (Print)
By: /s/ Charles M. Mixon
Name: Charles M. Mixon
Title: Vice President
Address: 499 Park Avenue
New York, N.Y.
Telephone: (212) 415-9777
Telecopy: ________________________
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Benefit Capital Mgmt. Corp. Seq # 2
Name of Purchaser (Print)
By: _______________________________
Name: James E. McCabe
Title: Vice Pres. Fixed Income
Address: 39 Old Ridgebury Rd.
Danbury, CT. 06817
Telephone: (203) 794-2693
Telecopy: (203) 794-2150
Principal Amount of
Notes to be Purchased: $3,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
CIGNA Investments, Inc.____________
Name of Purchaser (Print)
By: /s/ Alan C. Petersen__________
Name: Alan C. Petersen
Title: Managing Director
Address: 900 Cottage Grove Rd.
Bloomfield, CT. 06002
Telephone: (203) 726-7628
Telecopy: (203) 726-8137
Principal Amount of
Notes to be Purchased: $22,000,000
Tax ID Number: 06-0861092
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Corporate High Yield Fund, Inc.____
Name of Purchaser (Print)
By: /s/ Elizabeth Phillips________
Name: Elizabeth Phillips
Title: Vice President
Address: 800 Scudders Mill Rd.
Plainsboro, NJ 08536
Telephone: (609) 282-2905
Telecopy: (609) 282-2940
Principal Amount of
Notes to be Purchased: $2,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Corporate High Yield Fund II, Inc._
Name of Purchaser (Print)
By: /s/ Elizabeth Phillips________
Name: Elizabeth Phillips
Title: Vice President
Address: 800 Scudders Mill Rd.
Plainsboro, NJ 08536
Telephone: (609) 282-2905
Telecopy: (609) 282-2940
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
CRL Management Corp._______________
Name of Purchaser (Print)
By: /s/ C. R. Langston____________
Name: C. R. Langston
Title: President
Address: 154 W. 18th Street
Suite 6-D
New York, NY 10011
Telephone: (212) 571-2390
Telecopy: (212) 571-2423
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
AIM CAPITAL MANAGEMENT ON BEHALF OF
DELTA AIRLINE RETIREMENT TRUST_____
Name of Purchaser (Print)
By: /s/ John Pessarra_____________
Name: John Pessarra
Title:
Address: 11 Greenway Plaza
Ste. 1919
Houston, Texas 77046
Telephone: (713) 626-1919
Telecopy: ________________________
Principal Amount of
Notes to be Purchased: $1,260,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Detroit General Retirement System__
Name of Purchaser (Print)
By: /s/ Michael Lanier____________
Name: Michael Lanier
Title: Senior Vice President
Address: Wertheim Schroder Inv. Svcs.
787 7th Avenue, 5th Fl.
New York, N.Y. 10019
Telephone: (212) 492-6466
Telecopy: (212) 492-7037
Principal Amount of
Notes to be Purchased: $750,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
FEDERATED HIGH YIELD TRUST, a
Massachusetts business trust
By: Federated Management, a
Delaware business trust,
as attorney-in-fact
By: /s/ Mark E. Durbiano__________
Name: Mark E. Durbiano
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $1,650,000
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through the account
of its custodian, State Street Bank and Trust Company,
maintained at The Depository Trust Company. By accepting this
signature page, the Company and Pro-Fac will be deemed to
acknowledge and agree that, in accordance with the Declaration
of Trust pursuant to which the Purchaser has been organized as
a business trust under the laws of the Commonwealth of
Massachusetts, all persons extending credit to, contracting
with or having any claim against the Purchaser (including any
claims arising hereunder) shall only look to the assets of the
Purchaser for payment under such credit, contract or claim, and
neither the shareholders nor the trustees of the Purchaser, nor
any of the Purchaser's officers, employees or agents (including
the above-signed attorney-in-fact), whether past, present or
future, shall be liable therefor.
<PAGE>
13
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
FIXED INCOME SECURITIES, INC., a
Maryland corporation, on behalf
of its Strategic Income Fund
By: Federated Advisers, a
Delaware business trust,
as attorney-in-fact
By: Mark E. Durbiano_________________
Name: Mark E. Durbiano
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $100,000
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through the account
of its custodian, State Street Bank and Trust Company,
maintained at The Depository Trust Company. By accepting this
signature page, the Company and Pro-Fac will be deemed to
acknowledge and agree that: (1) Fixed Income Securities, Inc.
('FIS') is a 'series company' as defined in Rule 18f-2(a)
promulgated under the Investment Company Act of 1940, as
amended, and the Purchaser is a portfolio of assets
specifically allocated to a series of shares of FIS as
contemplated by such rule; (2) all persons extending credit to,
contracting with or having any claim against the Purchaser
(including any claims arising hereunder) shall only look to the
assets specifically allocated to the Purchaser for payment
under such credit, contract or claim and not to any assets
specifically allocated to another series
<PAGE>
2
of shares of FIS or to
any other assets of FIS; and (3) neither the shareholders nor
the directors of FIS, nor any of FIS's officers, employees or
agents (including the above-signed attorney-in-fact), whether
past, present or future, shall be liable for such credit,
contract or claim.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Fortis Advantage Portfolios, Inc.
High Yield Portfolio_____________
Name of Purchaser (Print)
By: /s/ David G. Carroll__________
Name: David G. Carroll
Title: Second Vice President
Address: 5500 Wayzata Blvd.
Suite 1150
Golden Valley, MN 55416
Telephone: (612) 544-1531
Telecopy: (612) 544-6363
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin AGE High Income___________
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy____
Name: Christopher J. Molumphy
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-2805
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $3,100,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin Multi-Income Trust_________
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy____
Name: Christopher J. Molumphy
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-2805
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $200,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin Strategic Income___________
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-2805
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $100,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin Tax-Advantaged High Yield__
Name of Purchaser (Print)
By: /s/ Betsy Hofman-Schwab________
Name: Betsy Hofman-Schwab
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-3097
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $300,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin Universal Trust____________
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-2805
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $600,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Franklin Valuemark Fund - High Yield
Name of Purchaser (Print)
By: /s/ Betsy Hofman-Schwab________
Name: Betsy Hofman-Schwab
Title: Portfolio Manager
Address: 777 Mariners Island Blvd.
San Mateo, CA 94404
Telephone: (415) 312-3097
Telecopy: (415) 312-2070
Principal Amount of
Notes to be Purchased: $700,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Harch & Company
High Yield Opportunity Fund
FBO Account 230-21244-21-280_________
Name of Purchaser (Print)
By: /s/ Michael E. Lewitt___________
Name: Michael E. Lewitt
Title: Executive Vice President
and General Counsel
Address: 621 NW 53rd St.
Boca Raton, FL
Telephone: (407) 995-4900
Telecopy: (407) 995-4949
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Harch & Company
for Lehman Offshore OSIP ___
Name of Purchaser (Print)
By: /s/ Michael E. Lewitt___________
Name: Michael E. Lewitt
Title: Executive Vice President
and General Counsel
Address: 621 NW 53rd St.
Boca Raton, FL
Telephone: (407) 995-4900
Telecopy: (407) 995-4949
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
HIGHLANDER INCOME FUND INC., a
Minnesota corporation
By: Federated Advisers, a
Delaware business trust,
as subadviser
By: /s/ Mark E. Durbiano____________
Name: Mark E. Durbiano
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $250,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
AIM CAPITAL MANAGEMENT ON BEHALF OF
HOUSTON POLICE OFFICERS PENSION SYSTEM
Name of Purchaser (Print)
By: /s/ John L. Pessarra_____________
Name: John L. Pessarra
Title:
Address: 11 Greenway Plaza
Ste. 1919
Houston, Texas 77046
Telephone: (713) 626-1919
Telecopy: __________________________
Principal Amount of
Notes to be Purchased: $240,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
IDS Extra Income Fund, Inc.___________
Name of Purchaser (Print)
By: /s/ Leslie L. Ogg_________________
Name: Leslie L. Ogg
Title: Vice President and
General Counsel
Address: c/o IDS Financial Corporation
3000 IDS Tower 10
Minneapolis, MN 55440
Telephone: Please contact Scott Schroepfer at
(612) 671-7653
Telecopy: (612) 671-5514
Principal Amount of
Notes to be Purchased: $4,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
ILLINOIS STATE BOARD OF INVESTMENT____
Name of Purchaser (Print)
By: /s/ Larry G. Darlington__________
Name: Larry G. Darlington
Title: Investment Officer
Address: 180 N. La Salle St.
Suite 2015
Chicago, IL 60601
Telephone: (312) 793-5718
Telecopy: (312) 793-2266
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
INVESTMENT SERIES FUNDS, INC., a
Maryland corporation, on behalf
of its Fortress Bond Fund
By: Federated Advisers, a
Delaware business trust,
as attorney-in-fact
By: /s/ Mark E. Durbiano____________
Name: Mark E. Durbiano
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $250,000
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through the account
of its custodian, State Street Bank and Trust Company,
maintained at The Depository Trust Company. By accepting this
signature page, the Company and Pro-Fac will be deemed to
acknowledge and agree that: (1) Investment Series Funds, Inc.
('ISF') is a 'series company' as defined in Rule 18f-2(a)
promulgated under the Investment Company Act of 1940, as
amended, and the Purchaser is a portfolio of assets
specifically allocated to a series of shares of ISF as
contemplated by such rule; (2) all persons extending credit to,
contracting with or having any claim against the Purchaser
(including any claims arising hereunder) shall only look to the
assets specifically allocated to the Purchaser for payment
under such credit, contract or claim and not to any assets
specifically allocated to another series
<PAGE>
of shares of ISF or to
any other assets of ISF; and (3) neither the shareholders nor
the directors of ISF, nor any of ISF's officers, employees or
agents (including the above-signed attorney-in-fact), whether
past, present or future, shall be liable for such credit,
contract or claim.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
John Hancock Strategic Income Fund____
Name of Purchaser (Print)
By: /s/ Frederick L. Cavanaugh_______
Name: Frederick L. Cavanaugh
Title: Portfolio Manager
Address: 101 Huntington Ave.
Boston, MA 02199
Telephone: (617) 375-1986
Telecopy: (617) 375-1531
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper High Yield Fund________________
Name of Purchaser (Print)
By: /s/ Michael A. McNamara__________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $3,200,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper Diversified Income Fund_______
Name of Purchaser (Print)
By: /s/ Michael A. McNamara_________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $250,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper Investors Fund High Yield Portfolio
Name of Purchaser (Print)
By: /s/ Michael A. McNamara______________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $230,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper High Income Trust_____________
Name of Purchaser (Print)
By: /s/ Michael A. McNamara_________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $210,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper Multi-Market Income Trust_____
Name of Purchaser (Print)
By: /s/ Michael A. McNamara_________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $70,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Kemper Strategic Income Fund_________
Name of Purchaser (Print)
By: /s/ Michael A. McNamara_________
Name: Michael A. McNamara
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, IL 60603
Telephone: (312) 346-4127
Telecopy: (312) 499-8531
Principal Amount of
Notes to be Purchased: $40,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Keyport Life Insurance Co.___________
Name of Purchaser (Print)
By: /s/ Ann H. Benjamin_____________
Name: Ann H. Benjamin
Title: Senior Vice President
Address: Stein Roe & Farnham Inc.,
as Agent for Keyport Life Ins. Co.
One S. Wacker
Chicago, IL 60606
Telephone: (312) 368-8121
Telecopy: (312) 368-8100
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
LB Series Fund, Inc. (High Yield Portfolio)
Name of Purchaser (Print)
By: /s/ Thomas N. Haag____________________
Name: Thomas N. Haag
Title: Portfolio Manager
Address: 625 Fourth Avenue South
Minneapolis, MN 55415
Telephone: (612) 340-5722
Telecopy: (612) 340-5776
Principal Amount of
Notes to be Purchased: $2,750,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Lazard Strategic Yield PR
Lazard Freres Asset Managment,
__as discretionary investment manager
Name of Purchaser (Print)
By: /s/ Ira Handler_________________
Name: Ira Handler
Title:
Address: One Rockefeller Plaza
New York, NY 10020
Telephone: (212) 632-6000
Telecopy: (212) 632-6060
Principal Amount of
Notes to be Purchased: $315,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
LIBERTY HIGH INCOME BOND FUND,
INC., a Maryland corporation
By: Federated Advisers, a
Delaware business trust,
as attorney-in-fact
By: /s/ Mark E. Durbiano
Name: Mark E. Durbiano
Title: Vice President
Address: c/o Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attn: High Yield Bonds
Telephone: (412) 288-6476
Telecopy: (412) 288-6461
Principal Amount of
Notes to be Purchased: $1,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Lincoln National Investment Management
Company, its Attorney-in-Fact
By: /s/ Richard D. Shafer____________
Name: Richard D. Shafer
Title: Vice President
Address: 200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Telephone: (219) 455-6151
Telecopy: (219) 455-1441
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Nominee Name: Linnett & Co.
The Advantage Strategic Income Fund__
Name of Purchaser (Print)
By: /s/ William H. Peck_____________
Name: William H. Peck
Title: Assistant Treasurer, The
Advantage Family of Funds
Address: Boston Security Counsellors
100 Federal Street, 29th Floor
Boston, MA 02110
Telephone: (617) 348-3107
Telecopy: (617) 348-3114
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Lutheran Brotherhood High Yield Fund
Name of Purchaser (Print)
By: /s/ Thomas N. Haag_____________
Name: Thomas N. Haag
Title: Portfolio Manager
Address: 625 Fourth Avenue South
Minneapolis, MN 55415
Telephone: (612) 340-5722
Telecopy: (612) 340-5776
Principal Amount of
Notes to be Purchased: $2,250,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Manusa Universal Life High Yield
(Acct Y212) (Nominee Name: Gullship)
Name of Purchaser (Print)
By: /s/ Terry Carr__________________
Name: Terry Carr
Title: Assistant Vice President
Address: 200 Bloor St. E, N.T.-6
Toronto, Ontario, Canada M4W 1E5
Telephone: (416) 926-5828
Telecopy: (416) 926-5432
Principal Amount of
Notes to be Purchased: $2,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Massachusetts Mutual Life Insurance Company
Name of Purchaser (Print)
By: /s/ Mary E. Wilson____________________
Name: Mary E. Wilson
Title: Vice President and
Managing Director
Address: 1295 State Street
Springfield, MA 01111
Telephone: (413) 744-6082
Telecopy: (413) 744-8798
Principal Amount of
Notes to be Purchased: $2,250,000
Section 4.2(i) of the Purchase Agreement is hereby
modified to provide, and Pro-Fac and the Company by their
acceptance hereof acknowledge, that a purchase for or on behalf
of a pension or welfare plan (as defined in Section 3 of ERISA)
shall also be permitted to the extent such purchase is made by
an insurance company with funds which constitute assets of its
general account in which, at all times while the Notes are held
by the purchaser, no such plan (together with any other plans
maintained by the same employer (or any affiliate thereof) or
employee organization) has an interest therein as
contractholder with respect to which the amount of reserves
(determined under Section 807(d) of the Internal Revenue Code)
exceed in the aggregate 10% of the total of all liabilities of
the general account.
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through its account
maintained at The Depository Trust Company.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Merrill Lunch Corporate Bond Fund, Inc.
High Income Portfolio___________________
Name of Purchaser (Print)
By: /s/ Vincent T. Lathbury____________
Name: Vincent T. Lathbury
Title: Vice President
Address: 800 Scudders Mill Rd.
Plainsboro, NJ 08536
Telephone: (609) 282-2084
Telecopy: (609) 282-2940
Principal Amount of
Notes to be Purchased: $21,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Northwestern Mutual Series Fund, Inc.
High Yield Bond Portfolio
Name of Purchaser (Print)
By: /s/ Steven P. Swanson
Name: Steven P. Swanson
Title: Vice President-Investments
Address: 720 East Wisconsin Avenue
Milwaukee, WI 53202
Telephone: (414) 299-7314
Telecopy: (414) 299-7124
Principal Amount of
Notes to be Purchased: $1,000,000
Section 4.2(i) of the Purchase Agreement is hereby
modified to provide, and Pro-Fac and the Company by their
acceptance hereof acknowledge, that a purchase for or on behalf
of a pension or welfare plan (as defined in Section 3 of ERISA)
shall also be permitted to the extent such purchase is made by
an insurance company with funds which constitute assets of its
general account in which, at all times while the Notes are held
by the purchaser, no such plan (together with any other plans
maintained by the same employer (or any affiliate thereof) or
employee organization) has an interest therein as
contractholder with respect to which the amount of reserves
(determined under Section 807(d) of the Internal Revenue Code)
exceed in the aggregate 10% of the total of all liabilities of
the general account.
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through its account
maintained at The Depository Trust Company.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
<PAGE>
provide the name of, and the foregoing information with respect
to, each such managed account.
PURCHASE AGREEMENT SIGNATURE PAGE
<PAGE>
Accepted and Agreed as of
the date first above written
The Northwestern Mutual Life Insurance Company
Name of Purchaser (Print)
By: /s/ Steven P. Swanson
Name: Steven P. Swanson
Title: Vice President
Address: 720 East Wisconsin Avenue
Milwaukee, WI 53202
Telephone: (414) 299-7314
Telecopy: (414) 299-7124
Principal Amount of
Notes to be Purchased: $14,000,000
Section 4.2(i) of the Purchase Agreement is hereby
modified to provide, and Pro-Fac and the Company by their
acceptance hereof acknowledge, that a purchase for or on behalf
of a pension or welfare plan (as defined in Section 3 of ERISA)
shall also be permitted to the extent such purchase is made by
an insurance company with funds which constitute assets of its
general account in which, at all times while the Notes are held
by the purchaser, no such plan (together with any other plans
maintained by the same employer (or any affiliate thereof) or
employee organization) has an interest therein as
contractholder with respect to which the amount of reserves
(determined under Section 807(d) of the Internal Revenue Code)
exceed in the aggregate 10% of the total of all liabilities of
the general account.
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through its account
maintained at The Depository Trust Company.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
<PAGE>
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
NYC Employees Retirement System
Name of Purchaser (Print)
By: /s/ Michael Lanier
Name: Michael Lanier
Title: Senior Vice President
Address: Wertheim Schroder Investment Svcs.
787 7th Avenue, 5th Floor
Telephone: (212) 492-6466
Telecopy: (212) 492-7037
Principal Amount of
Notes to be Purchased: $1,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
New York City Employees Retirement System
Name of Purchaser (Print)
Lazard Freres Asset Management,
as discretionary investment manager
By: /s/ Ira Handler
Name: Ira Handler
Title:
Address: Bureau of Asset Management
NYC Controller's Office
Room 736, 1 Centre Street
New York, New York 10007
Telephone:
Telecopy:
Principal Amount of
Notes to be Purchased: $450,000
Tax ID Number: 13-635-7165
The Purchaser represents that it is a Qualified
Institutional Buyer and wishes to hold Notes in book-entry form
and to receive payments in respect thereof through its account
maintained at The Depository Trust Company.
Each Purchaser executing this Purchase Agreement
Signature Page on behalf of one or more managed accounts should
provide the name of, and the foregoing information with respect
to, each such managed account.
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
NYC Police Department Pension Fund -
Sub Chapter 2
Name of Purchaser (Print)
By: /s/ Michael Lanier
Name: Michael Lanier
Title: Senior Vice President
Address: Wertheim Schroder Investment Svcs
787 7th Avenue, 5th Floor
New York, NY 10019
Telephone: (212) 492-6466
Telecopy: (212) 492-7037
Principal Amount of
Notes to be Purchased: $750,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Oppenheimer Champion High Yield Fund
Name of Purchaser (Print)
By: /s/ Ralph Stellmacher
Name: Ralph Stellmacher
Title: Vice President
Address: 3410 South Galena Street
Denver, CO 80231
Attn: Security Operations
Telephone: (303) 743-2978
Telecopy: (303) 743-2808
Principal Amount of
Notes to be Purchased: $0.5 million
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Oppenheimer High Yield Fund
Name of Purchaser (Print)
By: /s/ Ralph Stellmacher
Name: Ralph Stellmacher
Title: Vice President
Address: 3410 South Galena Street
Denver, CO 80231
Attn: Security Operations
Telephone: (303) 743-2978
Telecopy: (303) 743-2808
Principal Amount of
Notes to be Purchased: $4.5 million
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
ORIX USA Corporation
Name of Purchaser (Print)
By: /s/ Hiroyuki Miyauchi
Name: Hiroyuki Miyauchi
Title: Senior Vice President
Address: 780 Third Avenue - 48th Floor
New York, NY 10017
Telephone: (212) 418-8361
Telecopy: (212) 418-8308
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Pacific Mutual General Account
Name of Purchaser (Print)
By: /s/ Raymond Thee
Name: Raymond Thee
Title: Portfolio Manager
Address: 700 Newport Ctr Drive
Newport Beach, CA 92660
Telephone: (714) 640-3711
Telecopy: (714) 721-5258
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Pacific Select Fund The High Yield Bond Series
Name of Purchaser (Print)
By: /s/ Raymond Thee
Name: Raymond Thee
Title: Portfolio Manager
Address: 700 Newport Ctr Drive
Newport Beach, CA 77660
Telephone: (714) 640-3711
Telecopy: (714) 721-5258
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Phoenix Edge Bond Sep B
Name of Purchaser (Print)
By: /s/ Curtis Borrows
Name: Curtis Borrows
Title: Vice President
Address: 1 America Row
Hartford CT 06115
Telephone: 275-5282
Telecopy: 241-7210
Principal Amount of
Notes to be Purchased: $2,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Phoenix Series Fund
Name of Purchaser (Print)
By: /s/ Curtis Borrows
Name: Curtis Borrows
Title: Vice President
Address: 1 American Row
Hartford CT 06115
Telephone: 275-5282
Telecopy: 241-7210
Principal Amount of
Notes to be Purchased: $8,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Prospect Street High Income Portfolio Inc.
Name of Purchaser (Print)
By: /s/ Karen J. Thelen
Name: Karen J. Thelen
Title: Vice President
Address: Exchange Place
37th Floor
Telephone: (617) 742-3800
Telecopy: (617) 742-9455
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Providence Investment Management Group
Name of Purchaser (Print)
By: /s/ Fred Smith
Name: Fred Smith
Title: Partner
Address: 525 E 72 St., Ste. F 26
New York, NY 10021
Telephone: (212) 571-2353
Telecopy: (212) 571-2423
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
The Prudential Insurance Company of America,
as investment manager for the General Motors Retirement
Program for Salaried Employees High Yield Account
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
Name: Lars M. Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $1,500,000
<PAGE>
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
The U.S. HIGH YIELD FUND SICAV
By: The Prudential Insurance Company
of America as investment advisor
Name of Purchaser (Print)
By: /s/ Lars Berkman________________
Name: Lars Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $1,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
The Prudential Insurance Company of America,
as investment manager for the General Motors Hourly-Rate
Employees High Yield Account
Name of Purchaser (Print)
By: /s/ Lars M. Berkman_____________
Name: Lars M. Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $500,000
Inst'l ID: 25784
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
The High Yield Income Fund, Inc.
By: The Prudential Investment
Corporation, as investment advisor
Name of Purchaser (Print)
By: /s/ Lars Berkman__________________
Name: Lars Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
The Prudential Series Fund, Inc., High Yield Bond Portfolio
By: The Prudential Investment
Corporation, as investment advisor
Name of Purchaser (Print)
By: /s/ Lars Berkman_________________
Name: Lars Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $1,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Prudential High Yield Fund
By: The Prudential Investment Corporation,
as investment advisor
Name of Purchaser (Print)
By: /s/ Lars Berkman_________________
Name: Lars Berkman
Title: Vice President
Address: McCarter Highway & Market Street
Two Gateway Center, 7th Floor
Newark, New Jersey 07102-5096
Telephone: (201) 802-8507
Telecopy: (201) 802-9331
Principal Amount of
Notes to be Purchased: $12,500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Nomineee Name: Sestina & Co.
The Advantage High Yield Bond Fund
Name of Purchaser (Print)
By: /s/ William H. Peck_____________________ _
Name: William H. Peck
Title: Assistant Treasurer, The Advantage
Family of Funds
Address: Boston Security Counsellors
100 Federal Street 29th Floor
Boston, MA 02110
Telephone: (617) 348-3107
Telecopy: (617) 348-3114
Principal Amount of
Notes to be Purchased: $1,000,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Southern Farm Bureau Annuity Insurance
Company/Merrill Lynch Asset Management
Name of Purchaser (Print)
By: /s/ Vincent T. Lathbury__________
Name: Vincent T. Lathbury
Title: Vice President
Address: 800 Scudders Mill Rd.
Plainsboro, NJ 08536
Telephone: (609) 282-2084
Telecopy: (609) 282-2940
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Standard Security Life Insurance Company of New York
Name of Purchaser (Print)
By: /s/ David T. Ketig______________
Name: David T. Ketig
Title: Secretary
Address: 96 Cummings Pt. Rd.
Stamford, CT 06902
Telephone: (203) 358-8000
Telecopy: (203) 348-3103
Principal Amount of
Notes to be Purchased: $500,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
advisor to The City and County of San
Francisco Employees' Retirement System
Name of Purchaser (Print)
By: /s/ Sheldon Stone____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $1,510,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
advisor to Pacific Telesis Group__________
Name of Purchaser (Print)
By: /s/ Sheldon Stone____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $1,050,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
advisor to Howard Hughes Medical Institute
Name of Purchaser (Print)
By: /s/ Sheldon Stone____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $310,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management, Inc. as investment
advisor to TCW Galileo High Yield Bond Fund
Name of Purchaser (Print)
By: /s/ Sheldon Stone_____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $685,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
advisor to Chrysler Corporation
Name of Purchaser (Print)
By: /s/ Sheldon Stone____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $1,145,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
adviser to Morgan Stanley Group, Inc.
Name of Purchaser (Print)
By: /s/ Sheldon Stone____________________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $1,525,000.00
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
TCW Asset Management Company as investment
adviser to USW Benefit Plans Investment Partnership
Name of Purchaser (Print)
By: /s/ Sheldon Stone_______________
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $275,000
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Trust Company of the West
as trustee of the
TCW High Yield Fund
Name of Purchaser (Print)
By: /s/ Sheldon Stone________________ __
Name: Sheldon Stone
Title: Managing Director
Address: 865 S. Figueroa St., Suite 1800
Los Angeles, CA 90017
Telephone: (213) 244-0000
Telecopy: (213) 244-0489
Principal Amount of
Notes to be Purchased: $4,500,000.00
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Value Line Aggressive Income Trust
Name of Purchaser (Print)
By: /s/ John W. Risner_____________
Name: John W. Risner
Title: Vice President
Address: 220 E. 42nd St., 6th Floor
New York, NY 10017
Telephone: (212) 907-1523
Telecopy: (212) 818-9781
Principal Amount of
Notes to be Purchased: $500,000.00
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
Van Kempen Merritt Corporation High Yield Fund
Name of Purchaser (Print)
By: /s/ Edward C. Wood_______________________
Name: Edward C. Wood
Title: Treasurer
Address: One Park View Plaza
Oakbrook Terrace, IL 60181
Telephone: (800) 225-2222
Telecopy:
Principal Amount of
Notes to be Purchased: $1,000,000.00
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
MASSMUTUAL/CARLSON CBO, N.V.
Name of Purchaser (Print)
By: /s/ Stephen M. Ash__________________
Name: MEESPIERSON TRUST (CURACAO) N.V.
Title: Managing Director
Address: c/o State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department
Telephone: (617) 786-3000
Telecopy: (617) 654-4703
Principal Amount of
Notes to be Purchased: $2,500,000
<PAGE>
Schedule 4.1.2
SUBSIDIARIES
I. Subsidiaries of Curtice-Burns
Curtice Burns Express, Inc. ('Express')1
Finger Lakes Packaging Company, Inc. ('Finger Lakes')1
Snyder's Potato Chips, Inc. ('Snyder's')
Quality Snacks, Inc. ('Quality')
La Restaurante of Altoona, Inc. ('La Restaurante')
Curtice Burns Meat Snacks, Inc. ('Meat Snacks')1
Quality Snax of Maryland, Inc. ('Snax')1
Kennedy Endeavors, Incorporated ('Kennedy')1
Husman Snack Foods Co., Inc. ('Husman')1
Seasonal Employers, Inc. ('Seasonal')1
Curtice Burns Export Corp. ('Export')
Nalley's Canada Limited ('Nalley's')1
Comstock Michigan Fruit Company of Canada, Ltd. ('CMF Ltd.')
Pro-Fac Holding Company of Iowa, Inc. ('Pro-Fac Iowa')1 2
_________________________
1 Subsidiary Guarantor
2 Subsidiary of Curtice-Burns after giving effect to the
transactions contemplated by this Agreement, the Merger
Agreement and the other Documents
<PAGE>
II. Subsidiaries of Pro-Fac (each as will exist immediately
after the Closing, after giving effect to the transac-
tions contemplated by this Agreement, the Merger Agree-
ment and other Documents)
<TABLE>
<CAPTION>
# of shares of
% of issued and Capital Stock
outstanding and other equity
Capital Stock securities of
and other equity Curtice-Burns and
securities held each Subsidiary
by Pro-Fac Guarantor held by
Jurisdiction of (directly and Pro-Fac (directly
Name Incorporation indirectly and indirectly)
- ---- -------------- ---------------- -------------------
<S> <C> <C> <C>
Curtice-Burns NY 100 10,000 (common
Foods, Inc. stock)
Pro-Fac Iowa NY 100 200 (common
stock)
Express NY 100 10 (common
stock)
Finger Lakes NY 100 200 (common
stock)
Snyder's PA 100 N.A.
Quality PA 100 N.A.
La Restaurante PA 100 N.A.
Meat Snacks DE 100 100 (common
stock)
Snax MA 100 50 (common
stock)
Kennedy WA 100 10,000 (common
stock)
Husman OH 100 200 (common
stock)
<PAGE>
Seasonal NY 100 500 (common
stock)
Export Virgin Islands 100 N.A.
Nalley's Canada 100 25,100 (ordinary
shares)
CMF Ltd. Canada 100 N.A.
</TABLE>
<PAGE>
________________________________________________________________________________
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of November 3, 1994
by and among
PF ACQUISITION CORP.
PRO-FAC COOPERATIVE, INC.
EACH OF THE SUBSIDIARY
GUARANTORS NAMED ON THE
SIGNATURE PAGES HEREOF
and
EACH OF THE PURCHASERS
NAMED ON THE SIGNATURE
PAGES HEREOF
________________________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this 'Agreement')
is made and entered into as of November 3, 1994 by and among PF
ACQUISITION CORP., a New York corporation (the 'Company'),
PRO-FAC COOPERATIVE, INC., a New York cooperative corporation
(the 'Parent Guarantor'), each of the Subsidiary Guarantors (as
hereinafter defined) identified on the signature pages hereof
(together with the Parent Guarantor, the 'Guarantors') and each
of the purchasers identified on the signature pages hereof
(each a 'Purchaser' and, together, the 'Purchasers'). The
execution and delivery of this Agreement is a condition to the
obligations of the Purchasers to purchase the Company's 12-1/4%
Senior Subordinated Notes due 2005 under the Purchase Agreement
dated as of November 3, 1994 (the 'Purchase Agreement') by and
among the Company, the Parent Guarantor and the Purchasers.
The Company, the Guarantors and the Purchasers hereby
agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized
terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Action: As defined in Section 8(c) of this
Agreement.
Broker-Dealer: Any broker or dealer registered under
the Exchange Act.
Closing Date: The date that the Old Notes are
purchased by the Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be
deemed 'Consummated' for purposes of this Agreement upon the
occurrence of (i) the filing and effectiveness under the Act of
the Exchange Offer Registration Statement relating to the New
Notes to be issued in the Exchange Offer, (ii) the maintenance
of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) of this
Agreement, and (iii) if any Old Notes are tendered by their
Holders pursuant to the Exchange Offer, the delivery by the
Company to the Registrar under the Indenture of New Notes in
<PAGE>
2
the same aggregate principal amount as the aggregate principal
amount of Old Notes that were so tendered.
Damages Payment Date: With respect to the Notes,
each Interest Payment Date.
Exchange Act: The Securities Exchange Act of 1934,
as amended.
Exchange Offer: The registration by the Company and
the Guarantors under the Act of the New Notes pursuant to a
Registration Statement pursuant to which the Company and the
Guarantors offer the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such
outstanding Old Notes that are Transfer Restricted Securities
held by such Holders for New Notes in an aggregate principal
amount equal to the aggregate principal amount of the Old Notes
that are Transfer Restricted Securities tendered in such
exchange offer by such Holders.
Exchange Offer Registration Statement: The
Registration Statement relating to the Exchange Offer,
including the related Prospectus.
Holders: As defined in Section 2(b) of this
Agreement.
Indenture: The Indenture, dated as of November 3,
1994, between the Company, the Parent Guarantor and IBJ
Schroder Bank & Trust Company, as trustee (the 'Trustee'),
pursuant to which the Notes are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with
its terms.
Interest Payment Date: As defined in the Old Notes.
Merger: The merger of the Company with and into
Curtice-Burns Foods, Inc., as contemplated by the Purchase
Agreement.
NASD: National Association of Securities Dealers,
Inc.
New Notes: The Company's 12-1/4% Senior Subordinated
Notes due 2005 to be issued pursuant to the Indenture in
connection with the Exchange Offer, together with the related
guarantee of the Guarantors.
<PAGE>
3
Notes: The Old Notes and the New Notes.
Old Notes: The Company's 12-1/4% Senior Subordinated
Notes due 2005 to be issued pursuant to the Indenture on the
Closing Date, together with the related guarantee of the
Guarantors.
Person: An individual, partnership, corporation,
trust or unincorporated organization, or a government or agency
or political subdivision thereof.
Prospectus: The prospectus included in a
Registration Statement, as amended or supplemented by any
prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment
Date relating to the Old Notes, each Person who is a Holder of
Old Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 of
this Agreement.
Registration Statement: Any registration statement
of the Company and the Guarantors relating to (a) an offering
of New Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, which is filed
pursuant to the provisions of this Agreement, in each case,
including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Shelf Filing Deadline: As defined in Section 4(a) of
this Agreement.
Shelf Registration Statement: As defined in Section
4(a) of this Agreement.
Subsidiary: With respect to any Person, any other
Person of which a majority of the equity ownership or the
voting securities is at the time owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such
Person or a combination thereof.
<PAGE>
4
Subsidiary Guarantor: Each Subsidiary of the Company
which, pursuant to the Indenture, is required to become a
guarantor of the obligations of the Company under the Notes and
the Indenture.
TIA: The Trust Indenture Act of 1939 as in effect on
the date of the Indenture.
Transfer Restricted Securities: Each Note, until the
earliest to occur of (a) the date on which such Note is
exchanged in the Exchange Offer and entitled to be resold to
the public by the Holder of such Note without complying with
the prospectus delivery requirements of the Act, (b) the date
on which such Note has been effectively registered under the
Act and disposed of in accordance with a Shelf Registration
Statement and (c) the date on which such Note is distributed to
the public pursuant to a transaction satisfying the conditions
for an exemption from registration in accordance with Rule 144
under the Act or by a Broker-Dealer pursuant to the 'Plan of
Distribution' contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained
therein).
Underwritten Registration or Underwritten Offering:
A registration in which securities of the Company are sold to
an underwriter for reoffering to the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities: The securities
entitled to the benefits of this Agreement are the Transfer
Restricted Securities.
(b) Holders of Transfer Restricted Securities: A
Person is deemed to be a holder of Transfer Restricted
Securities (each, a 'Holder') whenever such Person owns
Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be
permissible under applicable federal law or Commission policy
(after the procedures set forth in Section 6(a) below have been
complied with), the Company and the Guarantors shall (i) cause
to be filed with the Commission as soon as practicable on or
prior to 45 days after the Closing Date, a Registration
Statement under the Act relating to the New Notes and the
Exchange Offer,
<PAGE>
5
and (ii) use their best efforts to cause such
Registration Statement to become effective as soon as
practicable on or prior to 90 days after the Closing Date. In
connection with the foregoing, the Company and the Guarantors
shall (A) file all pre-effective amendments to such
Registration Statement as may be necessary in order to cause
such Registration Statement to become effective, (B) if
applicable, file a post-effective amendment to such
Registration Statement pursuant to Rule 430A under the Act,
(C) cause all necessary filings in connection with the
registration and qualification of the New Notes to be made
under the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer (provided,
however, that the Company and the Guarantors shall not be
obligated to qualify as a foreign corporation in any
jurisdiction in which they are not so qualified or to take any
action which would subject them to general service of process
or taxation in any jurisdiction where it is not so subject),
and (D) upon the effectiveness of such Registration Statement,
commence the Exchange Offer and use their best efforts to issue
on or prior to 45 days after the date on which such
Registration Statement is declared effective by the Commission
New Notes in exchange for all Old Notes tendered prior to such
issuance in the Exchange Offer. The Exchange Offer shall be on
the appropriate form permitting registration of the New Notes
to be offered in exchange for the Transfer Restricted
Securities and to permit resales of New Notes held by Broker-
Dealers as contemplated by Section 3(c) below. If, after such
Exchange Offer Registration Statement initially is declared
effective by the Commission, the Exchange Offer or the issuance
of New Notes under the Exchange Offer or the resale of New
Notes received by Broker-Dealers in the Exchange Offer as
contemplated by Section 3(c) below is interfered with by any
stop order, injunction or other order or requirement of the
Commission or any other governmental agency or court, such
Registration Statement shall be deemed not to have become
effective for purposes of this Agreement during the period that
such stop order, injunction or other similar order or
requirement shall remain in effect.
(b) The Company and the Guarantors shall cause the
Exchange Offer Registration Statement to be effective
continuously and shall keep the Exchange Offer open for a
period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such
period be less than 20 business days nor longer than 90 days.
The Company and the Guarantors shall cause the Exchange Offer
to comply with all applicable federal and state securities
laws. The
<PAGE>
6
Company and the Guarantors shall only offer to
exchange New Notes for Old Notes in the Exchange Offer, and
only the New Notes shall be registered under the Exchange Offer
Registration Statement. The Company and the Guarantors shall
use their best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date, but not less than
20 business days, after the Exchange Offer Registration
Statement has become effective, but in no event later than 45
business days after such effective date.
(c) The Company and the Guarantors shall indicate in
a 'Plan of Distribution' section contained in the Prospectus
included in the Exchange Offer Registration Statement that any
Broker-Dealer that holds Old Notes that are Transfer Restricted
Securities and that were acquired for its own account as a
result of market-making activities or other trading activities
(other than Transfer Restricted Securities acquired directly
from the Company) may exchange such Old Notes pursuant to the
Exchange Offer; provided, however, that such Broker-Dealer may
be deemed to be an 'underwriter' within the meaning of the Act
and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with any resales of the
New Notes received by such Broker-Dealer in the Exchange Offer.
Such 'Plan of Distribution' section shall allow the use of the
Prospectus by all Persons subject to the prospectus delivery
requirements of the Act, including participating Broker-
Dealers, and shall also contain all other information with
respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto,
but such 'Plan of Distribution' shall not name any such Broker-
Dealer or disclose the amount of Old Notes held by any such
Broker-Dealer except to the extent required by the Commission
as a result of a change in policy after the date of this
Agreement.
The Company and the Guarantors shall use their best
efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by
the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Old Notes acquired
by Broker-Dealers for their own accounts as a result of market-
making activities or other trading activities, and to ensure
that it conforms with the requirements of this Agreement, the
Act and the policies, rules and regulations of the Commission
as announced from time to time, for a period of 180 days from
the date on which the Exchange Offer Registration Statement is
declared effective. The Company shall provide sufficient
<PAGE>
7
copies of the latest version of such Prospectus to Broker-
Dealers promptly upon request at any time during such 180-day
period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company and the
Guarantors are not required to file an Exchange Offer
Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law
(after the procedures set forth in Section 6(a) below have been
complied with) or (ii) any Holder of Transfer Restricted
Securities shall notify the Company within 20 business days
before the Consummation of the Exchange Offer that such Holder
(A) is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) may not resell the
New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder, or (C) is a Broker-
Dealer and holds Old Notes acquired directly from the Company,
any Guarantor or one of their affiliates, then the Company and
the Guarantors shall (x) cause to be filed a shelf registration
statement pursuant to Rule 415 under the Act, which may be an
amendment to the Exchange Offer Registration Statement (in
either event, the 'Shelf Registration Statement'), on or prior
to the earliest to occur of (1) the 45th day after the date on
which the Company determines that it is not required to file
the Exchange Offer Registration Statement, or (2) the 45th day
after the date on which the Company receives notice from a
Holder of Transfer Restricted Securities as contemplated by
clause (ii) above (such earliest date being the 'Shelf Filing
Deadline'), which Shelf Registration Statement shall provide
for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant
to Section 4(b) of this Agreement, and (y) use their best
efforts to cause such Shelf Registration Statement to be
declared effective by the Commission on or before the 45th day
after the Shelf Filing Deadline. The Company and the
Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c)
of this Agreement to the extent necessary to ensure that it is
available for resales of Old Notes by the Holders of Transfer
Restricted Securities entitled to the benefit of this Section
4(a), and to ensure that it conforms with the requirements of
this Agreement, the Act and the policies, rules and regulations
<PAGE>
8
of the Commission as announced from time to time, for a
continuous period of three years following the date on which
such Shelf Registration Statement becomes effective under the
Act or such shorter period that will terminate when all the Old
Notes covered by the Shelf Registration Statement have been
sold pursuant to such Shelf Registration Statement.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of
Transfer Restricted Securities may include any of its Transfer
Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 business days
after receipt of a request therefor, such information as the
Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary
Prospectus included in such Shelf Registration Statement. No
Holder of Transfer Restricted Securities shall be entitled to
liquidated damages pursuant to Section 5 of this Agreement
unless and until such Holder shall have provided all such
reasonably requested information. Each Holder as to which any
Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all material information
required to be disclosed in order to make the information
previously furnished to the Company by such Holder not
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by
this Agreement is not filed with the Commission on or prior to
the date specified for such filing in this Agreement, (ii) any
of such Registration Statements has not been declared effective
by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has
not been Consummated within 45 business days after the date on
which the Exchange Offer Registration Statement is declared
effective by the Commission or (iv) any Registration Statement
required by this Agreement is filed and declared effective but
shall thereafter cease to be effective or usable in connection
with resales of Transfer Restricted Securities during the
periods required by this Agreement (each such event referred to
in clauses (i) through (iv), a 'Registration Default'), the
Company and the Guarantors hereby jointly and severally agree
to pay liquidated damages to each Holder of Transfer Restricted
Securities affected by the Registration Default with respect to
the first 90-day period immediately following the occurrence of
such Registration Default, in an amount equal to $.05 per week
<PAGE>
9
per $1,000 principal amount of Old Notes constituting Transfer
Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The
amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Old
Notes constituting Transfer Restricted Securities with respect
to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of liquidated
damages of $.30 per week per $1,000 in principal amount of Old
Notes constituting Transfer Restricted Securities.
Notwithstanding the foregoing, the Company and the Guarantors
shall not be required to pay liquidated damages to each Holder
of Transfer Restricted Securities if the Registration Default
arises from the failure of the Company and the Guarantors to
file, or cause to become effective, a Shelf Registration
Statement within the time period required by Section 4 of this
Agreement and such Registration Default is by reason of the
failure of the Holders to provide the information required
pursuant to Section 4(b) of this Agreement, or provide the
information reasonably requested by the Company or the
Guarantors, the NASD or any other regulatory agency having
jurisdiction over any of the Holders. All accrued liquidated
damages shall be paid by the Company and/or the Guarantors on
each Damages Payment Date by wire transfer of immediately
available funds or by federal funds check. Following the cure
of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of liquidated
damages with respect to such Transfer Restricted Securities
will cease.
All obligations of the Company and the Guarantors set
forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to
such Transfer Restricted Security shall have been satisfied in
full, except that liquidated damages with respect to such
Transfer Restricted Securities shall cease to accrue.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In
connection with the Exchange Offer, the Company and the
Guarantors shall comply with all of the provisions of Section
6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities
being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the
following provisions:
<PAGE>
10
(i) If in the reasonable opinion of counsel to the
Company there is a question as to whether the Exchange
Offer is permitted by applicable law, the Company and the
Guarantors hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the
Company to Consummate an Exchange Offer for such Old
Notes. The Company and the Guarantors hereby agree to
pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission
policy. The Company and the Guarantors hereby agree,
however, to (A) participate in telephonic conferences with
the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth
the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement,
each Holder of Transfer Restricted Securities shall
furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in
the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is
not an affiliate of the Company or any Guarantor, (B) it
is not engaged in, and does not intend to engage in, and
has no arrangement or understanding with any person to
participate in, a distribution of the New Notes to be
issued in the Exchange Offer and (C) it is acquiring the
New Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's and
the Guarantors' preparations for the Exchange Offer. Each
Holder hereby acknowledges and agrees that any Broker-
Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this
Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available
June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2,
1993, and similar no-action letters (including any no-
action letter obtained pursuant to clause (i) above), and
<PAGE>
11
(2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary
resale transaction should be covered by an effective
registration statement containing the selling security
holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of New
Notes obtained by such Holder in exchange for Old Notes
acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors
shall provide a supplemental letter to the Commission
(A) stating that the Company and the Guarantors are
registering the Exchange Offer in reliance on the position
of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and
Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company
nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the New Notes
to be received in the Exchange Offer and that, to the best
of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New
Notes in its ordinary course of business and has no
arrangement or understanding with any Person to
participate in the distribution of the New Notes received
in the Exchange Offer.
(b) Shelf Registration Statement. In the event that
a Shelf Registration Statement is required by this Agreement,
the Company and the Guarantors shall comply with all the
provisions of Section 6(c) of this Agreement and shall use
their best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution
of such Transfer Restricted Securities and, in connection
therewith, the Company and the Guarantors will as expeditiously
as possible prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available
for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution
of such Transfer Restricted Securities.
<PAGE>
12
(c) General Provisions. In connection with any
Registration Statement and any Prospectus required by this
Agreement to permit the sale or resale of Transfer Restricted
Securities (including, without limitation, any Registration
Statement and the related Prospectus, to the extent that the
same are required to be available to permit resales of Old
Notes by Broker-Dealers), the Company and the Guarantors shall:
(i) use their best efforts to keep such Registration
Statement continuously effective and provide all requisite
financial statements (including, if required by the Act or
any regulation thereunder, financial statements of the
Guarantors) for the period specified in Section 3 or 4 of
this Agreement, as applicable; upon the occurrence of any
event that would cause any such Registration Statement or
the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the
Guarantors shall promptly notify the Holders to suspend
use of the Prospectus, and the Holders shall suspend use
of the Prospectus, and such Holders shall not communicate
non-public information to any third party, in violation of
the securities laws, until the Company and the Guarantors
have made an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either
clause (A) or (B), the Company and the Guarantors shall
use their best efforts to cause such amendment to be
declared effective and such Registration Statement and the
related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to such
Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period
set forth in Section 3 or 4 of this Agreement, or such
shorter period as will terminate when all Transfer
Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the
Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and
the Company, the Guarantors, the Purchaser, and the
Holders shall comply with the provisions of the Act with
respect to the disposition of
<PAGE>
13
all Transfer Restricted
Securities covered by such Registration Statement during
the applicable period in accordance with the intended
method or methods of distribution by the sellers of such
securities set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons,
confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for
additional information relating to such Registration
Statement or Prospectus, (C) of the issuance by the
Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the
suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event
that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or
supplement to such Registration Statement or Prospectus,
or any document incorporated by reference in such
Registration Statement or Prospectus untrue, or that
requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make
the statements in such Registration Statement or
Prospectus not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities
commission or other regulatory authority shall issue an
order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the
Guarantors shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest
possible time;
(iv) furnish to each of the selling Holders and each
of the underwriter(s), if any, before filing with the
Commission, copies of any Registration Statement or any
Prospectus included in such Registration Statement or
Prospectus or any amendments or supplements to any such
<PAGE>
14
Registration Statement or Prospectus, which documents will
be subject to the review of such Holders and
underwriter(s), if any, for a period of at least five
business days, and the Company and the Guarantors will not
file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement
or Prospectus (including all such documents incorporated
by reference) to which any selling Holder of Transfer
Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably
object within five business days after the receipt of such
Registration Statement or Prospectus. A selling Holder or
underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement,
Prospectus, amendment or supplement, as applicable, as
proposed to be filed, contains a material misstatement or
omission;
(v) promptly prior to the filing of any document
that is to be incorporated by reference into a
Registration Statement or Prospectus, (a) provide copies
of such document to the selling Holders and to the
underwriter(s), if any, (b) make the Company's and the
Guarantors' representatives available for discussion of
such document and other customary due diligence matters,
and (c) include such information in such document prior to
the filing of such document as such selling Holders or
underwriter(s), if any, may reasonably request;
(vi) make available at reasonable times for
inspection by the selling Holders, any underwriter
participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the under-
writer(s) all financial and other records, pertinent
corporate documents and properties of the Company and the
Guarantors and cause the Company's and the Guarantors'
officers, directors and employees to supply all
information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing
thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any
Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment, if necessary, such
information as such selling Holders and underwriter(s), if
any,
<PAGE>
15
may reasonably request to have included therein,
including, without limitation, information relating to the
'Plan of Distribution' of the Transfer Restricted
Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to
such underwriter(s), the purchase price being paid for
Transfer Restricted Securities and any other terms of the
offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy
of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including, upon
the request of such Person, all documents incorporated by
reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Person may
reasonably request; the Company and the Guarantors hereby
consent to the use of the Prospectus and any amendment or
supplement to the Prospectus by each of the selling
Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(x) enter into such reasonable agreements (including
an underwriting agreement), and make such reasonable
representations and warranties, and take all such other
reasonable actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any Registration
Statement contemplated by this Agreement, all as may be
reasonably requested by any Holder of Transfer Restricted
Securities or any underwriter in connection with any sale
or resale of Transfer Restricted Securities pursuant to
any Registration Statement contemplated by this Agreement;
and whether or not an underwriting agreement is entered
into
<PAGE>
16
and whether or not the registration is an
Underwritten Registration, the Company and the Guarantors
shall:
(A) furnish to each selling Holder and each
underwriter, if any, in such substance and scope as
they may reasonably request and as are customarily
made by issuers to underwriters in primary
underwritten offerings, upon the date of the
Consummation of the Exchange Offer and, if
applicable, the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of
Consummation of the Exchange Offer or the date
of effectiveness of the Shelf Registration
Statement, as the case may be, signed by (y) the
President or any Vice President and (z) a
principal financial or accounting officer of
each of the Company and the Guarantors,
confirming, as of the date thereof, the matters
set forth in Sections 3.1.2 and 3.1.3 of the
Purchase Agreement and such other matters as are
customary in underwritten offerings;
(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date
of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for
the Company and the Guarantors, covering the
matters set forth in Section 3.1.1(a) and (b) of
the Purchase Agreement and such other matters as
such parties may reasonably request, and in any
event including a statement to the effect that
such counsel has participated in discussions
with representatives of the Company and the
Guarantors, representatives of the independent
public accountants for the Company and the
Guarantors, the Holders' representatives and the
Holders' counsel in connection with the
preparation of such Registration Statement and
the related Prospectus and have advised as to
the requirements of the Act and the rules and
regulations thereunder; and that such counsel
confirms that, on the basis of the foregoing,
nothing which came to such counsel's attention
caused such counsel to believe that the
applicable Registration Statement, at the time
such Registration Statement or any post-
effective
<PAGE>
17
amendment thereto became effective,
and, in the case of the Exchange Offer
Registration Statement, as of the date of
Consummation, contained an untrue statement of a
material fact or omitted to state a material
fact required to be stated in such Registration
Statement or necessary to make the statements in
such Registration Statement not misleading, or
that the Prospectus contained in such
Registration Statement as of its date and, in
the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the
date of Consummation, contained an untrue
statement of a material fact or omitted to state
a material fact necessary in order to make the
statements in the Prospectus, in light of the
circumstances under which they were made, not
misleading, although such counsel does not
assume any responsibility for the accuracy,
completeness or fairness of the statements
contained in such Registration Statement and
Prospectus other than the descriptions of the
Notes, the Guarantees and the Indenture.
Without limiting the foregoing, such counsel may
state further that the statements made by such
counsel as aforesaid do not extend to the
financial statements, notes and schedules and
other financial and statistical data or to any
information provided by any Holders or
underwriters, included in any Registration
Statement contemplated by this Agreement or the
related Prospectus, as to which such counsel
need express no opinion or belief; and
(3) a customary comfort letter, dated as
of the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, from
the Company's and the Guarantors' independent
accountants, in the customary form and covering
matters of the type customarily covered in
comfort letters to underwriters in connection
with primary underwritten offerings, and
affirming the matters set forth in the comfort
letters delivered pursuant to Section 3.1.4 of
the Purchase Agreement;
<PAGE>
18
(B) set forth in full or incorporate by
reference in the underwriting agreement, if any, the
indemnification provisions and procedures of Section
8 of this Agreement with respect to all parties to be
indemnified pursuant to Section 8 (or such other
provisions and procedures acceptable to the Company,
the Guarantors, Holders of a majority in aggregate
principal amount of Transfer Restricted Securities
covered by such Registration Statement and the
managing underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and
certificates as may be reasonably requested by each
selling Holder and each underwriter, if any, to
evidence compliance with clause (A) above and with
any customary conditions contained in the
underwriting agreement or other agreement entered
into by the Company and/or the Guarantors pursuant to
this clause (x), if any.
(xi) prior to any public offering of Transfer
Restricted Securities, cooperate with and cause the
Guarantors to cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders
and underwriter(s) may reasonably request and do any and
all other reasonable acts or things necessary or advisable
to enable the disposition in such jurisdictions of the
Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that neither
the Company nor the Guarantors shall be required to
register or qualify as a foreign corporation where it is
not now so qualified or to take any action that would
subject it to the service of process in suits or to
taxation, other than as to matters and transactions
relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xii) shall issue, upon the request of any Holder of
Old Notes covered by the Shelf Registration Statement, if
any, New Notes having an aggregate principal amount equal
to the aggregate principal amount of Old Notes surrendered
to the Company by such Holder in exchange therefor or
being sold by such Holder; such New Notes to be registered
in the name of such Holder or, if being sold by such
<PAGE>
19
Holder in the name of the purchaser(s) of such New Notes,
as the case may be; in return, the Old Notes held by such
Holder shall be surrendered to the Company for
cancellation;
(xiii) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and enable such Transfer
Restricted Securities to be in such denominations and
registered in such names as the Holders or the
underwriter(s), if any, may request at least two business
days prior to any sale of Transfer Restricted Securities
made by such underwriter(s);
(xiv) use its best efforts to cause the Transfer
Restricted Securities covered by the Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary
to enable the seller or sellers of such Transfer
Restricted Securities or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause
(xi) above;
(xv) if any fact or event contemplated by Section
6(c)(iii)(D) of this Agreement shall exist or have
occurred, prepare a supplement or post-effective amendment
to the Registration Statement or related Prospectus or any
document incorporated in such Registration Statement or
Prospectus by reference or file any other required
document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the
Registration Statement and Prospectus will not contain an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of
the Registration Statement and provide the Trustee under
the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for
deposit with the Depositary Trust Company;
(xvii) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due
diligence investigation by any underwriter (including any
<PAGE>
20
'qualified independent underwriter') that is required to
be retained in accordance with the rules and regulations
of the NASD, and use its reasonable best efforts to cause
such Registration Statement to become effective and
approved by such governmental agencies or authorities as
may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of
such Transfer Restricted Securities subject to the proviso
contained in clause (xi) above;
(xviii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission in
regard to any Registration Statement, and make generally
available to its security holders, as soon as practicable,
a consolidated earnings statement meeting the requirements
of Rule 158 (which need not be audited) for the twelve-
month period (A) commencing at the end of any fiscal
quarter in which Transfer Restricted Securities are sold
to underwriters in a firm or best efforts Underwritten
Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's
first fiscal quarter commencing after the effective date
of the Registration Statement;
(xix) cause the Indenture to be qualified under the
TIA not later than the effective date of the first
Registration Statement required by this Agreement, and, in
connection therewith, cooperate with the Trustee and the
Holders of Old Notes to effect such changes to the
Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and
execute, and use their best efforts to cause the Trustee
to execute, all documents that may be required to effect
such changes and all other forms and documents required to
be filed with the Commission to enable such Indenture to
be so qualified in a timely manner.
Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in
Section 6(c)(iii)(D) of this Agreement, such Holder will
forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented
or amended Prospectus contemplated by Section 6(c)(xv) of this
Agreement, or until it is advised in writing (the 'Advice') by
the Company that the use of the Prospectus may be resumed, and
has received
<PAGE>
copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period
regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 of this Agreement, as applicable, shall
be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) of this Agreement to and including the
date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xv) of this
Agreement or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the
Guarantors' performance of or compliance with this Agreement
will be borne by the Company and/or the Guarantors regardless
of whether a Registration Statement becomes effective,
including, without limitation: (i) all registration and filing
fees and expenses (including filings made with the NASD (and,
if applicable, the fees and expenses of any 'qualified
independent underwriter' and its counsel that may be required
by the rules and regulations of the NASD, provided that such
fees and expenses shall not include any underwriting discounts
or commissions charged in connection with such sales));
(ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the
New Notes to be issued in the Exchange Offer and printing of
Prospectuses); (iv) all fees and disbursements of counsel for
the Company, the Guarantors and, subject to Section 7(b) below,
the Holders of Transfer Restricted Securities; and (v) all fees
and disbursements of independent certified public accountants
of the Company and the Guarantors (including the expenses of
any special audit and comfort letters required by or incident
to such performance).
Each of the Company and the Guarantors will, in any
event, bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses
of any
<PAGE>
annual audit and the fees and expenses of any Person,
including special experts, retained by it.
(b) In connection with any Registration Statement
required by this Agreement (including, without limitation, the
Exchange Offer Registration Statement and the Shelf
Registration Statement), the Company will reimburse the Holders
of Transfer Restricted Securities being tendered in the
Exchange Offer and/or resold pursuant to the 'Plan of
Distribution' contained in the Exchange Offer Registration
Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Cahill
Gordon & Reindel or such other counsel as may be chosen by the
Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors jointly and
severally agree to indemnify and hold harmless each Holder,
each person, if any, who controls any Holder within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act,
the agents, employees, officers and directors and the agents,
employees, officers and directors of any such controlling
person (collectively, the 'Holder indemnified parties') from
and against any and all losses, liabilities, claims, damages
and reasonable expenses whatsoever (including but not limited
to reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or
any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation) to which they or any of
them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or
Prospectus, or in any supplement thereto or amendment thereof,
or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the
Guarantors will not be liable in any such case to the extent,
but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any such
untrue statement or alleged
<PAGE>
untrue statement or omission or alleged omission made therein
in reliance and in conformity with written information furnished
to the Company or the Guarantors by or on behalf of the Holders
expressly for use therein; provided, further, that the Company and
the Guarantors shall not be liable to any Holder indemnified party
under the indemnity agreement in this subsection with respect to
any preliminary Prospectus to the extent that any such loss, claim,
damage or liability of such Holder indemnified party results
from an untrue statement of a material fact contained in, or
the omission of a material fact from, such preliminary
Prospectus, which untrue statement or omission was corrected in
the final Prospectus, if the Company or the Guarantors shall
sustain the burden of proving that such Holder indemnified
party sold Old Notes to the person alleging such loss, claim,
damage or liability without sending or giving, at or prior to
the written confirmation of such sale, a copy of the Prospectus
or of the Prospectus as then amended or supplemented if the
Company and the Guarantors had previously furnished copies
thereof to such Holder indemnified party. This indemnity
agreement will be in addition to any liability that the Company
or any of the Guarantors may otherwise have, including, but not
limited to, under this Agreement.
(b) Each Holder agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantors,
each person, if any, who controls the Company or the Guarantors
within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, and each of their agents, employees, officers
and directors and the agents, employees, officers and directors
of such controlling person from and against any losses,
liabilities, claims, damages and reasonable expenses whatsoever
(including but not limited to reasonable attorneys' fees and
any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and
all reasonable amounts paid in settlement of any claim or
litigation) to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in
each case to the
<PAGE>
extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company
by or on behalf of such Holder expressly for use therein. This
indemnity will be in addition to any liability which the
Holders may otherwise have, including, but not limited to,
under this Agreement.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement
of any action, suit or proceeding (collectively, an 'Action'),
such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is
to be sought in writing of the commencement of such Action (but
the failure so to notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may
have under this Section 8 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such
Action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement of such
Action, the indemnifying party will be entitled to participate
in such Action, and to the extent it may elect by written
notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to
assume the defense of such Action with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such Action,
but the fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the
defense of such Action, (ii) the indemnifying parties shall not
have employed counsel to take charge of the defense of such
Action within a reasonable time after notice of commencement of
the Action, or (iii) such indemnified party or parties shall
have reasonably concluded that one counsel could not properly
and effectively represent both the indemnifying parties and the
indemnified parties, in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties.
In no event shall the indemnifying party be liable for the fees
and expenses of more than one counsel (together with
appropriate local counsel) at any time for all indemnified
parties in connection with any one
<PAGE>
Action or separate but substantially similar or related Actions in
the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section to the contrary
notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or Action effected without its
written consent; provided, however, that such consent was not
unreasonably withheld.
(d) In order to provide for contribution in
circumstances in which the indemnification provided for in
paragraphs (a) and (b) of this Section 8 is for any reason held
to be unavailable from the indemnifying party, or is
insufficient to hold harmless a party indemnified under this
Section 8, the Company, the Guarantors and the Holders shall
contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such
indemnification provision (including any reasonable
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any Action or any
claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the
indemnifying party, any contribution received by the
indemnifying party, from persons other than the indemnified
party who may also be liable for contribution, including
persons who control the indemnified party within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) to
which the Company, the Guarantors and the Holders may be
subject, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors,
on the one hand, and the Holders, on the other hand, from the
offering of the Old Notes or, if such allocation is not
permitted by applicable law or indemnification is not available
as a result of the indemnifying party not having received
notice as provided in paragraph (c) of this Section 8, in such
proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the
Company and the Guarantors, on the one hand, and the Holders,
on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations.
(e) The Company, the Guarantors and the Purchasers
agree that it would not be just and equitable if contribution
pursuant to paragraph (d) of this Section 8 were determined by
pro rata allocation or by any other method of allocation that
does not take into account the equitable consideration referred
to above. Notwithstanding the provisions of paragraph (d) of
<PAGE>
this Section 8, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes
of paragraphs (d) and (e) of this Section 8, each person, if
any, who controls the Holders within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as the Holders, and each person, if
any, who controls the Company or the Guarantors within the
meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as the
Company or the Guarantors, subject in each case to clauses (i)
and (ii) of this Section 8(e). Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any Action against such party in respect of
which a claim for contribution may be made against another
party or parties under paragraph 8(d) or (e) of this Section 8,
notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under
paragraph (d) or (e) of this Section 8, except to the extent
that it has been prejudiced in any material respect by such
failure or from any liability which it may otherwise have. No
party shall be liable for contribution with respect to any
Action or claim settled without its written consent; provided,
however, that such written consent was not unreasonably
withheld.
SECTION 9. RULE 144A
The Company and the Guarantors hereby agree with each
Holder, for so long as any Transfer Restricted Securities
remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in
connection with any sale of such securities and any prospective
purchaser of such Transfer Restricted Securities from such
Holder or beneficial owner the information required by Rule
144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten
Registration under this Agreement unless such Holder (a) agrees
to sell such Holder's Transfer Restricted Securities on the
basis provided in any underwriting arrangements approved by the
Persons entitled under this Agreement to approve such
arrangements
<PAGE>
and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under
the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered
by the Shelf Registration Statement who desire to do so may
sell such Transfer Restricted Securities in an Underwritten
Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a
majority in aggregate principal amount of the Transfer
Restricted Securities included in such offering; provided, that
such investment bankers and managers must be reasonably
satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being
entitled to exercise all rights provided in this Agreement, in
the Indenture, the Purchase Agreement or granted by law,
including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this
Agreement. The Company and the Guarantors agree that monetary
damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any Action
for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Each of the Company
and the Guarantors will not on or after the date of this
Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the
provisions of this Agreement. Neither the Company nor any of
the Guarantors have previously entered into any agreement,
still in effect as of the date hereof, granting any
registration rights with respect to its securities to any
Person. The rights granted to the Holders under this Agreement
do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's or the
Guarantors' securities under any agreement in effect on the
date of this Agreement.
<PAGE>
(c) Adjustments Affecting the Old Notes. The
Company and the Guarantors will not take any action, or permit
any change to occur, with respect to the Old Notes that would
materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions of
this Agreement may not be given unless the Company has obtained
the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure
from the provisions of this Agreement that relates exclusively
to the rights of Holders whose securities are being sold or
tendered pursuant to a Registration Statement and that does not
affect directly or indirectly the rights of other Holders whose
securities are not being sold or tendered pursuant to such
Registration Statement may be given by the Holders of a
majority of the outstanding principal amount of Transfer
Restricted Securities being so sold or tendered.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand delivery, first-class mail (registered or certified,
return receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy
to the Registrar under the Indenture; and
(ii) if to the Company or the Guarantors, at:
90 Linden Place
P.O. Box 681
Rochester, New York 14603
Attention: President
with a copy to:
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith, Esq.
and
Harris Beach & Wilcox
<PAGE>
130 East Main Street
Rochester, New York 14604
Attention: Thomas M. Hampson, Esq.
All such notices and communications shall be deemed
to have been duly given: (i) at the time delivered by hand, if
personally delivered; (ii) five business days after being
deposited in the mail, postage prepaid, if mailed; (iii) when
answered back, if telexed; (iv) when receipt acknowledged, if
telecopied; and (v) on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee at the address specified in the
Indenture.
(f) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation
and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the 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.
(h) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning of this Agreement.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more
of the provisions contained in this Agreement, or the
application of any such provision in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions contained in this Agreement shall
not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with
the other Note Documents (as defined in the Purchase Agreement)
<PAGE>
is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement
of the agreement and understanding of the parties to this
Agreement in respect of the subject matter contained in this
Agreement. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to in this
Agreement with respect to the registration rights granted by
the Company and the Guarantors with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect
to such subject matter.
(l) Signatures of the Subsidiary Guarantors. The
Company hereby agrees that it shall cause each of the
Subsidiary Guarantors to execute this Agreement on the Closing
Date, after which the Subsidiary Guarantors shall be deemed to
be parties to this Agreement on and after the date of this
Agreement for all purposes.
[Signatures on Next Page]
<PAGE>
[Registration Rights Agreement -- Company's Signature Page]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PF ACQUISITION CORP.
By: /s/ Roy A. Myers
----------------------
Name: Roy A. Myers
Title: President
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
----------------------
Name: Roy A. Myers
Title: General Manager
HUSMAN SNACK FOODS COMPANY, INC.
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
FINGER LAKES PACKAGING COMPANY, INC.
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
CURTICE-BURNS MEAT SNACKS, INC.
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
<PAGE>
CURTICE-BURNS EXPRESS, INC.
By: /s/ Roy A. Myers
----------------------
Name: Roy A. Myers
Title: President
PRO-FAC HOLDING COMPANY OF IOWA, INC.
By: /s/ Roy A. Myers
----------------------
Name: Roy A. Myers
Title: Vice President
SEASONAL EMPLOYERS, INC.
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
QUALITY SNAX OF MARYLAND, INC.
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
NALLEY'S CANADA LIMITED
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
KENNEDY ENDEAVORS, INCORPORATED
By: /s/ William D. Rice
----------------------
Name: William D. Rice
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed to as of the
date first above written:
AMERICAN SKANDIA TRUST, a
Massachusetts business trust,
on behalf of its Federated High
Yield Portfolio
By: /s/ Gordon Boronow
-------------------------
Name: Gordon Boronow
Title: Vice President
By accepting this signature page, the Company,
Pro-Fac and each Subsidiary Guarantor will be deemed to
acknowledge and agree that: (1) American Akandia Trust ('AST')
is a 'series company' as defined in Rule 18f-2(a) promulgated
under the Investment Company Act of 1940, as amended, and the
Purchaser is a portfolio of assets specifically allocated to a
series of shares of AST as contemplated by such rule; (2) all
persons extending credit to, contracting with or having any
claim against the Purchaser (including any claims arising
hereunder) shall only look to the assets specifically allocated
to the Purchaser for payment under such credit, contract or
claim and not to any assets specifically allocated to another
series of shares of AST or to any other assets of AST; and (3)
neither the shareholders nor the directors of AST, nor any of
AST's officers, employees or agents, whether post, present or
future, shall be liable for such credit, contract or claim.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Amoco Global Fund
----------------------------------
Name of Purchaser (Print)
Lazard Freres Asset
Management, as discretionary
investment manager
By: /s/ Ira Handler
------------------------------
Name: Ira Handler
Title:
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Banque National DeParis
---------------------------------
Name of Purchaser (Print)
By: /s/ Charles M. Mixon
-----------------------------
Name:
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Benefit Capital Management Corp.
SEG #2_____________ ___________
Name of Purchaser (Print)
By: /s/ James E. McCabe
-----------------------------
Name: James E. McCabe
Title: Vice-Pres. Fixed
Income
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
CIGNA Investments, Inc.
-------------------------------
Name of Purchaser (Print)
By: /s/ Alan C. Petersen
--------------------------------
Name: Alan C. Petersen
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Corporate High Yield Fund, Inc.__
Name of Purchaser (Print)
By: /s/ Elizabeth Phillips
Name: Elizabeth Phillips
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Corporate High Yield Fund
II, Inc._________________________
Name of Purchaser (Print)
By: /s/ Elizabeth Phillips
Name: Elizabeth Phillips
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
CRL Management Corp. ____________
Name of Purchaser (Print)
By: /s/ C.R. Langston
Name: C.R. Langston
Title: President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
AIM CAPITAL MANAGEMENT ON
BEHALF OF DELTA AIRLINES
RETIREMENT TRUST_________________
Name of Purchaser (Print)
By: /s/ John L. Pessarra
Name: John L. Pessarra
Title:
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
DETROIT GENERAL RETIREMENT SYSTEM
Name of Purchaser (Print)
By: /s/ Michael Lanier
Name: Michael Lanier
Title: Senior Vice President
Wertheim Schroder
Inv. Svcs.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
FEDERATED HIGH YIELD TRUST, a
Massachusetts business trust
By: Federated Management, a
Delaware business trust, as
attorney-in-fact
By: /s/ Mark E. Durbiano
Name: Mark E. Durbiano
Title: Vice President
By accepting this signature page, the Company,
Pro-Fac and each Subsidiary Guarantor will be deemed to
acknowledge and agree that, in accordance with the Declaration
of Trust pursuant to which the Purchaser has been organized as
a business trust under the laws of the Common wealth of
Massachusetts, all persons extending credit to, contracting
with or having any claim against the Purchaser (including any
claims arising hereunder) shall only look to the assets of the
Purchaser for payment under such credit, contract or claim, and
neither the shareholders nor the trustees of the Purchaser, nor
any of the Purchaser's officers, employees or agents (including
the above-signed attorney-in-fact), whether past, present or
future, shall be liable therefor.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed to as of the
date first above written:
FIXED INCOME SECURITIES, INC., a
Maryland corporation, on behalf
of its Strategic Income Fund
By: Federated Advisers, a
Delaware business trust, as
attorney-in-fact
By: /s/ Mark E. Durbiano
Name: Mark E. Durbiano
Title: Vice President
By accepting this signature page, the Company,
Pro-Fac and each Subsidiary Guarantor will be deemed to
acknowledge and agree that: (1) Fixed Income Securities, Inc.
('FIS') is a 'series company' as defined in Rule 18f-2(a)
promulgated under the Investment Company Act of 1940, as
amended, and the Purchaser is a portfolio of assets
specifically allocated to a series of shares of FIS as
contemplated by such rule; (2) all persons extending credit to,
contracting with or having any claim against the Purchaser
(including any claims arising hereunder) shall only look to the
assets specifically allocated to the Purchaser for payment
under such credit, contract or claim and not to any assets
specifically allocated to another series of shares of FIS or to
any other assets of FIX; and (3) neither the shareholders nor
the directors of FIS; nor any of FIS's officers, employees or
agents (including the above-signed attorney-in-fact), whether
past, present or future, shall be liable for such credit,
contract or claim.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Fortis Advantage Portfolios,
Inc. - High Yield Portfolio
Name of Purchaser (Print)
By: /s/ David G. Carroll
Name: David G. Carroll
Title: Second Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin AGE High Income Fund
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin Multi-Income Trust
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin Strategic Income Fund
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin Tax-Advantaged
High Yield
Name of Purchaser (Print)
By: /s/ Betsey Hofman-Schwab
Name: Betsy Hofman-Schwab
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin Universal Trust
Name of Purchaser (Print)
By: /s/ Christopher J. Molumphy
Name: Christopher J. Molumphy
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Franklin Valuemark Funds -
High Yield_______________________
Name of Purchaser (Print)
By: /s/ Betsey Hofman-Schwab
Name: Betsy Hofman-Schwab
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
HARCH & COMPANY
Name of Purchaser (Print)
High Yield Opportunity Fund FBO ACCOUNT 230-31244-21-280
By: /s/ Michael E. Lewitt
Name: Michael E. Lewitt
Title: Executive Vice
President
General Counsel
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
HARCH & COMPANY
Name of Purchaser (Print)
FBO LEHMAN OFFSHORE OSIP
By: /s/ Michael E. Lewitt
Name: Michael E. Lewitt
Title: Executive Vice
President
General Counsel
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
HIGHLANDER INCOME FUND INC., a
Minnesota corporation
By: Federated Advisers, a
Delaware business trust,
as subadviser
By: /s/ Mark E. Durbiano
Name: Mark E. Durbiano
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
AIM CAPITAL MANAGEMENT ON BEHALF
OF HOUSTON POLICE OFFICERS
PENSION SYSTEM__________________
Name of Purchaser (Print)
By: /s/ John L. Pessarra
Name: John L. Pessarra
Title:
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
IDS Extra Income Fund, Inc.
Name of Purchaser (Print)
By: /s/ Leslie L. Ogg
Name: Leslie L. Ogg
Title: Vice President and
General Counsel
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
ILLINOIS STATE BOARD OF
INVESTMENT_______________________
Name of Purchaser (Print)
By: /s/ Larry G. Darlington
Name: Larry G. Darlington
Title: Investment Officer
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed to as of the
date first above written:
INVESTMENT SERIES FUNDS, INC., a
Maryland corporation, on behalf
of its Fortress Bond Fund
By: Federated Advisers, a
Delaware business trust, as
attorney-in-fact
By: /s/ Mark R. Durbiano
Name: Mark E. Durbiano
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
John Hancock Strategic Income
Fund_____________________________
Name of Purchaser (Print)
By: /s/ Frederick L. Cavanaugh
Name: Frederick L. Cavanaugh
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper High Yield Fund___________
Name of Purchaser (Print)
By: /s/ Michael A. McNamara______
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper Diversified Income Fund___
Name of Purchaser (Print)
By: /s/ Michael A. McNamara______
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper Investors Fund
High Yield Portfolio __
Name of Purchaser (Print)
By: /s/ Michael A. McNamara______
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper High Income Trust
Name of Purchaser (Print)
By: /s/ Michael A. McNamara______
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper Multi-Market
High Income Trust
Name of Purchaser (Print)
By: /s/ Michael A. McNamara _____
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Kemper Strategic Income Trust
Name of Purchaser (Print)
By: /s/ Michael A. McNamara _____
Name: Michael A. McNamara
Title: Senior Vice President
<PAGE>
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Stein Roe & Farnham for Keyport
Life Insurance Co.
Name of Purchaser (Print)
By: /s/ Ann H. Benjamin
Name: Ann H. Benjamin
Title: Sr. V.P.
STEIN ROE & FARNHAM INC.
AS AGENT FOR KEYPORT LIFE
INS. CO.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
LB Series Fund, Inc. (High Yield
Portfolio)
Name of Purchaser (Print)
By: /s/ Thomas N. Haag
Name: Thomas N. Haag
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Lazard Strategic Yield PR
Name of Purchaser (Print)
Lazard Freres Asset Management as
discretionary investment manager
By: /s/ Ira Handler
Name: Ira Handler
Title:
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed to as of the
date first above written:
LIBERTY HIGH INCOME BOND FUND,
INC., a Maryland corporation
By: Federated Advisers, a
Delaware business trust,
as attorney-in-fact
By: /s/ Mark E. Durbiano
Name: Mark E. Durbiano
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln National Investment
Management Company, Its
Attorney-In-Fact
Name of Purchaser (Print)
By: /s/ Richard D. Shafer
Name: Richard D. Shafer
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
The Advantage Strategic Income
Fund_____________________________
Name of Purchaser (Print)
By: /s/ William H. Peck
Name: William H. Peck
Title: Assistant Treasurer
The Advantage Family
of Funds
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Lutheran Brotherhood High Yield
Fund
Name of Purchaser (Print)
By: /s/ Thomas N. Haag
Name: Thomas N. Haag
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
MANUSA Universal High
Yield (Nominee: Gullship)
Name of Purchaser (Print)
By: /s/ Terry Carr
Name: Terry Carr
Title: Assistant Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
Name of Purchaser (Print)
By: /s/ Mary E. Wilson
Name: Mary E. Wilson
Title: Vice President and
Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
MASSMUTUAL/CARLSON CBO, N.V.
Name of Purchaser (Print)
By: /s/ Stephen M. Ash
MEESPIERSON TRUST (CURACAO)
Name: Stephen M. Ash
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Merrill Lynch Corporate Bond
Fund, Inc. High Income Portfolio
Name of Purchaser (Print)
By: /s/ Vincent T. Lathbury
Name: Vincent T. Lathbury
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
NORTHWESTERN MUTUAL SERIES FUND,
INC. -- HIGH YIELD BOND PORTFOLIO
Name of Purchaser (Print)
By: /s/ Steven P. Swanson
Name: Steven P. Swanson
Title: Vice President-
Investments
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
Name of Purchaser (Print)
By: /s/ Steven P. Swanson
Name: Steven P. Swanson
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
NYC EMPLOYEES RETIREMENT SYS.
Name of Purchaser (Print)
By: /s/ Michael Lanier
Name: Michael Lanier
Title: Senior Vice President
Wertheim Schroder Inv.
Svcs.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
New York City Employees
Retirement System
Name of Purchaser (Print)
Lazard Freres Asset Management,
as discretionary Investmetn
Manager
By: /s/ Ira Handler
Name: Ira Handler
Title:
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
NYC POLICE DEPARTMENT PENSION
FUND-SUB CHAPTER 2
Name of Purchaser (Print)
By: /s/ Michael Lanier
Name: Michael Lanier
Title: Senior Vice President
Wertheim Schroder Inv.
Svcs.
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Oppenheimer Champion High Yield
Fund
Name of Purchaser (Print)
By: /s/ Ralph Stellmacher
Name: Ralph Stellmacher
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Oppenheimer High Yield Fund
Name of Purchaser (Print)
By: /s/ Ralph Stellmacher
Name: Ralph Stellmacher
Title: Vice President
<PAGE>
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
ORIX USA Corporation
--------------------------------
Name of Purchaser (Print)
By: /s/ Hiroyuki Miyauchi
----------------------------
Name: Hiroyuki Miyauchi
Title: Senior Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Pacific Mutual General Account
--------------------------------
Name of Purchaser (Print)
By: /s/ Raymond Lee
----------------------------
Name: Raymond Lee
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Pacific Select Fund
The High Yield Bond Series
--------------------------------
Name of Purchaser (Print)
By: /s/ Raymond Lee
----------------------------
Name: Raymond Lee
Title: Portfolio Manager
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Phoenix Edge Bond Sep B
--------------------------------
Name of Purchaser (Print)
By: /s/ Curtiss Barrows
----------------------------
Name: Curtiss Barrows
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Phoenix Series Fund
--------------------------------
Name of Purchaser (Print)
By: /s/ Curtiss Barrows
----------------------------
Name: Curtiss Barrows
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Prospect Street High Income
Portfolio Inc.
--------------------------------
Name of Purchaser (Print)
By: /s/ Karen J. Thelen
----------------------------
Name: Karen J. Thelen
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Providence Investment
Management Group
--------------------------------
Name of Purchaser (Print)
By: /s/ Fred Smith
----------------------------
Name: Fred Smith
Title: Partner
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
The Prudential Insurance Company
of America, as investment manager
for the General Motors Retirement
Retirement Program for Salaried
Employees High Yield Account
--------------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
THE U.S. HIGH YIELD FUND SICAV
By: The Prudential Insurance
Company of America, as
investment advisor
---------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
The Prudential Insurance Company
of America, as investment manager
for the General Motors Hourly-
Rate Employees High Yield Account
---------------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
-----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
THE HIGH YIELD INCOME FUND, INC.
By: The Prudential Investment
Corporation, as investment
advisor
---------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
-----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
THE PRUDENTIAL SERIES FUND, INC.
HIGH YIELD BOND PORTFOLIO
By: The Prudential Investment
Corporation, as investment
advisor
---------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
PRUDENTIAL HIGH YIELD FUND
By: The Prudential Investment
Corporation, as investment
advisor
---------------------------
Name of Purchaser (Print)
By: /s/ Lars M. Berkman
-----------------------------
Name: Lars M. Berkman
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
The Advantage High Yield
Bond Fund________________________
Name of Purchaser (Print)
By: /s/ William H. Peck
Name: William H. Peck
Title: Assistant Treasurer
The Advantage Family
of Funds
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Southern Farm Bureau Annuity
Insurance Company/Merrill
Lynch Asset Management___________
Name of Purchaser (Print)
By: /s/ Vincent T. Lathbury
Name: Vincent T. Lathbury
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Standard Security Life Insurance
Company of New York______________
Name of Purchaser (Print)
By: /s/ David T. Kettig
Name: David T. Kettig
Title: Secretary
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company as
investment advisor to The City
and County of San Francisco
Employees' Retirement System_____
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company
as investment advisor to
Pacific Telesis Group____________
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company
as investment advisor to
Howard Hughes Medical Institute__
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Funds Management, Inc.
as investment advisor to
TCW Galileo High Yield Bond Fund_
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company as
investment advisor to USW Benefit
Plans Investment Partnership_____
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company
as investment advisor to
Chrysler Corporation_____________
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
TCW Asset Management Company
as investment advisor to
Morgan Stanley Group, Inc._______
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Trust Company of the West
as trustee of the
TCW High Yield Fund______________
Name of Purchaser (Print)
By: /s/ Sheldon Stone
Name: Sheldon Stone
Title: Managing Director
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Value Line Aggressive Income
Trust____________________________
Name of Purchaser (Print)
By: /s/ John W. Risner
Name: John W. Risner
Title: Vice President
<PAGE>
[Registration Rights Agreement -- Purchasers' Signature Page]
Accepted and agreed as of the
date first above written:
Van Kampen Merritt
Corporate High Yield Fund________
Name of Purchaser (Print)
By: /s/ Edward C. Wood III
Name: Edward C. Wood III
Title: Treasurer
<PAGE>
Exhibit 4.4
- --------------------------------------------------------------------------------
TERM LOAN, TERM LOAN FACILITY AND SEASONAL LOAN AGREEMENT
by and among
PF ACQUISITION CORP.,
CURTICE-BURNS FOODS, INC.
and
SPRINGFIELD BANK FOR COOPERATIVES
Dated as of November 3, 1994
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms............................................................. 1
Section 1.2 Accounting Terms.......................................................... 15
SECTION 2. AMOUNT AND TERMS OF THE LOANS
Section 2.1 Term Loan................................................................. 15
Section 2.2 Term Note................................................................. 15
Section 2.3 Amortization of Term Loan................................................. 16
Section 2.4 Term Loan Facility........................................................ 16
Section 2.5 Term Loan Facility Note................................................... 16
Section 2.6 Amortization of Term Loan Facility Loans.................................. 17
Section 2.7 Seasonal Loan Facility.................................................... 17
Section 2.8 Seasonal Loan Note........................................................ 17
Section 2.9 Repayment of Seasonal Loans............................................... 17
Section 2.10 Annual Repayment Period................................................... 18
Section 2.11 Notice and Manner of Borrowing............................................ 18
Section 2.12 Conversions and Renewals.................................................. 19
Section 2.13 Interest.................................................................. 20
Section 2.14 Fees...................................................................... 23
Section 2.15 Authorization for Notes................................................... 23
Section 2.16 Prepayments; Prepayment Fee............................................... 23
Section 2.17 Method of Payment......................................................... 24
Section 2.18 Use of Proceeds........................................................... 25
Section 2.19 Illegality................................................................ 25
Section 2.20 Impossibility............................................................. 26
Section 2.21 Increased Cost............................................................ 26
Section 2.22 [Intentionally Omitted]................................................... 27
Section 2.23 Funding Loss Indemnification.............................................. 27
Section 2.24 Guaranties................................................................ 28
Section 2.25 Security.................................................................. 28
SECTION 3. LETTERS OF CREDIT
Section 3.1 Letter of Credit Accommodations........................................... 30
Section 3.2 Conditions Precedent...................................................... 30
Section 3.3 Obligations............................................................... 31
Section 3.4 Reimbursement Obligations................................................. 31
Section 3.5 Indemnification........................................................... 32
Section 3.6 Fees and Commissions...................................................... 32
Section 3.7 L/C Limit................................................................. 32
Section 3.8 Exculpation and Release................................................... 33
Section 3.9 Compliance with Law; Borrower's Risk...................................... 33
</TABLE>
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<TABLE>
<S> <C> <C> <C>
SECTION 4. CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Loans and Letter of Credit
Accommodations as of Closing Date....................................... 34
Section 4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations.......................................................... 38
SECTION 5. REPRESENTATIONS AND WARRANTIES
Section 5.1 Incorporation, Good Standing, and Due Qualification....................... 39
Section 5.2 Corporate Power and Authority............................................. 39
Section 5.3 Legally Enforceable Agreement............................................. 39
Section 5.4 Labor Disputes and Acts of God............................................ 39
Section 5.5 Other Agreements.......................................................... 40
Section 5.6 Litigation................................................................ 40
Section 5.7 No Defaults on Outstanding Judgments or Orders............................ 40
Section 5.8 Ownership and Liens....................................................... 40
Section 5.9 Subsidiaries and Ownership of Stock....................................... 40
Section 5.10 ERISA..................................................................... 41
Section 5.11 Operation of Business..................................................... 41
Section 5.12 Taxes..................................................................... 41
Section 5.13 Debt...................................................................... 41
Section 5.14 Environment............................................................... 42
Section 5.15 Solvency.................................................................. 43
SECTION 6. AFFIRMATIVE COVENANTS
Section 6.1 Maintenance of Existence.................................................. 43
Section 6.2 Maintenance of Records.................................................... 43
Section 6.3 Maintenance of Properties................................................. 44
Section 6.4 Conduct of Business....................................................... 44
Section 6.5 Maintenance of Insurance.................................................. 44
Section 6.6 Compliance With Laws...................................................... 44
Section 6.7 Right of Inspection....................................................... 44
Section 6.8 Environment............................................................... 44
Section 6.9 Monthly Borrowing Base Certificates....................................... 45
Section 6.10 Title Reports, Title Insurance and Survey................................. 45
SECTION 7. NEGATIVE COVENANTS
Section 7.1 Liens..................................................................... 45
Section 7.2 Debt...................................................................... 48
Section 7.3 Mergers, Etc.............................................................. 49
Section 7.4 Leases.................................................................... 49
Section 7.5 Sale and Leaseback........................................................ 49
Section 7.6 [Intentionally Omitted]................................................... 50
Section 7.7 Sale of Assets............................................................ 50
Section 7.8 Investments............................................................... 50
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Section 7.9 Guaranties, Etc........................................................... 51
Section 7.10 Transactions With Affiliates.............................................. 51
Section 7.11 Fiscal Year............................................................... 51
SECTION 8. INVESTMENT BY BORROWER IN STOCK OF BANK
Section 8.1 Initial Investment in Class C Stock....................................... 51
Section 8.2 Quarterly Investment in Class C Stock..................................... 52
Section 8.3 Security for Bank Stock Purchase Obligations.............................. 52
Section 8.4 Pledge of Bank Stock and Patron's Equities................................ 52
SECTION 9. EVENTS OF DEFAULT
Section 9.1 Events of Default......................................................... 53
Section 9.2 Remedies.................................................................. 56
SECTION 10. MISCELLANEOUS
Section 10.1 Account Stated............................................................ 57
Section 10.2 Amendments, Etc........................................................... 57
Section 10.3 Notices................................................................... 57
Section 10.4 No Waiver................................................................. 58
Section 10.5 Successors and Assigns.................................................... 58
Section 10.6 Assignments and Participations............................................ 58
Section 10.7 Costs, Expenses, and Taxes................................................ 59
Section 10.8 Integration............................................................... 59
Section 10.9 Indemnity................................................................. 59
Section 10.10 Governing Law............................................................. 60
Section 10.11 Consent to Jurisdiction................................................... 60
Section 10.12 Waiver of Jury Trial...................................................... 60
Section 10.13 [Intentionally Omitted]................................................... 60
Section 10.14 Severability of Provisions................................................ 60
Section 10.15 Headings.................................................................. 60
Section 10.16 Counterparts.............................................................. 61
</TABLE>
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SCHEDULES AND EXHIBITS
<TABLE>
<S> <C> <C>
Schedule 1.1 -- Subsidiary Guarantors
Schedule 2.25(a)(iv) -- List of Borrower's Real Property Collateral
Schedule 2.25(c)(ii) -- List of Subsidiaries Real Property Collateral
Schedule 3.1 -- List of Existing Letters of Credit
Schedule 3.2 -- Letter of Credit Fees and Commissions
Schedule 4.1(i) -- List of Uniform Commercial Code Filing Jurisdictions
Schedule 4.1(m) -- List of Borrower's and Subsidiaries' Jurisdictions of Incorporation and Qualification
as a Foreign Corporation
Schedule 4.1(q) -- Permitted Transactions
Schedule 5.5 -- Agreements with Material Adverse Effect
Schedule 5.6 -- Litigation
Schedule 5.9 -- List of Subsidiaries and Ownership of Capital Stock Thereof
Schedule 5.10 -- Exceptions to ERISA Minimum Plan Funding Compliance
Schedule 5.12 -- Outstanding Tax Returns and/or Unpaid Tax Liabilities
Schedule 5.13 -- List of Credit Agreements, Etc.
Schedule 5.14 -- Exceptions to Environmental Law Compliance
Schedule 7.2(b) -- Permitted Debt
Exhibit A -- Form of Term Note
Exhibit B -- Form of Term Loan Facility Note
Exhibit C -- Form of Seasonal Loan Note
Exhibit D -- Form of Parent Guaranty
Exhibit E -- Form of Subsidiaries Guaranty
</TABLE>
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<TABLE>
<S> <C> <C>
Exhibit F -- Form of Borrower Security Agreement
Exhibit G -- Form of Borrower Trademark Security Agreement
Exhibit H -- Form of Borrower Patent Security Agreement
Exhibit I -- Form of Parent Security Agreement
Exhibit J -- Form of Subsidiaries Security Agreement
Exhibit K -- Form of Opinion of Howard, Darby and Levin
Exhibit L -- Form of Opinion of Harris, Beach & Wilcox
Exhibit M -- Form of Borrowing Base Certificate
</TABLE>
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TERM LOAN, TERM LOAN FACILITY AND SEASONAL LOAN AGREEMENT
TERM LOAN, TERM LOAN FACILITY AND SEASONAL LOAN AGREEMENT dated as of
November 3, 1994 between PF ACQUISITION CORP., a New York corporation ('PF'),
and CURTICE-BURNS FOODS, INC., a New York corporation, ('CURTICE-BURNS', and
together with PF, individually and collectively, jointly and severally, the
'BORROWER') and SPRINGFIELD BANK FOR COOPERATIVES, a corporation established
under the laws of the United States of America and continuing as a
federally-chartered instrumentality of the United States under the Farm Credit
Act of 1971, as amended (together with its permitted successors and assigns, the
'BANK').
- ----------------------------------------------------------
WITNESSETH:
WHEREAS, PF is a wholly-owned subsidiary of Pro-Fac Cooperative, Inc.
('PARENT'), a New York cooperative corporation and an eligible farmers'
cooperative association as defined by the Farm Credit Act of 1971, as amended;
WHEREAS, PF and Curtice-Burns have entered into the Merger Agreement (as
defined below):
WHEREAS, PF and Curtice-Burns have requested the Bank to provide financial
accommodations, including financial accommodations required to consummate the
transactions contemplated by the Merger Agreement, and the Bank has agreed to
provide such financial accommodations upon the terms and subject to the
conditions of this Agreement;
WHEREAS, Curtice-Burns will be the survivor of the merger of PF with and
into Curtice-Burns upon consummation of such merger;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
'ACQUISITION FACILITY FEE' shall have the meaning assigned to such
term in Section 2.14.
'ADDITIONAL COSTS' shall have the meaning assigned to such term in
Section 2.21.
<PAGE>
'AFFILIATE' means any Person (A) which directly or indirectly controls, or
is controlled by, or is under common control with the Borrower or a Subsidiary;
(B) which directly or indirectly beneficially owns or holds five percent (5%) or
more of any class of voting stock of the Borrower or any Subsidiary; or (C) five
percent (5%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Borrower or a Subsidiary; provided that the
Bank shall not be deemed an Affiliate of Parent or any of its Subsidiaries. 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.
'AGREEMENT' means this Term Loan, Term Loan Facility and Seasonal Loan
Agreement, as amended, supplemented, or modified from time to time.
'ANNUAL CASH SWEEP' means, for any Fiscal Year of the Parent, an amount
equal to eighty percent (80%) of the following amount calculated with respect to
the Parent on a consolidated basis: net income after taxes and interest before
patronage distribution, plus depreciation (excluding depreciation of Capital
Leases), amortization (including amortization of deferred finance charges), and
adjustments to reconcile net income to net cash provided by operating activities
made in accordance with GAAP, less scheduled principal installments payable and
paid during such Fiscal Year with respect to the Term Loan, capital expenditures
made during such Fiscal Year, Restricted Payments (as defined in the Parent
Guaranty) made to the holders of preferred and common stock of the Parent and
that are not in violation of paragraph 9.6 of the Parent Guaranty, cash
dividends paid to the holders of preferred stock of the Borrower, and cash
patronage payments made to the members of the Parent for such Fiscal Year.
'BANK STOCK' shall have the meaning assigned to such term in Section 8.1.
'BANKRUPTCY CODE' shall mean title 11 of the united states code as enacted
in 1978, as the same may have heretofore been or may hereafter be amended,
recodified, modified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
'BORROWER' shall have the meaning assigned to such term in the first
sentence of this Agreement.
'BORROWER MORTGAGES' shall have the meaning assigned to such term in
Section 2.25.
'BORROWER PATENT SECURITY AGREEMENT' shall have the meaning assigned to
such term in Section 2.25.
'BORROWER SECURITY AGREEMENT' shall have the meaning assigned to such term
in Section 2.25.
'BORROWER TRADEMARK SECURITY AGREEMENT' shall have the meaning assigned to
such term in Section 2.25.
'BORROWING BASE' shall mean, as of any date of determination, an amount
equal to:
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(i) sixty percent (60%) of the face amount of the Eligible Accounts
as of such date,
plus (ii) fifty percent (50%) of the amount of the Eligible
Inventory as of such date, valued at the lower of its cost (calculated
on a first-in-first-out basis) or market value.
'BORROWING BASE CERTIFICATE' shall have the meaning assigned to such
term in Section 6.9.
'BUSINESS DAY' means any day other than a Saturday, Sunday, 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 and, if the applicable day
relates to a LIBOR Loan, LIBOR Interest Period, or notice with respect to a
LIBOR Loan, a day on which dealings in Dollar deposits are also carried on
in the London Interbank Market and banks are open for business in London.
'CAPITAL LEASES' means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
'CHANGE OF CONTROL' means the occurrence of any of the following,
other than in connection with the Offer or the Merger: (a) the sale, lease
or transfer, in one or a series of related transactions, of all or
substantially all of the Parent's or the Borrower's assets to any Person or
group (as such term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended), (b) the consummation of any transaction the
result of which is that any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) owns,
directly or indirectly, (i) more than fifty percent (50%) of the voting
power of the voting stock of the Parent or the Borrower or (ii) more than
thirty percent (30%) of the voting power of the voting stock of the
Borrower if the Parent owns, directly or indirectly, a lesser percentage
than such Person or group of the voting power of the voting stock of the
Borrower, (c) the first date on which any Person or group (as defined
above) shall have elected, or caused to be elected, a sufficient number of
its or their nominees to the Board of Directors of the Parent or the
Borrower such that the nominees so elected (regardless of when elected)
shall collectively constitute a majority of the Board of Directors of the
Parent or the Borrower, as the case may be or (d) for a period of
one-hundred-twenty (120) consecutive days, the number of Disinterested
Directors on the Board of Directors of the Borrower being less than the
greater of (A) two and (B) the number of the directors of the Borrower who
are Parent directors. For purposes of this definition, any transfer of an
equity interest of an entity that was formed for the purpose of acquiring
voting stock of the Parent or the Borrower shall be deemed to be a transfer
of such portion of the voting stock owned by such entity as corresponds to
the portion of the equity of such entity that has been so transferred.
'CLOSING DATE' means November 3, 1994 or such other date as may be
agreed upon by the parties hereto.
'CODE' means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and published interpretations thereof.
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<PAGE>
'COLLATERAL' means all property which is subject or is to be subject
to the Lien granted by any Obligor pursuant to the Security Documents.
'COMMITMENT' means the Bank's obligation to make Loans to the Borrower
pursuant to Section 2.1, 2.4 and 2.7 in the amounts referred to therein and
to provide the Letter of Credit Accommodations described in Section 3.1,
all upon and subject to the terms and provisions of this Agreement.
'COMMITMENT FEE' shall have the meaning assigned to such term in
Section 2.14.
'COMMONLY CONTROLLED ENTITY' means an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 414(b) or 414(c) of the Code.
'CURTICE-BURNS' shall have the meaning assigned to such term in the
first sentence of this Agreement.
'DEBT' means, with respect to any Person, without duplication, all
items which, in accordance with GAAP, should be included in determining
total liabilities as shown on the liability side of a balance sheet as of
the date on which such Debt is to be determined and includes, whether or
not so reflected, (a) indebtedness or liability for borrowed money; (b)
obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations arising in the ordinary course of
business, deferred compensation arrangements for employees and obligations
under the Marketing Agreement); (d) all indebtedness arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property); (e) obligations as
lessee under Capital Leases; (f) current liabilities in respect of unfunded
vested benefits under Plans covered by ERISA; (g) monetary obligations
under letters of credit; (h) monetary obligations under acceptance
facilities; (i) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent
obligations to assure a creditor against loss.
'DEFAULT' means any event or condition that would become an Event of
Default after notice, or passage of time, or both.
'DISCOUNT' shall have the meaning assigned to such term in Section
2.13(c).
'DISINTERESTED DIRECTORS' means directors of the Borrower who are not
affiliates of either the Borrower or the Parent.
'DOLLARS' and the sign '$' mean lawful money of the United States of
America.
'ELIGIBLE ACCOUNTS' means accounts owing to Borrower or any Subsidiary
now existing or hereafter arising, each of which accounts meets the
following specifications at the time it comes into existence and continues
to meet the same until it is collected in full:
4
<PAGE>
(a) Each of the accounts arose from bona fide completed
transactions and is due and payable in full within thirty (30) days, and
not more than ninety (90) days have elapsed since the date of the
invoice therefor;
(b) Each of the accounts arose from the sale of goods or from the
performance of services by Borrower or a Subsidiary and each of the
accounts is evidenced by such agreements, invoices, shipping documents,
or other instruments ordinarily used in the trade as shall be reasonably
satisfactory to the Bank to the extent no return, rejection or
repossession has occurred with respect to such goods or services;
(c) Each of the accounts is not subject to any Lien (other than
those granted to the Bank) or to any setoffs, counterclaims or disputes
existing with respect thereto and there are no other facts existing or
threatened which would impair or delay the collectibility of all or any
portion thereof;
(d) No information has come to the attention of the Borrower or the
Subsidiary that owns the account to indicate that the account is not a
valid and legally enforceable obligation of the account debtor or that
it is subject to credit, allowance, defense, offset, counterclaim or
adjustment by the account debtor, other than any discount allowed for
prompt payment;
(e) Each of the accounts arose in the ordinary course of business
of the Borrower or the Subsidiary that owns such account and no notice
of the bankruptcy, insolvency, failure, or suspension or termination of
business of the account debtor has been received by the Borrower or such
Subsidiary;
(f) The account debtor on each of the accounts is not an Affiliate
of the Borrower or the Subsidiary;
(g) Each of the accounts otherwise conforms, to the extent
applicable, to all representations, warranties and covenants of this
Agreement and the other Loan Documents;
(h) The amounts of the accounts reported to the Bank are absolutely
owing to the Borrower or a Subsidiary, as the case may be, and do not
arise from sales or consignment, guaranteed sale or other terms under
which payment by the account debtors may be conditional or contingent;
and
(i) Accounts owed by a single account debtor and/or its affiliates
do not represent more than fifteen percent (15%) of all otherwise
Eligible Accounts.
For purposes of this definition, all accounts now or hereafter owned
by Nalley's Canada Limited, other than accounts arising from sales to
account debtors located in the United States, shall in no event constitute
Eligible Accounts. Any accounts that are not Eligible Accounts shall
nevertheless be and remain at all times a part of the Collateral.
'ELIGIBLE INVENTORY' means that inventory consisting of finished goods
held for resale in the ordinary course of business of the Borrower or a
Subsidiary that, at any time when eligibility is to be determined, meets
all of the following requirements:
5
<PAGE>
(a) inventory that, to the extent applicable, complies in all
material respects with all representations, warranties, and covenants
and other applicable provisions of this Agreement and the other Loan
Documents;
(b) inventory that is subject to the first perfected security
interest of the Bank and no other liens or security interests, except
Permitted Liens;
(c) inventory that is merchantable and fit for sale;
(d) inventory that is not consigned to the Borrower or the
Subsidiaries;
(e) inventory that does not consist of packaging or shipping
materials, except to the extent that packaging is included in finished
goods;
(f) inventory that meets, in all material respects, all standards
imposed by any governmental agency or departmental division thereof
having regulatory authority over such inventory, its use or sale;
(g) inventory that does not consist of bill and hold goods and/or
defective goods;
(h) inventory located at premises in the continental United States
that are owned or leased by the Borrower or a Subsidiary;
(i) inventory that is not subject to a Lien arising under the 'FSA'
or 'PACA', as each of said terms is defined in the Borrower Security
Agreement.
For purposes of this definition, all inventory now or hereafter owned
by Nalley's Canada Limited located outside of the United States shall in no
event constitute Eligible Inventory. Any inventory that is not Eligible
Inventory shall nevertheless be and remain at all times part of the
Collateral.
'EXISTING LETTERS OF CREDIT' shall have the meaning assigned to such
term in Section 3.1.
'ERISA' means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published
interpretations thereof.
'EVENT OF DEFAULT' shall have the meaning assigned to such term in
Section 9.1.
'FINANCING STATEMENTS' shall have the meaning assigned to such term in
Section 4.1.
'FISCAL YEAR' means each fiscal year ending on the last Saturday of
June.
'FIXED RATE LOANS' means, collectively, Treasury-Based Loans and LIBOR
Loans.
'FIXED RATE PREPAYMENT' shall have the meaning assigned to such term
in Section 2.16.
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<PAGE>
'FIXED RATE PROGRAM LOANS' shall have the meaning assigned to such term in
Section 2.13.
'FUNDING DATE' shall mean, with respect to any Term Loan Facility Loan or
any Seasonal Loan, the date of the funding thereof by the Bank, and in the case
of a Fixed Rate Loan that is continued or converted from one type of Fixed Rate
Loan to another type of Fixed Rate Loan, the first day of the Interest Period
with respect thereto.
'GAAP' means generally accepted accounting principles in the United States.
'GOOD FAITH' means honesty in fact in the conduct or transaction concerned,
without regard to whether standards which might be deemed commercially
reasonable have been observed.
'GUARANTIES' means collectively, the Parent Guaranty and the Subsidiaries
Guaranty.
'GUARANTORS' means, collectively, the Parent and the Subsidiary Guarantors.
'INSOLVENCY EVENT' shall have the meaning assigned to such term in Section
9.1.
'INTEREST PERIOD' means (1) with respect to any LIBOR Loan, the period
commencing on the date such Loan is made and ending, as the Borrower may select
pursuant to Section 2.11, on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, and (2) with respect to any
Treasury-Based Loan, the period commencing on the Funding Date for such Loan and
ending, as the Borrower may select pursuant to Section 2.12, on the numerically
corresponding day in the ninth calendar month thereafter or on any of the first
through tenth anniversaries, inclusive, of such Funding Date; provided that all
of the foregoing provisions relating to Interest Periods are subject to the
following:
(a) Each such Interest Period that commences on the last Business
Day of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month;
(b) No Interest Period may extend beyond the Termination Date or,
in the case of Seasonal Loans, the date on which all Seasonal Loans must
be repaid in full pursuant to Section 2.9;
(c) No Interest Period may extend beyond a principal repayment date
for the Term Loan and the Term Loan Facility Loans, respectively,
unless, after giving effect thereto, the aggregate principal amount of
the LIBOR Loans and Treasury Based Rate Loans having Interest Periods
that end after such principal repayment date shall be equal to or less
than the principal amount to be outstanding under the Term Loan or the
Term Loan Facility, as the case may be, after such principal repayment
date; and
(d) If an Interest Period would end on a day that is not a Business
Day, such Interest Period shall end on the immediately preceding
Business Day.
'L/C LIMIT' shall have the meaning assigned to such term in Section
3.7.
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'LETTER OF CREDIT ACCOMMODATIONS' shall have the meaning assigned to
such term in Section 3.1.
'LETTER OF CREDIT FACILITY' shall have the meaning assigned to such
term in Section 3.1.
'LETTER OF CREDIT LIABILITY' means, at any time, the sum of (a) the
Reimbursement Obligations, plus (b) the aggregate undrawn face amount of
Letters of Credit then outstanding, plus (c) the aggregate amount of all
other commitments or obligations relating to the Letter of Credit
Accommodations made or incurred by the Bank for the account or benefit of
the Borrower.
'LIABILITIES' means, at any given time, all liabilities of Borrower
and its Affiliates on a combined basis which would be classified as
liabilities under GAAP.
'LIBOR LOANS' means any Loan, when and to the extent that the interest
rate therefor is determined by reference to the LIBOR Rate.
'LIBOR RATE' means an annual rate of interest determined by the Bank
as being that rate quoted by Bankers Trust Company at approximately 11:00
A.M. London time for the offering of United States Dollar deposits in the
London Interbank Market for the Interest Period selected by the Borrower,
as taken from the so-called 'Reuters Screen', in accordance with the usual
practice in such market, two (2) Business Days prior to the Funding Date
for a requested LIBOR Loan (including those requested in connection with
the conversion of a Variable Rate Loan to a LIBOR Loan in accordance with
Section 2.12 hereof), or for a LIBOR Loan which Borrower has elected to
continue as a LIBOR Loan beyond the expiration of the then current Interest
Period with respect thereto, for deposits of Dollars in amounts equal (as
nearly as may be estimated) to the amount of the LIBOR Loan which shall
then be loaned by the Bank to Borrower as of the time of such
determination.
'LIEN' means any mortgage, deed of trust, statutory trust, pledge,
security interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, or other
security agreement or preferential arrangement, charge, or encumbrance of
any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction to evidence any of the foregoing).
'LOANS' means, collectively, the Term Loan, the Term Loan Facility
Loans, and the Seasonal Loans.
'LOAN DOCUMENTS' means, collectively, this Agreement, the Notes, the
Guaranties, the Security Documents, and all related documents, instruments
and agreements executed and delivered in connection therewith, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
'MARKETING AGREEMENT' means the Marketing and Facilitation Agreement,
dated as of November 3, 1994, between the Parent and Curtice-Burns, as such
agreement may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
8
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'MEMBER EQUITY' means all net proceeds received by the Parent at any
time subsequent to the Closing Date from the sale and issuance by the
Parent to its members of equity securities and/or (solely for the purposes
of this definition) subordinated debentures (other than the Subordinated
Notes) permitted under the Parent Guaranty.
'MERGER' means the merger of PF with and into Curtice-Burns in
accordance with the Merger Agreement.
'MERGER AGREEMENT' means the Agreement and Plan of Merger dated as of
September 27, 1994, executed by and among Parent, PF and Curtice-Burns.
'MORTGAGES' means, collectively, the Borrower Mortgages and the
Subsidiaries Mortgages.
'MULTIEMPLOYER PLAN' means a Plan described in Section 4001(a)(3) of
ERISA.
'NOTES' means, collectively, the Term Note, the Term Loan Facility
Note, and the Seasonal Note and when used in the singular means any one of
such Notes.
'OBLIGATIONS' means any and all obligations, liabilities and
indebtedness of the Borrower to the Bank of every kind and description now
existing and hereafter arising under this Agreement or any other Loan
Documents, however evidenced, whether direct or indirect, absolute or
contingent, joint or several, secured or unsecured, due or not due, primary
or secondary, liquidated or unliquidated, whether arising before, during or
after the initial or any renewal term hereof, or after the commencement of
any case with respect to the Borrower under the Bankruptcy Code or any
similar statute, including, without limitation, all principal, interest,
financing charges, fees, commissions and expenses payable to the Bank,
including, but not limited to, reasonable attorneys' fees and
disbursements, chargeable to Borrower and due from the Borrower under this
Agreement or any other Loan Documents.
'OBLIGORS' shall have the meaning assigned to such term in Section
4.1.
'OFFER' means the Offer to Purchase for Cash all outstanding Class A
and Class B Shares of Common Stock of Curtice-Burns Foods, Inc. at Nineteen
Dollars ($19) Net Per Share by PF Acquisition Corp., a wholly-owned
subsidiary of Pro-Fac Cooperative, Inc., dated October 4, 1994, as the same
may be amended, modified or supplemented.
'PBGC' means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
'PARENT' shall have the meaning assigned to such term in the first
sentence of the recitals of this Agreement.
'PARENT GUARANTY' shall have the meaning assigned to such term in
Section 2.24.
'PERMITTED LIENS' shall have the meaning assigned to such terms in
Section 7.1.
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'PERSON' means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority, or other entity of whatever nature.
'PLAN' means any pension plan which is covered by Title IV of ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is an
'employer' as defined in Section 3(5) of ERISA.
'PRIME LOANS' means any Loans when and to the extent that the interest
rate therefor is determined by reference to the Prime Rate.
'PRIME RATE' means the highest 'prime rate' of interest quoted from
time to time by The Wall Street Journal as the base rate on corporate loans
at large United States money center commercial banks, provided, however,
that in the event that The Wall Street Journal ceases quoting a 'Prime
Rate' of the type described, Prime Rate shall mean the highest per annum
rate of interest quoted as the 'Bank Prime Loan' rate for 'This Week' in
Statistical Release H.15 (519) published from time to time by the Board of
Governors of the Federal Reserve System. The Prime Rate shall change
effective on the date of the publication of any change in the applicable
index by which such Prime Rate is determined.
'PRINCIPAL OFFICE' means the Bank's office at 67 Hunt Street, Agawam,
Massachusetts 01001.
'PROGRAM RATE' shall have the meaning assigned to such term in Section
2.13.
'PROHIBITED TRANSACTION' means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
'REAL PROPERTY COLLATERAL' means all Collateral consisting of real
property and interests in real property upon which the Bank at any time
holds a Lien.
'REGULATORY CHANGE' shall have the meaning assigned to such term in
Section 2.21.
'REIMBURSEMENT OBLIGATIONS' shall have the meaning assigned to such
term in Section 3.4.
'REPORTABLE EVENT' means any of the events set forth in Section 4043
of ERISA.
'RETAINS' means patronage income allocated but not distributed to
members of the Parent and retained as such members' equity in the Parent.
'SEASONAL LOAN COMMITMENT' shall have the meaning assigned to such
term in Section 2.7.
'SEASONAL LOANS' shall have the meaning assigned to such term in
Section 2.7.
'SEASONAL NOTE' shall have the meaning assigned to such term in
Section 2.8.
'SECURITY DOCUMENTS' means, collectively, the Borrower Security
Agreement, the Parent Security Agreement, the Subsidiaries Security
Agreement, the Borrower Patent Security Agreement, the Borrower
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Trademark Security Agreement, the Borrower Mortgages and the Subsidiaries
Mortgages, and all related documents, instruments and agreements executed and
delivered in connection therewith pursuant to which any Lien is granted in favor
of the Bank or perfected, as the same may now exist or may hereafter be amended,
modified, supplemented, extended, restated or replaced.
'SUBORDINATED NOTES' means, collectively, the Subordinated Notes issued by
the Borrower pursuant to the Subordinated Notes Indenture and any senior
subordinated notes issued upon exchange thereof, substantially as described in
the Offering Memorandum dated October 24, 1994.
'SUBORDINATED NOTES INDENTURE' means the Indenture dated November 3, 1994
executed by and between the Borrower and the Trustee, pursuant to which the
Subordinated Notes have been issued and payment and performance thereof are
governed and any indenture entered into in replacement thereof in connection
with the exchange of the Subordinated Notes issued on or about November 3, 1994.
'SUBSIDIARY' means, as to the Borrower, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by the Borrower.
'SUBSIDIARY GUARANTORS' means, collectively, the Subsidiaries identified on
Schedule 1.1 annexed hereto.
'SUBSIDIARIES GUARANTY' shall have the meaning assigned to such term in
Section 2.24.
'SUBSIDIARIES MORTGAGES' shall have the meaning assigned to such term in
Section 2.25.
'SUBSIDIARIES SECURITY AGREEMENT' shall have the meaning assigned to such
term in Section 2.25.
'TERMINATION DATE' means, with respect to the Term Loan and the Term Loan
Facility, November 2, 2004.
'TERM LOAN' shall have the meaning assigned to such term in Section 2.1.
'TERM LOAN FACILITY' shall have the meaning assigned to such term in
Section 2.4.
'TERM LOAN FACILITY LOANS' shall have the meaning assigned to such term in
Section 2.4 and when used in the singular shall mean any one of such Loans.
'TERM NOTE' shall have the meaning assigned to such term in Section 2.2.
'TERM LOAN FACILITY NOTE' shall have the meaning assigned to such term in
Section 2.5.
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'TRANCHE' shall have the meaning assigned to such term in Section 2.13.
'TRANCHE MATURITY DATE' shall have the meaning assigned to such term in
Section 2.13.
'TREASURY-BASED LOANS' means any Loans when and to the extent that the
interest rate is determined by reference to the Treasury-Based Rate.
'TREASURY-BASED RATE' means an annual rate of interest equal to the
interest rate for United States Treasury Bills having a maturity equal to the
term of the Interest Period selected by the Borrower pursuant to Section 2.12
with respect to a particular Loan and as quoted by The Wall Street Journal,
provided, however that if The Wall Street Journal ceases quoting such a rate,
the Treasury-Based Rate with respect to such Interest Period shall mean the
interest rate for United States Treasury obligations having such maturity as
quoted for 'This Week' in Statistical Release H.15 (519) published from time to
time by the Board of Governors of the Federal Reserve System.
'TRUSTEE' means IBJ Schroder Bank & Trust Company and any successor thereto
appointed pursuant to the Subordinated Notes Indenture.
SECTION 1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with those applied
in the preparation of the financial statements referred to in paragraph 7.4 of
the Parent Guaranty, and all financial data submitted pursuant to this Agreement
shall be prepared in accordance with such principles.
SECTION 2. AMOUNT AND TERMS OF THE LOANS
SECTION 2.1 TERM LOAN. The Bank agrees, upon the terms and subject to the
conditions set forth in this Agreement, to make a term loan to the Borrower on
the Closing Date in the principal amount of Eighty Million Dollars ($80,000,000)
(the 'TERM LOAN').
SECTION 2.2 TERM NOTE. The Term Loan shall be evidenced by the promissory
note of the Borrower (the 'TERM NOTE') in substantially the form of EXHIBIT A
annexed hereto, with blanks appropriately filled in. The Term Loan shall be
repaid with interest in accordance with this Agreement and the Term Note.
SECTION 2.3 AMORTIZATION OF TERM LOAN. The principal amount of the Term
Loan shall be repaid in twenty (20) equal consecutive semi-annual installments,
commencing on the first Business Day of May, 1995 and thereafter on the first
Business Day of each November and May, until paid in full, of which the first
nineteen (19) installments shall each be in the amount of Four Million Dollars
($4,000,000), and the twentieth and final installment shall be in the amount of
the then outstanding principal balance of the Term Loan plus all accrued unpaid
interest thereon and other sums and charges due under this Agreement and the
Term Note.
SECTION 2.4 TERM LOAN FACILITY.
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(a) The Bank agrees, upon the terms and subject to the conditions set forth
in this Agreement, to make, in addition to the Term Loan, one or more term loans
to the Borrower (the 'TERM LOAN FACILITY'; the Loans made under the Term Loan
Facility are collectively referred to herein as the 'TERM LOAN FACILITY LOANS'),
from time to time during the period from the Closing Date up to but not
including November 3, 1999, in an aggregate principal amount of up to One
Hundred Twenty Million Dollars ($120,000,000). Each Term Loan Facility Loan that
shall not utilize the full amount of the Commitment therefor shall be in an
amount not less than One Million Dollars ($1,000,000). Each Term Loan Facility
Loan may be made as a Prime Loan, LIBOR Loan or Treasury-Based Loan.
(b) Notwithstanding anything to the contrary contained in Section 2.4(a),
the Borrower shall be permitted to borrow amounts previously repaid under the
Term Loan Facility at any time, and from time to time during the period from the
Closing Date up to but not including November 3, 1999, in an amount which,
together with all amounts previously repaid and re-borrowed pursuant to this
Section 2.4(b), shall not exceed, in the aggregate, the lesser of (i) Member
Equity and any federal income tax refund received by the Borrower or the Parent
with respect to income tax returns filed on or prior to October 31, 1993 for the
Fiscal Year ending in June, 1993 and any Fiscal Year prior thereto, in each case
theretofore applied to the repayment of the outstanding principal balance of the
Term Loan Facility and (ii) (A) Twenty Five Million Dollars ($25,000,000) if
such re-borrowing occurs on or before June 30, 1996 and (B) Twenty Million
Dollars ($20,000,000) if such re-borrowing occurs on or after July 1, 1996.
SECTION 2.5 TERM LOAN FACILITY NOTE. The Term Loan Facility Loans shall be
evidenced by a promissory note of the Borrower (the 'TERM LOAN FACILITY NOTE')
in substantially the form of EXHIBIT B attached hereto, with blanks
appropriately filled in. The Term Loan Facility Loans shall be repaid with
interest in accordance with this Agreement and the Term Loan Facility Note.
SECTION 2.6 AMORTIZATION OF TERM LOAN FACILITY LOANS. The principal amount
of the Term Loan Facility Loans shall be repaid (a) from the Closing Date
through September 1, 1999, in five (5) consecutive annual installments on
September 1 of each calendar year, in an amount equal to the Annual Cash Sweep
for the Borrower's immediately preceding Fiscal Year, and (b) from and after
November 3, 1999, in ten (10) equal consecutive semi-annual installments,
commencing on the first Business Day of May, 2000 and thereafter on the first
Business Day of each November and May, until paid in full. The amount of each of
the first nine (9) said principal installments due and payable from and after
November 3, 1999 shall be an amount equal to the quotient of (a) the outstanding
principal balance of the Term Loan Facility Loan outstanding as of November 3,
1999 divided by (b) ten (10), and the tenth and final installment shall be in
the amount of the outstanding principal balance of the Term Loan Facility Loans
plus all accrued unpaid interest and other sums and charges due under the Term
Loan Facility Note.
SECTION 2.7 SEASONAL LOAN FACILITY. The Bank agrees, upon the terms and
subject to the conditions set forth in this Agreement, to make seasonal loans
(the 'SEASONAL LOANS') to the Borrower from time to time during the period from
the Closing Date up to but not including the date that is fourteen (14) months
after the Closing Date in an aggregate principal amount not to exceed at any
time outstanding the lesser of (a) Eighty-Six Million Dollars ($86,000,000) and
(b) the Borrowing Base (the 'SEASONAL LOAN COMMITMENT'). Each Seasonal Loan that
shall not utilize the full amount of the Seasonal Loan Commitment in full and
that is requested to be made by the Borrower as a LIBOR Loan or Treasury-Based
Loan shall be
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in an amount not less than One Million Dollars ($1,000,000). Within the limits
of the Seasonal Loan Commitment, the Borrower may borrow, repay pursuant to
Section 2.16 and reborrow under this Section 2.7. Each Seasonal Loan may be made
as a Prime Loan, a LIBOR Loan, or a Treasury-Based Loan. The Bank may, at its
option, renew the Seasonal Loan Commitment for one or more successive one
(1)-year periods from and after the expiration of the initial term of the
Seasonal Loan Commitment.
SECTION 2.8 SEASONAL LOAN NOTE. The Seasonal Loans shall be evidenced by a
promissory note (the 'SEASONAL NOTE') in substantially the form of EXHIBIT C
annexed hereto, with blanks appropriately filled in. The Seasonal Note shall be
repaid with interest in accordance with this Agreement and the Seasonal Loan
Note.
SECTION 2.9 REPAYMENT OF SEASONAL LOANS. The principal amount of the
Seasonal Loans shall be repaid in full on or before the date that is 18 months
after the Closing Date, provided, however, that to the extent that the
outstanding principal amount thereof exceeds, at the end of any month, the
Borrowing Base at the end of such month, such excess(es) shall be immediately
due and payable upon demand by the Bank.
SECTION 2.10 ANNUAL REPAYMENT PERIOD. Notwithstanding the provisions of
Section 2.9, the Borrower shall be obligated to repay the Seasonal Loans in full
and to maintain the Seasonal Loans in such fully paid status for a period of any
fifteen (15) consecutive calendar days during each of its Fiscal Years, each of
which fifteen (15) day periods shall be selected by the Borrower.
SECTION 2.11 NOTICE AND MANNER OF BORROWING.
(a) The Borrower shall give the Bank written notice (effective upon
receipt) of its request for any Term Loan Facility Loans or Seasonal Loans under
this Agreement, on or before the requested Funding Date for each Prime Loan, and
at least three (3) Business Days before the requested Funding Date for each
Fixed Rate Loan, specifying (i) the requested Funding Date for such Loan; (ii)
the amount of such Loan; (iii) whether the Loan shall be a Prime Rate, LIBOR
Rate or Treasury-Based Loan; and (iv) in the case of a LIBOR Loan or
Treasury-Based Loan, the duration of the Interest Period selected by the
Borrower applicable thereto. Failure by the Borrower to make such election
described in clause (a)(iii) shall be deemed and shall constitute the Borrower's
election that the proposed Term Loan Facility Loan or Seasonal Loan, as
applicable, shall be a Prime Loan; and failure by the Borrower to make such
election described in clause (a)(iv) shall be deemed and shall constitute the
Borrower's election that the Interest Period with respect to the requested Loan
shall be (X) in the case of a LIBOR Loan, one (1) month, and (Y) in the case of
a Treasury-Based Loan, nine (9) months. In lieu of delivering the
above-described written notice of a requested Loan, the Borrower may give the
Bank a telephonic notice of any requested Loan by the time required under this
Section 2.11; provided, that such notice shall be confirmed in writing by
delivery to the Bank (1) immediately of a telecopy of a written notice of a
requested Loan which has been signed by an authorized officer of the Borrower
and (2) promptly (and in no event later than three (3) Business Days after the
Funding Date) of a written notice of a requested Loan containing the original
signature of an authorized officer of the Borrower.
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<PAGE>
(b) The Borrower shall notify the Bank in writing of the names of the
officers authorized to request Loans on behalf of the Borrower, and shall
provide the Bank with a specimen signature of each such officer. The Bank shall
be entitled to rely conclusively on such officer's authority to request Loans on
behalf of the Borrower, until the Bank receives written notice to the contrary.
The Bank shall have no duty to verify the authenticity of the signature
appearing on any notice of a requested Loan or other writing delivered pursuant
to Section 2.11(a), and with respect to an oral request for Loans, the Bank
shall have no duty to verify the identity of any individual representing
herself/himself as one of the officers authorized to make such request on behalf
of the Borrower. Not later than 3:00 P.M. New York time on the Funding Date of
the proposed Loan and upon fulfillment of the applicable conditions set forth in
Section 4, the Bank will make such Loan available to the Borrower in immediately
available funds by crediting the amount thereof to such account as the Borrower
shall specify.
(c) All notices given under this Section 2.11 shall be irrevocable and
shall be given not later than 12:00 Noon New York time on the day which is not
less than the number of Business Days specified in Section 2.11(a) for such
notice. The Bank shall not incur any liability to the Borrower as a result of
acting upon any telephonic notice referred to in this Section 2.11, which notice
the Bank believes in Good Faith to have been given by a duly authorized officer
or other individual authorized to request Loans on behalf of the Borrower or for
otherwise acting in Good Faith under this Section 2.11 and, upon the funding of
the Term Loan or any Term Loan Facility Loan or Seasonal Loan by the Bank in
accordance with this Agreement pursuant to any such telephonic notice, the
Borrower shall be deemed to have borrowed the Term Loan, a Term Loan Facility
Loan or Seasonal Loan hereunder, as the case may be.
SECTION 2.12 CONVERSIONS AND RENEWALS. The Borrower may elect from time to
time to (a) convert all or a part of (i) a Prime Loan into a LIBOR Loan and/or a
Treasury-Based Loan, (ii) a LIBOR Loan into a Treasury-Based Loan and/or a Prime
Loan and (iii) a Treasury-Based Loan into a Prime Loan and/or a LIBOR Loan, and
(b) in the case of Fixed Rate Loans, to renew all or part of a Loan at the end
of the Interest Period with respect thereto, in each case, by giving the Bank
written notice thereof at least one (1) Business Day before the conversion of a
Fixed Rate Loan into a Prime Loan, at least three (3) Business Days before the
conversion into or renewal of a Treasury-Based Loan and at least three (3)
Business Days before the conversion into or renewal of a LIBOR Loan, specifying:
(1) the renewal or conversion date for such Loan; (2) the amount of such Loan to
be converted or renewed; (3) in the case of conversions, the type of Loan into
which the subject existing Loan (or designated portion thereof) shall be
converted; and (4) in the case of renewal of or a conversion into a LIBOR or a
Treasury-Based Loan, the duration of the Interest Period selected by the
Borrower applicable to such Loan (or designated portion thereof); provided that
(i) the minimum principal amount of each Fixed Rate Loan outstanding after
giving effect to a renewal or conversion of such Loan (or designated portion
thereof) shall be One Million Dollars ($1,000,000); and (ii) a LIBOR Loan and a
Treasury-Based Loan can be continued as such or converted into a Prime Loan only
on the last day of the Interest Period for such Loans. All notices given under
this Section 2.12 shall be irrevocable and shall be given not later than 12:00
Noon New York time on the day which is not less than the number of Business Days
specified above for the giving of such notice. If the Borrower shall fail to
give the Bank the notice as specified above for the renewal or conversion of a
LIBOR or Treasury-Based Loan prior to the end of the Interest Period with
respect thereto, such LIBOR Loan or Treasury-Based Loan shall automatically be
converted into a Prime Loan on the last day of the Interest Period for such
Loan. Notwithstanding anything herein to the contrary set forth in this Section
2.12, in the event of the occurrence and continuation of an
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Event of Default, (X) the conversion provided for herein shall not be permitted
and (Y) all Fixed Rate Loans shall automatically be converted to a Prime Loan on
the last day of the then current Interest Period with respect thereto.
SECTION 2.13 INTEREST. (a) Solely for purposes of this Section 2.13, the
Term Loan and the first Twenty-One Million Dollars ($21,000,000) of the Term
Loan Facility Loans made by the Bank to the Borrower shall be divided into the
tranches (each, a 'TRANCHE') set forth below, with Tranche No. 1, Tranche No. 2
and Four Million Dollars ($4,000,000) of Tranche No. 3 constituting in the
aggregate said first Twenty-One Million Dollars ($21,000,000) of the Term Loan
Facility Loans made by the Bank to the Borrower. The Borrower shall pay interest
to the Bank on the outstanding and unpaid principal amount of each Tranche
(collectively, the 'FIXED RATE PROGRAM LOANS'), from the Closing Date through
the respective Tranche Maturity Date ('TRANCHE MATURITY DATE') for each Tranche,
at the per annum rate for each respective Tranche (collectively, the 'PROGRAM
RATE'), all as set forth below:
<TABLE>
<CAPTION>
TRANCHE TRANCHE TRANCHE PROGRAM RATE
NUMBER MATURITY DATE AMOUNT ANNUAL PERCENT
- ------- ------------------------------------------------------------ ------------ --------------
<C> <S> <C> <C>
1 May 1, 1995................................................. $ 6,000,000 8.05
2 November 1, 1995............................................ 11,000,000 7.04
3 May 1, 1996................................................. 8,000,000 8.58
4 November 1, 1996............................................ 15,000,000 9.55
5 November 1, 1996............................................ 5,000,000 7.39
6 May 1, 1997................................................. 6,000,000 9.00
7 November 1, 1997............................................ 4,000,000 8.68
8 November 1, 1997............................................ 6,000,000 8.68
9 May 1, 1998................................................. 6,000,000 8.81
10 November 1, 1998............................................ 12,000,000 8.01
11 November 1, 1999............................................ 12,000,000 8.69
12 November 1, 2000............................................ 10,000,000 8.42
Total Amount of Tranches: $101,000,000
</TABLE>
No later than three (3) Business Days before the Tranche Maturity Date for a
Tranche, the Borrower shall deliver written notice to the Bank of its election
to convert the Fixed Rate Program Loans in such Tranche, in whole or in part, to
any of a Prime Loan, a LIBOR Loan, or a Treasury-Based Loan. Said notice shall
contain the information required by Section 2.12 with respect to conversion of
Loans from one interest rate option to another. If the Borrower shall fail to
deliver said notice to the Bank within said time, the Fixed Rate Program Loans
in such Tranche shall automatically be converted into a Prime Loan as of the
relevant Tranche Maturity Date.
(b) The Borrower shall pay interest to the Bank on the outstanding and
unpaid principal amount of the Loans made under this Agreement, other than with
respect to each Tranche of Fixed Rate Program Loans prior to the relevant
Tranche Maturity Date therefor:
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(i)for a Prime Loan, at a rate per annum equal to (A) with respect to
the Term Loan and the Term Loan Facility Loans, the Prime Rate plus
one-half percent (.50%), and (B) with respect to the Seasonal Loans, the
Prime Rate minus one-quarter percent (.25%);
(ii) for a LIBOR Loan, at a rate per annum equal to (A) with respect
to the Term Loan and Term Loan Facility Loans, the LIBOR Rate plus two and
six-tenths percent (2.6%); and (B) with respect to the Seasonal Loans, the
LIBOR Rate plus one and seventy-five hundredths percent (1.75%); and
(iii) for a Treasury-Based Loan, at a rate per annum equal to (A) with
respect to the Term Loan and the Term Loan Facility Loans, the
Treasury-Based Rate plus three percent (3%), and (B) with respect to the
Seasonal Loans, the Treasury-Based Rate plus two percent (2%);
(c) Notwithstanding anything to the contrary contained in Section 2.13(b):
(i) if, as and when the difference between (A) the Bank's cost of funds for the
Treasury-Based Loans outstanding at any time and (B) the Treasury-Based Rate
increases or decreases, then the effective interest rates provided for in
Section 2.13(b)(iii) shall be automatically changed by an amount equal to such
increase or decrease with respect to all Loans made by the Bank or converted or
renewed by the Borrower pursuant to Section 2.12, in each case on and after the
date of such increase or decrease; and (ii) if the Parent achieves a
consolidated long term debt to equity ratio, as reflected in a quarterly or
annual financial statement delivered to the Bank pursuant to Paragraph 8.8 of
the Parent Guaranty, of (A) 2.5:1 or (B) 2.15:1, then, solely with respect to
the Term Loan and the Term Loan Facility Loans, the rate of interest provided
for Prime Loans and the Fixed Rate Loans in Section 2.13(b) shall be reduced by
one-quarter percent (.25%) or one-half percent (.50%) (such interest rate
reductions are herein collectively referred to as the 'Discount'), respectively,
effective as of the date on which the Bank receives the financial statements
reflecting achievement of the ratios set forth in this clause (ii). The
applicable Discount shall remain in effect for as long as the Parent maintains
the aforesaid respective consolidated long term debt to equity ratio.
(d) Any change in the effective interest rate for a Prime Loan resulting
from a change in the Prime Rate shall be effective as of the opening of business
on the day on which such change in the Prime Rate becomes effective.
(e) Interest on each Loan and Reimbursement Obligation shall be calculated
on the basis of a year of 360 days for the actual number of days elapsed. In
calculating interest, the date each Loan is made and the date each Reimbursement
Obligation arises shall be included and the date each Loan and each
Reimbursement Obligation is repaid shall be excluded from such calculation.
(f) Interest on the Loans shall be paid in immediately available funds at
the Bank's Principal Office monthly, in arrears, on the first Business Day of
each calendar month.
(g) Any principal amount not paid when due (at maturity, by acceleration,
or otherwise) shall bear interest thereafter until paid in full, payable on
demand of the Bank, at a rate per annum equal to:
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(i) For the Fixed Rate Program Loans, at the Program Rate plus two
percent (2%);
(ii) For each Prime Loan, at a rate equal to the applicable effective
rate for Prime Loans set forth in Section 2.13(b)(i), subject to any
Discount then in effect, plus two percent (2%);
(iii) For each LIBOR Loan, at a rate equal to the applicable effective
rate for LIBOR Loans set forth in Section 2.13(b)(ii), subject to any
Discount then in effect, plus two percent (2%) from the time of default in
payment of principal until the end of the then current Interest Period
therefor, and thereafter at a rate equal to the applicable effective rate
for Prime Loans set forth in Section 2.13(b)(i) plus two percent (2%); and
(iv) For each Treasury-Based Loan, at a rate equal to the applicable
effective rate for Treasury-Based Loans set forth in Section 2.13(b)(iii),
subject to any Discount then in effect, plus two percent (2%) from the time
of default in payment of principal until the end of the then current
Interest Period therefor, and thereafter at a rate equal to the applicable
effective rate for Prime Loans set forth in Section 2.13(b)(i) plus two
percent (2%).
SECTION 2.14 FEES.
(a) The Borrower agrees to pay to the Bank a non-refundable Acquisition
Facility Fee (the 'ACQUISITION FACILITY FEE') in the amount of Two Million One
Hundred Forty-Five Thousand Dollars ($2,145,000). The Acquisition Facility Fee
shall be deemed earned and shall be payable in full on the Closing Date.
(b) In consideration of the Bank's Commitment to make Term Loan Facility
Loans on the terms and subject to the conditions set forth in this Agreement,
the Borrower agrees to pay to the Bank monthly, in arrears, on the first day of
each month during the period from the Closing Date through and including
September 1, 1999 a commitment fee ('COMMITMENT FEE'), equal to one-quarter
percent (1/4%) per annum of the difference, if any, between (i) the Term Loan
Facility Commitment of One Hundred Twenty Million Dollars ($120,000,000) and
(ii) the average aggregate outstanding daily principal balance of the Term Loan
Facility Loans for each month during said period. The Commitment Fee shall be in
addition to all interest and other sums and charges due and payable with respect
to the Term Loan Facility Loans.
SECTION 2.15 AUTHORIZATION FOR NOTES. The Bank is hereby authorized by the
Borrower to endorse on any schedule attached to any Note for a Loan the amount
and interest rate option in effect with respect to such Loan and each renewal,
conversion, and payment of principal amount received by the Bank on account of
such Loan, which endorsement shall, in the absence of manifest error, be
conclusive as to the outstanding balance of such Loan made by the Bank;
provided, however that the failure to make such notation with respect to any
Loan or renewal, conversion, or payment shall not limit or otherwise affect the
obligations of the Borrower under this Agreement or the Note evidencing such
Loan.
SECTION 2.16 PREPAYMENTS; PREPAYMENT FEE.
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(a) The Borrower may upon at least one (1) Business Days' notice to the
Bank in the case of Prime Loans, and at least three (3) Business Days' notice to
the Bank in the case of Fixed Rate Loans and Fixed Rate Program Loans, prepay
the Notes in whole or in part with accrued interest to the date of such
prepayment on the amount prepaid, provided that (i) each partial prepayment
shall be in a principal amount of not less than One Million Dollars
($1,000,000); (ii) prepayment of a LIBOR Loan or Treasury-Based Loan on any day
other than the last day of the Interest Period for such Loan, or prepayment of
the Fixed Rate Program Loans on any day other than the Tranche Maturity Date for
such Fixed Rate Program Loan, must also be accompanied by (A) any prepayment fee
that is due and payable under Section 2.16(c) and (B) any funding loss
indemnification payment that the Bank determines is due and payable under
Section 2.23 on account of such prepayment; and (iii) in the case of the Term
Note and the Term Loan Facility Note, prepayments shall be applied pro rata to
all of the then remaining unpaid principal installments of, the Term Note or, at
the Borrower's option, the Term Loan Facility Note;
(b) The Borrower shall prepay the Term Loan Facility Note, without notice,
in an amount equal to the Member Equity received by the Parent, as and when
received by the Parent, without premium or penalty, subject, however, to the
provisions of Section 2.23;
(c) Notwithstanding anything to the contrary contained in Section 2.12 or
2.13, the Borrower shall pay to the Bank a prepayment fee with respect to any
payment ('FIXED RATE PREPAYMENT') of a Fixed Rate Loan or a Fixed Rate Program
Loan made prior to the last day of the Interest Period or the Tranche Maturity
Date (as the case may be) for such Loan. Such prepayment fee shall be due and
payable together with such Fixed Rate Prepayment and shall be in an amount equal
to the amount, if any, by which (i) the discounted present value of the
remaining scheduled payments of principal plus interest that would have accrued
through the last day of such Interest Period or the Tranche Maturity Date (as
the case may be) exceeds (ii) the principal amount of the Fixed Rate Prepayment
plus accrued but unpaid interest thereon. For the purpose of this Section
2.16(c) the discount rate used in calculating such discounted present value
shall be the rate equal to, as of the date of determination, the Treasury-Based
Rate for an interest period which most nearly approximates the total number of
calendar months, and any part thereof, remaining between the date of such Fixed
Rate Prepayment and the last day of the Interest Period or the Tranche Maturity
Date (as the case may be) for the Loan being prepaid.
SECTION 2.17 METHOD OF PAYMENT.
(a) The Borrower shall make each payment under this Agreement and under the
Notes not later than 12:00 Noon New York time on the date when due in lawful
money of the United States to the Bank at its Principal Office in immediately
available funds.
(b) The Borrower hereby authorizes the Bank, if and to the extent payment
of any of the Obligations is not made when due, whether under this Agreement,
under any Note, or otherwise, to make, at its option, and subject to the terms
and provisions of this Agreement, a Seasonal Loan (which shall be a Prime Loan)
for the account of the Borrower in the amount of such past due payment, the
proceeds of which shall be used to satisfy such past due payment. Nothing
contained herein, however, shall in any manner affect, limit or impair the
liability of the Borrower for such past due payment, which liability shall
remain absolute until the past due payment is made in full.
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(c) Whenever any payment to be made under this Agreement or under any Note
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest due on the
Loan evidenced thereby, except that, in the case of a Fixed Rate Loan or a Fixed
Rate Program Loan, if the result of such extension would be to extend such
payment beyond the then current Interest Period therefor or the relevant Tranche
Maturity Date, as the case may be, such payment shall be made on the Business
Day immediately preceding the day on which such payment is stated to be due.
SECTION 2.18 USE OF PROCEEDS. The proceeds of the Loans hereunder shall be
used by the Borrower to (a) assist in financing the acquisition by PF of the
shares of Class A and Class B Common Stock of Curtice-Burns outstanding on the
Closing Date in accordance with the Merger Agreement, (b) repay all Debt of
Parent to the Bank outstanding as of the Closing Date, (c) repay all Debt of
Curtice-Burns to its existing commercial bank lenders, and (d) provide long term
and seasonal loan financing to the Borrower. The Borrower will not, directly or
indirectly, use any part of such proceeds in a manner that gives rise to a
violation of Regulation U of the Board of Governors of the Federal Reserve
System or Regulation X of such Board of Governors.
SECTION 2.19 ILLEGALITY. Notwithstanding any other provision in this
Agreement, if the Bank determines that any applicable law, rule, or regulation,
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 compliance by the Bank
with any request or directive (whether or not having the force of law) of any
such authority, central bank, or comparable agency shall make it unlawful or
impossible for the Bank to: (a) maintain its Commitment, then upon notice to the
Borrower by the Bank, the Commitment of the Bank shall terminate; or (b)
maintain or fund its LIBOR Loans and/or Treasury-Based Loans, then upon notice
to the Borrower by the Bank, the outstanding principal amount of the LIBOR Loans
and/or Treasury-Based Loans (as the case may be), together with interest accrued
thereon, and all other amounts payable to the Bank under this Agreement and the
Note(s) evidencing such Loan(s) with respect thereto shall be repaid (i)
immediately upon demand of the Bank, if such change or compliance with such
request, in the judgment of the Bank, requires immediate repayments, or (ii) at
the expiration of the last Interest Period to expire before the effective date
of any such change or request; provided, however, that the Borrower shall have
the right to convert such Loans to Prime Loans on the date specified in clause
(i) or clause (ii), as the case may be.
SECTION 2.20 IMPOSSIBILITY. Notwithstanding anything to the contrary in
this Agreement, if the Bank determines in Good Faith that:
(a) Quotations of interest rates for the relevant deposits referred to
in the definition of LIBOR Rate or Treasury-Based Rate, as the case may be,
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest on a LIBOR Loan
or Treasury-Based Loan as provided in this Agreement; or
(b) The relevant rates of interest referred to in the definition of
LIBOR Rate or Treasury-Based Rate, as the case may be, upon the basis of
which the rate of interest for any such type of
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Loan is to be determined, do not accurately cover the cost to the Bank
of making or maintaining such type of Loan;
then the Bank may, at its sole option, forthwith give notice thereof
to the Borrower, whereupon (i) the obligation of the Bank to make LIBOR
Loans or Treasury-Based Loans, as the case may be, shall be suspended until
the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist; and (ii) such LIBOR Loan or Treasury-Based
Loan, as the case may be, shall be converted into a Prime Loan on the last
day of the then current Interest Period applicable to such Loan.
SECTION 2.21 INCREASED COST. The Borrower shall pay to the Bank from time
to time such amounts as the Bank may reasonably determine to be necessary to
compensate the Bank for any costs incurred by the Bank which the Bank reasonably
determines are attributable to its making or maintaining any LIBOR Loans or
Treasury-Based Loans hereunder or its obligation to make any such Loans
hereunder, or any reduction in any amount receivable by the Bank under this
Agreement or the Notes in respect of any such Loans or such obligations (such
increases in costs and reductions in amounts receivable being herein called
'ADDITIONAL COSTS'), resulting from any change after the date of this Agreement
in U.S. federal, state, municipal, or foreign laws or regulations or the
adoption or making after such date of any interpretations, directives, or
requirements applying to a class of banks, including the Bank, of or under any
U.S. federal, state, municipal, or any foreign laws or regulations (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof ('REGULATORY CHANGE')
which: (a) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Notes in respect of any of such Loans (other than
taxes imposed on the overall net income of the Bank for any of such Loans) or
(b) imposes or modifies any reserve, special deposit, compulsory loan or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of the Bank (including any of such Loans or
any deposits referred to in the definition of LIBOR Rate or Treasury-Based
Rate); or (c) imposes any other condition affecting this Agreement or the Notes
(or any of such extensions of credit or liabilities). The Bank will notify the
Borrower of any event occurring after the date of this Agreement which will
entitle the Bank to compensation pursuant to this Section 2.21 as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.
Determinations by the Bank for purposes of this Section 2.21 of the effect
of any Regulatory Change on its costs of making or maintaining Fixed Rate Loans
or on amounts receivable by it in respect of Fixed Rate Loans, and of the
additional amounts required to compensate the Bank in respect of any Additional
Costs, shall be conclusive, provided that such determinations are made on a
reasonable basis.
SECTION 2.22 [INTENTIONALLY OMITTED].
SECTION 2.23 FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to the
Bank, upon the request of the Bank, such amount or amounts as shall be
sufficient (in the Good Faith judgment of the Bank) to compensate it for any
loss, cost, or expense incurred as a result of:
(a) Any payment of a LIBOR or Treasury-Based Loan on a date other than
the last day of the Interest Period for such Loan including, but not
limited to, acceleration of the Loans by the Bank pursuant to Section 9.2,
but excluding any such payment pursuant to Section 2.19;
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(b) Any failure by the Borrower to borrow or convert, as the case may be, a
LIBOR or Treasury-Based Loan on the date for borrowing or conversion, as the
case may be, specified in the relevant notice under Section 2.11 or 2.12, as the
case may be; or
(c) Any payment of a Fixed Rate Program Loan prior to its Tranche Maturity
Date, but excluding any such payment pursuant to Section 2.19, provided that the
amount calculated as payable under this Section 2.23 shall not include any
amount due pursuant to Section 2.16.
SECTION 2.24 GUARANTIES. All Obligations of the Borrower to the Bank
arising under this Agreement and the other Loan Documents shall be
unconditionally guaranteed, (a) by Parent pursuant to a Guaranty, dated as of
the date hereof, substantially in the form annexed hereto as EXHIBIT D (which,
together with all supplements thereto and amendments thereof, is referred to
herein as the 'PARENT GUARANTY'), and (b) by the Subsidiary Guarantors pursuant
to a Guaranty, dated as of the date hereof, substantially in the form annexed
hereto as EXHIBIT E (which, together with all supplements thereto and amendments
thereof, is referred to herein as the 'SUBSIDIARIES GUARANTY'; and, together
with the Parent Guaranty, collectively, the 'GUARANTIES').
SECTION 2.25 SECURITY.
(a) The Obligations shall be secured by:
(i) a Security Agreement, dated as of the date hereof, between the
Borrower and the Bank substantially in the form annexed hereto as EXHIBIT F
(which, together with all supplements thereto and amendments thereof, is
referred to herein as the 'BORROWER SECURITY AGREEMENT'), granting to the
Bank a first priority security interest in the Collateral (as defined in
the Borrower Security Agreement), subject only to Permitted Liens;
(ii) a Collateral Assignment of Trademarks and Security Agreement
substantially in the form annexed hereto as Exhibit G (which, together with
all supplements thereto and amendments thereof, is referred to herein as
the 'BORROWER TRADEMARK SECURITY AGREEMENT'), granting to the Bank a first
priority security interest in the Trademark Collateral (as defined in the
Borrower Trademark Security Agreement), subject only to Permitted Liens;
(iii) a Patent Collateral Assignment and Security Agreement, dated as
of the date hereof, between the Borrower and the Bank substantially in the
form annexed hereto as EXHIBIT H (which, together with all supplements
thereto and amendments thereof, is referred to herein as the 'BORROWER
PATENT SECURITY AGREEMENT'), granting to the Bank a first priority security
interest in the Patent Collateral (as defined in the Borrower Patent
Security Agreement), subject only to Permitted Liens;
(iv) a mortgage, deed of trust, collateral assignment of leases and
rentals, leasehold mortgage and other similar instruments (collectively,
the 'MORTGAGES'), dated the date hereof, executed and delivered by the
Borrower in favor of the Bank, in form and substance satisfactory to the
Bank (all Mortgages delivered by the Borrower to the Bank, together with
all supplements thereto and amendments thereof, are collectively referred
to herein as the 'BORROWER MORTGAGES', granting to the Bank
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a first priority Lien on all Real Property Collateral now owned by the
Borrower described on SCHEDULE 2.25(A)(IV) hereto, subject only to
Permitted Liens;
(v) Borrower Mortgages, delivered to the Bank on all Real Property
Collateral other than the Real Property Collateral described on SCHEDULE
2.25(A)(IV) hereto, whether now owned or acquired by the Borrower
subsequent to the Closing Date, granting to the Bank a first priority Lien
on all such Real Property Collateral, subject only to Permitted Liens;
(b) The Parent Guaranty shall be secured by a Security Agreement, dated as
of the date hereof, between the Parent and the Bank, substantially in the form
annexed hereto as EXHIBIT I (which, together with all supplements thereto and
amendments thereof, is referred to herein as the 'PARENT SECURITY AGREEMENT'),
granting to the Bank a first priority security interest in the Collateral (as
defined in the Parent Security Agreement), subject only to Permitted Liens;
(c) The Subsidiaries Guaranty shall be secured by:
(i) a Security Agreement, dated as of the date hereof, between the
Subsidiaries and the Bank, substantially in the form annexed hereto as
EXHIBIT J (which, together with all supplements thereto and amendments
thereof, is referred to herein as the 'SUBSIDIARIES SECURITY AGREEMENT'),
granting to the Bank a first priority security interest in the Collateral
(as defined in the Subsidiaries Security Agreement), subject only to the
Permitted Liens;
(ii) a Mortgage, dated the date hereof, executed and delivered by the
respective Subsidiary Guarantor that owns the Real Property Collateral
described on SCHEDULE 2.25(C)(II) hereto to the Bank (which, together with
all supplements thereto and amendments thereof, are referred to
collectively herein as the 'SUBSIDIARIES MORTGAGES'), granting to the Bank
a first priority Lien on all such Real Property Collateral, subject only to
Permitted Liens; and
(iii) Subsidiaries Mortgages delivered to the Bank on all Real
Property Collateral acquired by any Subsidiary Guarantor subsequent to the
Closing Date, subject only to Permitted Liens.
SECTION 3. LETTERS OF CREDIT
SECTION 3.1 LETTER OF CREDIT ACCOMMODATIONS. The Bank shall, from time to
time, on the terms and subject to the conditions hereof, at the request of the
Borrower, provide one or more of the following financial accommodations to or
for the account of the Borrower during the period from the Closing Date up to
but not including the first anniversary of the Closing Date, with an expiration
date for each such financial accommodation not later than the Termination Date:
(a) issue, open or cause the issuance or opening of direct pay or standby
letters of credit or purchase or other guaranties for the purchase of goods and
services in the ordinary course of the Borrower's business or for any other
purpose approved by the Bank or (b) assist the Borrower in establishing or
opening letters of credit for such purposes by indemnifying the issuer thereof
or guaranteeing the payment or performance of the Borrower to such issuer in
connection
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therewith (the 'LETTER OF CREDIT FACILITY'; and all letters of credit and other
accommodations issued or provided for hereunder are herein collectively referred
to as the 'LETTER OF CREDIT ACCOMMODATIONS'). In addition, all letters of credit
issued prior to the Closing Date for the account of Parent and/or Curtice-Burns
set forth on SCHEDULE 3.1 annexed hereto (collectively, the 'EXISTING LETTERS OF
CREDIT') shall, for all purposes of this Agreement, be deemed and shall
constitute Letter of Credit Accommodations issued by the Bank for the account of
the Borrower, and the same shall in all respects be governed by this Agreement.
The Borrower agrees to execute on the Closing Date all such amendments and
related documents with respect to the Existing Letters of Credit as the Bank
shall reasonably request, providing for, among other things, the addition and/or
substitution of the Borrower as account party under any Existing Letters of
Credit. The Bank may, at its sole option, renew the Commitment for Letter of
Credit Accommodations set forth herein for one or more successive one (1)-year
periods from and after the first anniversary of the Closing Date.
SECTION 3.2 CONDITIONS PRECEDENT. The extension of Letter of Credit
Accommodations by the Bank shall be subject to the satisfaction of each of the
following conditions precedent:
(a) No letter of Credit Accommodations will be issued unless the sum
of (i) the amount of the Letter of Credit Accommodation requested, plus
fees and costs for issuance thereof, plus (ii) the aggregate amount of
Letter of Credit Accommodations and Reimbursement Obligations then
outstanding including, without limitation, the aggregate amount of the
outstanding Existing Letters of Credit, does not exceed the L/C Limit
immediately prior to the issuance of the requested Letter of Credit
Accommodation;
(b) if such Letter of Credit Accommodation is for the purpose of
purchasing goods, the Bank will have, immediately upon such purchase, a
valid and perfected first security interest in and lien upon goods being
acquired in connection therewith;
(c) the form and content of all Letter of Credit Accommodations shall
be reasonably satisfactory to the Bank or the issuer (if other than the
Bank), and all documents, instruments, notices and statements relating
thereto, if any, which the Bank or other issuer may request, shall be
promptly delivered to the Bank or such other issuer (as the case may be);
and
(d) the Borrower shall have fully complied with all terms and
provisions hereof and the terms and provisions of any agreements, in each
case relating to the requested Letter of Credit Accommodations, including
the payment of all fees, commissions and charges set forth therein and on
SCHEDULE 3.2 annexed hereto.
SECTION 3.3 OBLIGATIONS. All indebtedness, liabilities and obligations of
any sort whatsoever, however arising, whether present or future, fixed or
contingent, secured or unsecured, due or to become due, paid, arising or
incurred in connection with any Letter of Credit Accommodations shall constitute
a part of the Obligations, and shall include, without limitation, (a) all
amounts due or which may become due under any Letter of Credit Accommodations,
including without limitation, the Reimbursement Obligations, (b) all amounts
charged or chargeable to the Borrower or the Bank by any bank, other financial
institution or correspondent bank which opens, issues or pays such Letter of
Credit Accommodation; (c) the Bank's letter of credit fees and commissions set
forth on SCHEDULE 3.2 annexed hereto, costs and other charges of any issuer of
any
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Letter of Credit Accommodation; and (d) all duties, freight, taxes, costs,
insurance and all such other charges and expenses paid or incurred by the Bank
which may pertain directly or indirectly to any such Obligations or Letter of
Credit Accommodations or to any goods or documents relating thereto.
SECTION 3.4 REIMBURSEMENT OBLIGATIONS. The Borrower shall reimburse the
Bank for each drawing paid under any Letter of Credit Accommodations no later
than one (1) Business Day thereafter, which obligation shall be absolute and
unconditional under any and all circumstances, irrespective of any claim,
set-off, defense or other right that the Borrower may have at any time against
the Bank or any other Person (collectively, the 'REIMBURSEMENT OBLIGATIONS').
Any Reimbursement Obligations that are not paid when due shall accrue interest
at a rate equal to the default rate for Prime Loans set forth in Section
2.13(g)(ii), which interest shall be due and payable to the Bank without notice
or demand.
SECTION 3.5 INDEMNIFICATION. The Borrower agrees to and does hereby
indemnify the Bank with respect to any loss, cost, claims, demands, causes of
action, liability or expense which the Bank may suffer or incur arising from or
in connection with any transaction or occurrences relating to the Letter of
Credit Accommodations and any documents, drafts or acceptance thereunder or
relating thereto, including, but not limited to, any action taken by any issuer
other than the Bank or any correspondent with respect to any Letter of Credit
Accommodation (except for such loss, cost, liability or expense that arises from
the Bank's gross negligence or willful misconduct), which indemnification shall
remain in effect after the termination or non-renewal of the Letter of Credit
Facility or this Agreement, as applicable. The Borrower further agrees that any
payments made or other obligations incurred by the Bank in connection with
Letter of Credit Accommodations are part of the Obligations, and shall be
payable in accordance with the terms hereof. Any such payments made by the Bank,
including, without limitation, any of the same made after termination or
non-renewal of the Letter of Credit Facility or this Agreement or the other Loan
Documents with respect to Letter of Credit Accommodations provided to the
Borrower prior to such termination or non-renewal (exclusive of drafts paid
under any Letter of Credit Accommodation), shall accrue interest commencing on
the date such payment is made by the Bank, at the default rate for Prime Loans
set forth in Section 2.13(g)(ii).
SECTION 3.6 FEES AND COMMISSIONS. In addition to any charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations, the Borrower agrees to pay to the Bank letter of credit fees and
commissions as set forth in Schedule 3.2 annexed hereto.
SECTION 3.7 L/C LIMIT. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, except in the Bank's sole
discretion, the sum of (a) the aggregate amount of all outstanding Letter of
Credit Accommodations plus (b) the aggregate amount of all outstanding
Reimbursement Obligations plus (c) all other commitments and obligations made or
incurred by the Bank pursuant hereto for the account or benefit of the Borrower
in connection with Letter of Credit Accommodations outstanding at any time shall
at no time exceed Ten Million Dollars ($10,000,000) (the 'L/C LIMIT').
SECTION 3.8 EXCULPATION AND RELEASE.
(a) The Bank shall not be responsible for (i) the validity or genuineness
of any documents delivered to the Bank or the issuer of any Letter of Credit
Accommodations, or of any endorsements thereon, even if such documents should in
fact prove to be in any or all respects invalid,
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fraudulent or forged; (ii) any default or breach of contract or other obligation
between the Borrower and the beneficiary of any Letter of Credit Accommodation
or other third parties in connection with any Letter of Credit Accommodations,
or (iii) lost profits or special or consequential damages.
(b) The Borrower agrees that any action taken by the Bank, if taken in Good
Faith, or any action taken by any other issuer of any Letter of Credit
Accommodation, shall be binding on the Borrower and shall not create any
resulting liability to the Bank. In furtherance thereof, the Bank shall have the
full right and authority to clear and resolve any questions of noncompliance of
documents delivered in connection with any Letter of Credit Accommodation; to
give any instructions as to acceptance or rejection of any documents or goods
purchased pursuant to a Letter of Credit Accommodation; and upon and during the
continuance of an Event of Default: to execute for the Borrower's account any
and all applications for steamship or airway guarantees, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents; and to agree to any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents; and to agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications or Letter of Credit Accommodations. All of
the foregoing actions may be taken in the Bank's sole name, and any bank,
financial institution or correspondent which opens, issues or pays any Letter of
Credit Accommodation shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from the Bank, all
without any notice to or any consent from the Borrower.
(c) The Borrower further agrees to and hereby so releases and holds the
Bank harmless for any acts, waivers, errors, delays or omissions, whether caused
by the Bank, or other issuer of any Letter of Credit Accommodations or any
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodations (except for any of the foregoing arising from the Bank's gross
negligence or willful misconduct).
SECTION 3.9 COMPLIANCE WITH LAW; BORROWER'S RISK. As between the Borrower
and the Bank, the Borrower assumes all risk, liability and responsibility for,
and agrees to pay and discharge, all present and future local, state, federal
and foreign taxes, duties or levies assessed in connection with any shipment of
goods made under any Letter of Credit Accommodations. Any embargo, restriction,
laws, customs or regulations of any country, state, city or other political
subdivision where any Collateral is or may be located, or wherein payments under
any Letter of Credit Accommodations are to be made, or wherein drafts may be
drawn, negotiated, accepted, or paid, shall, as between the Borrower and the
Bank, be solely the Borrower's risk, liability and responsibility.
SECTION 4. CONDITIONS PRECEDENT
SECTION 4.1 CONDITIONS PRECEDENT TO LOANS AND LETTER OF CREDIT
ACCOMMODATIONS AS OF CLOSING DATE. The Bank shall have no obligation to make or
provide any Loans or Letter of Credit Accommodations to the Borrower on the
Closing Date unless prior to or concurrently with the making of the Loans and/or
Letter of Credit Accommodations all of the following conditions have been
satisfied:
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(a) MERGER. The Merger shall have been fully and legally consummated
in accordance with the Merger Agreement contemporaneously with the
execution of this Agreement.
(b) NO INJUNCTION WITH RESPECT TO MERGER. No injunction or other order
issued by any court of competent jurisdiction or by any governmental or
regulatory body which prevents the consummation of the Merger as
contemplated by the Merger Agreement shall be in effect; and no proceeding
before any such court or governmental or regulatory body with any
reasonable likelihood of success shall have been commenced seeking to
enjoin the consummation of the Merger contemplated by the Merger Agreement.
(c) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. After giving effect
to the Merger, Parent shall have, as at the Closing Date, on a consolidated
basis and determined in accordance with GAAP:
(i) a long term debt-to-equity ratio of no greater than 3.1:1.0;
(ii) total net worth (including capital stock, earnings allocated
to members of Parent and earned surplus) of not less than fifteen
percent (15%) of total assets;
(iii) working capital of not less than One Hundred Million Dollars
($100,000,000); and
(iv) on the basis of cash flow projections reasonably acceptable to
the Bank, prepared on the basis of assumptions reasonably acceptable to
the Bank, a cash flow coverage ratio at the end of each Fiscal Year of
Parent (beginning with the Fiscal Year ending June, 1995) until the
Termination Date of (A) net income after taxes, plus depreciation, plus
amortization, plus deferred finance charges for such Fiscal Year to (B)
the current portion of long term debt, plus capital expenditures, plus
cash dividends to preferred stockholders, plus cash patronage payments
to members of Parent for such Fiscal Year, of not less than 1.0 to 1.0.
(d) SUBORDINATED DEBT. The Borrower and the Trustee shall have
executed the Subordinated Notes Indenture and the Borrower shall have
executed the Subordinated Notes, both in form and substance reasonably
satisfactory to the Bank, and the Borrower shall have received gross
proceeds from the issuance of the Subordinated Notes of not less than One
Hundred Sixty Million Dollars ($160,000,000).
(e) NO CHANGES TO THE RESTRUCTURING PROPOSAL. There shall have been no
changes to the Pro-Fac Cooperative, Inc. Restructuring Proposal, dated
August 25, 1994 and the supplement thereto, dated September 1, 1994,
describing the Borrower's proposed management structure, both previously
delivered to the Bank, other than changes thereto reasonably satisfactory
to the Bank;
(f) AGREEMENT AND NOTES. This Agreement and the Notes shall have been
duly executed and delivered by the Borrower.
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(g) GUARANTIES. The respective Guaranties to which each of the
Guarantors shall be a party, as required by Section 2.24 of this Agreement,
shall have been duly executed and delivered by each Guarantor.
(h) SECURITY DOCUMENTS. The Security Documents shall have been duly
executed and delivered by the Borrower, the Parent and the Subsidiary
Guarantors (collectively, the 'OBLIGORS'), as the case may be.
(i) FINANCING STATEMENTS. Financing statements naming each of the
Obligors, as appropriate, as debtor, and the Bank, as secured party (the
'FINANCING STATEMENTS'), shall have been executed and delivered to the
Bank, ready for filing in accordance with the Uniform Commercial Code in
those jurisdictions identified on Schedule 4.1(i) annexed hereto with the
appropriate filing offices of such jurisdictions, which Financing
Statements constitute all of the filings required to perfect the security
interests intended to be created by the Security Documents (which can be
perfected by filing financing statements).
(j) BORROWING BASE CERTIFICATE. The Bank shall have received a
Borrowing Base Certificate showing a Borrowing Base not less than the
initial Seasonal Loans requested to be made by the Bank as of the Closing
Date.
(k) NO ERISA LIABILITIES. There shall not be any material liabilities
under ERISA of Parent or Curtice-Burns in respect of any pension,
profit-sharing or other Plan now or heretofore maintained by Parent or
Curtice-Burns, except and to the extent disclosed in the most recent
audited financial statements of Parent and of Curtice-Burns or otherwise
disclosed and acceptable to the Bank.
(l) EVIDENCE OF CORPORATE ACTION; INCUMBENCY OF OFFICERS. The Bank
shall have received (i) certified copies of all corporate action taken by
PF and Curtice-Burns, including resolutions of their respective Boards of
Directors authorizing execution, delivery and performance of the Merger
Agreement, (ii) certified (as of the Closing Date) copies of all corporate
action taken by the Borrower, and each of the Guarantors, including
resolutions of their respective Boards of Directors and consent by their
respective stockholders (other than the stockholders of the Parent),
authorizing the execution, delivery, and performance of the Loan Documents
to which each is a party and (iii) a certificate (dated as of the Closing
Date) of each of the Secretary of the Borrower and each of the Guarantors,
certifying the names and true signatures of the officers of the Borrower
and each of the Guarantors, respectively, authorized to sign the Loan
Documents to which each is a party.
(m) GOOD STANDING. The Bank shall have received certificates of good
standing for each of the Borrower and each of the Guarantors issued by
their respective jurisdictions of incorporation and each jurisdiction in
which each of them, respectively, is qualified as a foreign corporation, as
set forth in Schedule 4.1(m) annexed hereto.
(n) REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. The Borrower shall have
delivered to the Bank an officer's certificate, dated the Closing Date,
stating that (i) the representations and warranties contained in this
Agreement are true and correct on and as of the Closing Date, and (ii) no
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Default or Event of Default has occurred and is continuing, or would result
after giving effect to any of the Loans and the Letter of Credit Accommodations.
(o) TITLE REPORTS, TITLE INSURANCE AND SURVEY. The Bank shall have
received: (i) an ALTA title report updated through a date reasonably acceptable
to the Bank with respect to all Real Property Collateral with respect to which
the Borrower and any Subsidiary shall deliver a Mortgage to the Bank pursuant to
Section 2.25.
(p) INSURANCE. The Borrower shall have obtained or caused to be obtained
the insurance and endorsements thereto required to be obtained under Section 6.5
and the Security Documents.
(q) NO MERGER OR CHANGE IN CONTROL. EXCEPT FOR (I) THE MERGER, (II) THE
TRANSFER BY PARENT TO PF ON OR PRIOR TO THE CLOSING DATE OF ALL, OR
SUBSTANTIALLY ALL, OF PARENT'S FIXED ASSETS, AND (III) THE TRANSACTIONS SET
FORTH ON SCHEDULE 4.1(q), none of the Borrower, Parent or any of the
Subsidiaries shall have consolidated or merged with, been wound up into or sold,
leased or otherwise disposed of its properties as an entirety or substantially
as an entirety to, any Person since June 23, 1994.
(r) OPINION OF COUNSEL FOR THE BORROWER AND GUARANTORS. The Bank and its
counsel shall have received from Howard, Darby & Levin and Harris Beach &
Wilcox, counsel for the Borrower, Parent and the Subsidiaries, an opinion dated
the Closing Date, in form and substance satisfactory to the Bank and its
counsel, to the effect specified in EXHIBIT K AND EXHIBIT L annexed hereto,
respectively, and covering such other matters incident to the transactions
contemplated hereby as the Bank and its counsel may reasonably request.
(s) FEES AND DISBURSEMENTS OF COUNSEL FOR THE BANK. Counsel for the Bank
shall have received payment of any statements rendered for its reasonable fees
and disbursements posted through the date of such statement (with the
understanding that supplemental statements for reasonable fees and disbursements
subsequently posted will be rendered thereafter) for services rendered and
disbursements made in connection with this Agreement and the transactions
contemplated hereby.
(t) PROCEEDINGS SATISFACTORY. All proceedings and actions taken on or prior
to the Closing Date in connection with the transactions contemplated by this
Agreement, the Guaranties, the Security Documents, the Subordinated Notes
Indenture and the Subordinated Notes and all instruments incident thereto, shall
be in form and substance reasonably satisfactory to the Bank and its counsel,
and the Bank and its counsel shall have received copies of all documents that
the Bank or its counsel may reasonably request in connection with such
proceedings, actions and transactions (including, without limitation, copies of
documents required to give legal effect to the Merger filed with the Secretary
of State of the State of New York, certifications and evidence of the
correctness of the representations and warranties contained herein and
certifications and evidence of the compliance with the terms and the fulfillment
of the conditions of the Merger Agreement, this Agreement, the Guaranties, the
Security Documents, the Subordinated Notes Indenture and the Subordinated Notes,
in form and substance reasonably satisfactory to the Bank and its counsel).
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SECTION 4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. The obligation of the Bank to make each Loan and any Letter of
Credit Accommodation (including the initial Loans and Letter of Credit
Accommodations) shall be subject to the further conditions precedent that on the
date of such Loan or Letter of Credit Accommodation, as the case may be:
(a) The following statements shall be true and, at the Bank's request,
the Bank shall have received a certificate signed by a duly authorized
officer of the Borrower dated the date of such Loan or Letter of Credit
Accommodation, as the case may be, stating that:
(i)The representations and warranties contained in Section 5 of
this Agreement (other than Sections 5.5, 5.6, 5.9, 5.10, 5.13 and 5.14),
in paragraph 7 of the Parent Guaranty (other than paragraphs 7.6, 7.7,
7.10, 7.11, 7.14 and 7.15), in the Security Documents (other than
Sections 4(e) through (h), inclusive, of each of the Parent Security
Agreement, the Borrower Security Agreement and the Subsidiaries Security
Agreement), and in the Guaranties are correct in all material respects
on and as of the date of such Loan or Letter of Credit Accommodation, as
the case may be, as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is continuing
or would result from such Loan or Letter of Credit Accommodation, as the
case may be; and
(b) If requested by the Bank in connection with any Loan, the Bank
shall have received a Borrowing Base Certificate dated as of the Funding
Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank the following, each of
which shall survive the closing of the transactions contemplated hereby.
SECTION 5.1 INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION. The
Borrower and each of its operating Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own
its assets and to transact the business in which it is now engaged or proposes
to be engaged in; and is duly qualified as a foreign corporation and in good
standing under the laws of each other jurisdiction in which such qualification
is required, except where the failure to be so qualified would not have a
material adverse effect on the Borrower and its operating subsidiaries, taken as
a whole.
SECTION 5.2 CORPORATE POWER AND AUTHORITY. The execution, delivery, and
performance by the Borrower and the Subsidiaries of the Loan Documents to which
each is a party have been duly authorized by all necessary corporate action and
do not and will not (a) require any consent or approval of the stockholders of
such corporation that has not been obtained; (b) contravene such corporation's
charter or bylaws; (c) violate any provision of any law, rule, regulation
(including, without limitation Regulations U and X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to such
corporation; (d) result in a breach of
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or constitute a default under any material indenture, including, without
limitation, the Subordinated Notes Indenture, or material loan or credit
agreement or any other agreement, lease or instrument to which such corporation
is a party or by which it or its properties may be bound or affected; or (e)
result in, or require, the creation or imposition of any Lien upon or with
respect to any of the properties now owned or hereafter acquired by such
corporation, except as contemplated by the Loan Documents.
SECTION 5.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, legal,
valid and binding obligations of Parent, the Borrower or the Subsidiaries, as
the case may be, enforceable against Parent, the Borrower or the Subsidiaries,
as the case may be, in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors' rights generally.
SECTION 5.4 LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
properties of the Borrower or any Subsidiary are affected by any fire,
explosion, accident, strike, lockout, or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of a public enemy, or other casualty
(whether or not covered by insurance), materially and adversely affecting such
business or properties or the operation of the Borrower and it Subsidiaries,
taken as a whole, except as has been disclosed to the Bank.
SECTION 5.5 OTHER AGREEMENTS. Except as set forth in SCHEDULE 5.5, neither
the Borrower nor any Subsidiary is a party to any indenture, loan or credit
agreement or to any lease or other agreement or instrument or subject to any
charter or corporate restriction which is reasonably likely to have a material
adverse effect on the business, properties, assets, operations or conditions,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole,
or the ability of the Borrower or any Subsidiary to carry out its obligations
under the Loan Documents to which it is a party. Except as set forth in SCHEDULE
5.5, neither the Borrower nor any Subsidiary is in default in any material
respect of the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material to its
business to which it is a party.
SECTION 5.6 LITIGATION. Except as disclosed in SCHEDULE 5.6, there is no
pending or, to the Borrower's knowledge, threatened action or proceeding against
or affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which is reasonably likely to, in any one
case or in the aggregate, materially adversely affect the financial condition,
operations, properties or business of the Borrower and its Subsidiaries, taken
as a whole, or the ability of the Borrower or any Subsidiary to perform its
obligations under the Loan Documents to which it is a party.
SECTION 5.7 NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The Borrower
and its Subsidiaries have complied with their respective obligations under all
judgments in excess of Five Hundred Thousand Dollars ($500,000) and neither the
Borrower nor any Subsidiary is in default with respect to any material judgment,
writ, injunction, decree rule, or regulation of any court, arbitrator or
federal, state, municipal, or other governmental authority, commission, board,
bureau, agency or instrumentality domestic or foreign.
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SECTION 5.8 OWNERSHIP AND LIENS. The Borrower and each Subsidiary has title
to, or valid leasehold interests in, all of their properties and assets, real
and personal, and none of the properties and assets owned by the Borrower or any
Subsidiary and none of their leasehold interests is subject to any Lien, except
for Permitted Liens, and except for such interests, properties and assets as are
no longer used or useful in the conduct of its business or as have been disposed
of in the ordinary course of business.
SECTION 5.9 SUBSIDIARIES AND OWNERSHIP OF STOCK. Set forth in SCHEDULE 5.9
is a complete and accurate list of the Subsidiaries of the Borrower, showing
which Subsidiaries are operating, the jurisdiction of incorporation of each and
showing the ownership of the outstanding stock of each Subsidiary. All of the
outstanding capital stock of each such Subsidiary has been validly issued, is
fully paid and nonassessable and is owned by the Borrower free and clear of all
Liens, except for Permitted Liens.
SECTION 5.10 ERISA. The Borrower and each Subsidiary are in compliance in
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction is continuing with respect to any
Plan; except as set forth in Schedule 5.10, no notice of intent to terminate a
Plan has been filed nor has any Plan been terminated since September 1, 1989; no
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate or appoint a trustee to administer a Plan, nor has the
PBGC instituted any such proceedings; except as set forth in SCHEDULE 5.10,
neither the Borrower nor any Commonly Controlled Entity has completely or
partially withdrawn from a Multiemployer Plan since September 1, 1989; the
Borrower and each Commonly Controlled Entity have met their minimum funding
requirements under ERISA with respect to all of their Plans and, except as set
forth in Schedule 5.10, the present value of all vested benefits under each Plan
does not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA; and neither the Borrower nor any
Commonly Controlled Entity has incurred any liability to the PBGC under ERISA.
SECTION 5.11 OPERATION OF BUSINESS. The Borrower and its Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and
trade names or rights thereto, to conduct their respective businesses
substantially as now conducted and as presently proposed to be conducted and the
Borrower and its Subsidiaries are not in violation of any valid rights of others
with respect to any of the foregoing, except where the failure to possess or any
such violation would not have a material adverse effect on the Borrower and its
Subsidiaries, taken as a whole.
SECTION 5.12 TAXES. Except as set forth in SCHEDULE 5.12, the Borrower and
each of its Subsidiaries have filed all tax returns (federal, state, and local)
required to be filed and have paid all taxes, assessments, and governmental
charges and levies thereon to be due including interest and penalties. The
federal income tax liabilities of the Borrower and its Subsidiaries have been
audited by the Internal Revenue Service and have been finally determined and
satisfied for all taxable years up to and including the taxable year 1988.
SECTION 5.13 DEBT. SCHEDULE 5.13 is a complete and correct list of all
credit agreements, indentures, purchase agreements, guaranties, Capital Leases,
and other agreements, and arrangements presently in effect providing for or
relating to extensions of credit for borrowed money (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which the
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Borrower or any Subsidiary is in any manner directly or contingently obligated
in an aggregate principal amount in excess of Two Hundred Fifty Thousand Dollars
$250,000; and the maximum principal or face amounts of the credit in question
outstanding, as of August 27, 1994, are correctly stated, and all Liens of any
nature given or agreed to be given as security therefor are correctly described
or indicated in such Schedule.
SECTION 5.14 ENVIRONMENT. Except as set forth in SCHEDULE 5.14, to the best
of the Borrower's knowledge, the Borrower and each Subsidiary have duly complied
with and their businesses, operations, assets, equipment, property, leaseholds
or other facilities are in compliance with the provisions of all federal, state
and local environmental, health and safety laws, codes and ordinances and all
rules and regulations promulgated thereunder. To the best of the Borrower's
knowledge, the Borrower and each Subsidiary have been issued all required
federal, state and local permits, licenses certificates and approvals relating
to (a) air emissions; (b) discharges to surface water or groundwater; (c) noise
emissions; (d) solid or liquid waste disposal; (e) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or wastes (intended
hereby and hereafter to include any and all such materials listed in any
federal, state, or local law, code or ordinance and all rules and regulations
promulgated thereunder as hazardous or potentially hazardous); or (f) other
environmental, health, or safety matters. A true, accurate, complete and current
list of all such permits, licenses, certificates and approvals has been
delivered to the Bank. Except as set forth in SCHEDULE 5.14, neither the
Borrower nor any Subsidiary has received notice of, nor knows of nor suspects
facts which might constitute any violations of, any federal, state, or local
environmental, health or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder with respect to its businesses, operations,
assets, equipment, property, leaseholds, or other facilities. Except as
described in SCHEDULE 5.14, to the best of the Borrower's knowledge, there has
been no emission, spill, release, or discharge into or upon (a) the air; (b)
soils, or any improvements located thereon; (c) surface water or groundwater; or
(d) the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, in violation of any applicable law, of any toxic or
hazardous substances or wastes at or from the premises; and the premises of the
Borrower and its Subsidiaries are free of all such toxic or hazardous substances
or wastes. Except as set forth in SCHEDULE 5.14, to the best of the Borrower's
knowledge, there has been no complaint, order, directive, claim, citation, or
notice by any governmental authority or any person or entity with respect to (a)
air emissions; (b) spills releases, or discharges to soils or improvements
located thereon surface water, groundwater or the sewer, septic system or waste
treatment, storage or disposal systems servicing the premises; (c) noise
emissions; (d) solid or liquid waste disposal; (f) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or waste; or (g)
other environmental, health or safety matters affecting the Borrower or any of
their businesses, operations, assets, equipment, property, leaseholds, or other
facilities. To the best of the Borrower's knowledge, neither the Borrower nor
its Subsidiaries have any indebtedness, obligations, or liability, absolute or
contingent, matured or not matured, with respect to the storage, treatment,
cleanup or disposal of any solid wastes, hazardous wastes, or other toxic or
hazardous substances (including without limitation any such indebtedness,
obligation or liability with respect to any current regulation, law, or statute
regarding such storage, treatment, cleanup, or disposal) which is not shown on
SCHEDULE 5.14. Set forth in SCHEDULE 5.14 is a list of all real property owned
or leased by the Borrower and its Subsidiaries at any time since November 1,
1991 wherever located, and a brief description of the business conducted at such
location.
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SECTION 5.15 SOLVENCY. After giving effect to the Merger, the Borrower is
solvent, is able to pay its debts as they become due and has capital sufficient
to carry on its business as presently conducted and all businesses in which it
is about to engage, and owns property having a value both at fair valuation and
at present fair salable value greater than the amount required to pay Borrower's
Debts. The Borrower will not be rendered insolvent by the execution and delivery
of this Agreement or any of the other Loan Documents or by the transactions
contemplated hereunder or thereunder.
SECTION 6. AFFIRMATIVE COVENANTS
So long as any Obligations shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrower will:
SECTION 6.1 MAINTENANCE OF EXISTENCE. Preserve and maintain, and cause each
operating Subsidiary to preserve and maintain, its corporate existence and good
standing in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each operating Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified would not have a material
adverse effect on the Borrower and its operating Subsidiaries, taken as a whole,
and except as otherwise contemplated by Section 7.3.
SECTION 6.2 MAINTENANCE OF RECORDS. Keep, and cause each operating
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP (in all material respects)
consistently applied, reflecting all financial transactions of the Borrower and
its operating Subsidiaries.
SECTION 6.3 MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve, and
cause each operating Subsidiary to maintain, keep, and preserve, all of its
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
SECTION 6.4 CONDUCT OF BUSINESS. Continue, and cause each operating
Subsidiary to continue, to engage in a business of the same general type as
conducted by it on the date of this Agreement and to not permit any
non-operating Subsidiary to engage in a business other than one of the same
general type as conducted by the Borrower or any Subsidiary on the date of this
Agreement.
SECTION 6.5 MAINTENANCE OF INSURANCE. Maintain, and cause each Subsidiary
to 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 a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
SECTION 6.6 COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, rules, regulations,
and orders, such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments, and governmental charges
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imposed upon it or upon its property, except for such taxes, assessments and
other charges being contested in Good Faith by appropriate proceedings and for
which appropriate reserves are maintained.
SECTION 6.7 RIGHT OF INSPECTION. At any reasonable time and from time to
time, upon at least two (2) Business Days' notice prior to the occurrence of an
Event of Default and at any time and without prior notice upon and during the
continuance of an Event of Default, permit the Bank or any agent or
representative thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any Subsidiary, and to discuss the affairs, finances, and accounts of the
Borrower and any Subsidiary with any of their respective officers and directors
and the Borrower's independent accountants.
SECTION 6.8 ENVIRONMENT. (a) Except as set forth in SCHEDULE 5.14, be and
remain, and cause each Subsidiary to be and remain, in compliance in all
material respects with the provisions of all federal, state, and local
environmental, health and safety laws, codes and ordinances, and all rules and
regulations issued thereunder, provided that, with respect to the matters set
forth in SCHEDULE 5.14, diligently exercise its reasonable commercial efforts to
remedy, and cause each Subsidiary to diligently exercise its reasonable
commercial efforts to remedy, same; notify the Bank immediately of any notice of
a hazardous discharge or environmental complaint received from any governmental
agency or any other party; notify the Bank promptly after becoming aware of any
hazardous discharge from or affecting its premises; immediately contain and
remove the same, in compliance with all applicable laws; promptly pay any fine
or penalty assessed in connection therewith, except as such fine or penalty is
being contested in Good Faith by appropriate proceedings and for which
appropriate reserves are maintained; permit the Bank to, upon reasonable notice
prior to the occurrence of an Event of Default and at any time and without prior
notice upon and during the continuance of an Event of Default, inspect the
premises, to conduct tests thereon and to inspect all books, correspondence, and
records pertaining thereto;
(b) At the Bank's request, and at the Borrower's expense, provide a report
with respect to any Real Property Collateral designated by the Bank of a
qualified environmental engineer, reasonably satisfactory in scope, form and
content to the Bank.
SECTION 6.9 MONTHLY BORROWING BASE CERTIFICATES. At any time a Seasonal
Loan is outstanding, furnish to the Bank within twenty (20) days of the end of
each month a Borrowing Base Certificate ('Borrowing Base Certificate') in
substantially the form of EXHIBIT M.
SECTION 6.10 TITLE REPORTS, TITLE INSURANCE AND SURVEY. At the Bank's
request and at the Borrower's expense, promptly provide the Bank with: (i) an
ALTA Lender's mortgagee title insurance policy with respect to each Mortgage
delivered to the Bank pursuant to Section 2.25, in form and substance reasonably
satisfactory to the Bank and its counsel, each of which policies shall (A) be
issued by a title insurance company or companies reasonably acceptable to the
Bank (B) be in an aggregate amount reasonably acceptable to the Bank and (C)
insure the priority of each Mortgage, subject only to Permitted Liens, and (ii)
a current as-built survey, satisfactory to the Bank for any Real Property
Collateral designated by the Bank.
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SECTION 7. NEGATIVE COVENANTS
So long as any Obligations shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrower will not:
SECTION 7.1 LIENS. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any Lien, upon or with
respect to any of its properties now owned or hereafter acquired, except the
following (collectively, the 'PERMITTED LIENS'):
(a) Liens in favor of the Bank;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(c) Liens imposed by law, such as mechanics', materialmen's,
landlord's, warehousemen's, and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than ninety (90) days or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves
have been established;
(d) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation, securing obligations that are not past
due and for which appropriate reserves have been established;
(e) Monetary deposits or pledges or bonds to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of
business;
(f) Judgment and other similar Liens other than those, or any portion
thereof, for which an insurance company has unconditionally agreed to
provide coverage, securing Debt in an amount not in excess of $250,000
arising in connection with court proceedings, provided the execution or
other enforcement of such Liens is effectively stayed and the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings;
(g) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower or any Subsidiary of the
property or assets encumbered thereby in the normal course of its business
or materially impair the value of the property subject thereto;
(h) Liens securing obligations of a Subsidiary to the Borrower, the
Parent or another Subsidiary;
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(i) Purchase-money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition
(and not created in contemplation of such acquisition), or a Lien incurred
in connection with any conditional sale or other title retention agreement;
provided that:
(i) Any property subject to any of the foregoing is acquired by the
Borrower or any Subsidiary in the ordinary course of its respective
business and the Lien on any such property attaches to such asset
concurrently or within twenty (20) days after the acquisition thereof;
(ii) The obligation secured by any Lien so created, assumed or
existing shall not exceed the lesser of the cost or the fair market
value as of the time of acquisition of the property covered thereby to
the Borrower or Subsidiary acquiring the same;
(iii) Each such Lien shall attach only to the property so acquired
and fixed improvements thereon;
(iv) The Debt secured by all such Liens shall not exceed One
Hundred Thousand Dollars ($100,000) at any time outstanding in the
aggregate; and (v) The Debt secured by such Lien is permitted by the
provisions of Section 7.2, and the related expenditure is permitted
under Paragraph 10.6 of the Parent Guaranty;
(j) Liens permitted under any of the other Loan Documents;
(k) Subject to compliance by the Borrower and its Subsidiaries with
the covenants contained in the Borrower Security Agreement and the
Subsidiaries Security Agreement, respectively, (a) Liens on farm products
purchased by the Borrower or any Subsidiary and on accounts arising from
the sale thereof in favor of the sellers of such farm products, or any
secured lender to any such seller, and (b) statutory trusts created under
the Perishable Agricultural Commodities Act in favor of the Borrower's or
any Subsidiary's suppliers of food products derived from perishable
agricultural commodities; and
(l) Liens pursuant to Capital Leases permitted under Section 7.2(h).
SECTION 7.2 DEBT. Create incur, assume, or suffer to exist, or permit any
Subsidiary to create incur, assume, or suffer to exist any Debt, except:
(a) Debt of the Borrower under this Agreement, including, without
limitation, the assumption of the Obligations evidenced by the Existing
Letters of Credit and Debt of any Subsidiary Guarantor under a Subsidiary
Guaranty;
(b) Debt described in SCHEDULE 7.2(B), but no voluntary prepayment,
renewals, extensions, or refinancings thereof, except for renewals or
extensions of Capital Leases or as described on such Schedule.
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(c) The Debt evidenced by the Subordinated Notes (and guarantees
thereof by the Parent and the Subsidiaries) and other Debt of the Borrower
subordinated on terms reasonably satisfactory to the Bank to the Borrower's
obligations under this Agreement;
(d) Debt of the Borrower to any Subsidiary or of any Subsidiary to the
Borrower or another Subsidiary;
(e) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), of which an
aggregate amount not in excess of One Hundred Thousand Dollars ($100,000)
is more than ninety (90) days past due at any time, in each case incurred
in the ordinary course of business, as presently conducted, and paid within
the specified time, unless contested in good faith and by appropriate
proceedings;
(f) Debt of the Borrower or any Subsidiary secured by purchase-money
Liens permitted by Section 7.1(i);
(g) Debt arising under the Marketing Agreement;
(h) Debt of the Borrower or any Subsidiary in respect of any Capital
Lease in an aggregate principal amount not in excess of Four Million
Dollars ($4,000,000) at any time outstanding;
(i) Debt of the Borrower for the purpose of fixing or hedging interest
rate risk of other Debt permitted under this Agreement;
(j) Debt with respect to deferred compensation arrangements,
post-retirement benefits and other employee, unemployment or retiree
benefits, in each case incurred in the ordinary course of business and
consistent with past practice;
(k) Debt for taxes payable (but not past due, unless being contested
in Good Faith by appropriate proceedings and for which appropriate reserves
have been made) or deferred in accordance with the Code or other applicable
law;
(l) Debt arising under guaranties permitted under Section 7.9; and
(m) Debt (other than Debt permitted pursuant to clauses (a) through
(l) of this Section 7.2) in an aggregate amount not to exceed One Million
Dollars ($1,000,000) at any time outstanding.
SECTION 7.3 MERGERS, ETC. Except for the Merger, wind up, liquidate or
dissolve itself, reorganize, merge or consolidate with or into or convey, sell,
assign, transfer, lease, or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person, or permit any Subsidiary to do so,
except subject to prior written notice to the Bank, (a) that any Subsidiary may
merge into or transfer assets to the Borrower, (b) that any Subsidiary may merge
into or
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consolidate with or transfer assets to any other Subsidiary, and (c) in
connection with any of the transactions described in Schedule 4.1(q).
SECTION 7.4 LEASES. Create, incur, assume, or suffer to exist, or permit
any Subsidiary to create, incur, assume, or suffer to exist, any obligation as
lessee for the rental or hire of any real or personal property, except: (a)
Capital Leases permitted by Section 7.2(h), (b) leases (other than Capital
Leases) which do not in the aggregate require the Borrower and its Subsidiaries
on a consolidated basis to make payments (including taxes, insurance,
maintenance, and similar expenses which the Borrower or any Subsidiary is
required to pay under the terms of any lease) in any Fiscal Year of the Borrower
in excess of Fifteen Million Dollars ($15,000,000); and (c) leases between the
Borrower and any Subsidiary or between any Subsidiaries.
SECTION 7.5 SALE AND LEASEBACK. Sell, transfer, or otherwise dispose of, or
permit any Subsidiary to sell, transfer or otherwise dispose of any real or
personal property to any Person and thereafter directly or indirectly lease back
the same or similar property.
SECTION 7.6 [INTENTIONALLY OMITTED].
SECTION 7.7 SALE OF ASSETS. Sell, lease, assign, transfer, or otherwise
dispose of or permit any Subsidiary to sell, lease, assign, transfer, or
otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
Subsidiaries, accounts receivable, and leasehold interests), except: (a)
inventory disposed of in the ordinary course of business; (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
(c) that any Subsidiary may sell, lease, assign, or otherwise transfer its
assets to the Borrower or to another subsidiary located in the Continental
United States; (d) as contemplated by the transactions described in Schedule
4.1(q); (e) assets (including shares of stock disposed of that have a fair
market value not exceeding Five Hundred Thousand Dollars ($500,000) in the
aggregate for each Fiscal Year of the Borrower; and (f) assets (including shares
of stock) disposed of for net proceeds not in excess of Five Hundred Thousand
Dollars ($500,000) in the aggregate for such Fiscal Year. Net proceeds arising
from sales of assets permitted by subsection (d), (e) and (f) of this Section
7.7 shall be promptly delivered to the Bank, and together with any proceeds
delivered to the Bank pursuant to paragraph 9.7 of the Parent Guaranty, shall be
applied by the Bank as a prepayment of the Term Loan or the Term Loan Facility
Loan, as elected by the Borrower in the manner provided by Section 2.16.
SECTION 7.8 INVESTMENTS. Make, or permit any Subsidiary to make, any loan
or advance to any Person or purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, assets,
obligations, or other securities of, make any capital contribution to, or
otherwise invest in or acquire any interest in any Person, or participate as a
partner or joint venturer with any other Person, except: (a) direct obligations
of the United States or any agency thereof with maturities of one year or less
from the date of acquisition; (b) commercial paper of a domestic issuer rated at
least 'A-1' by Standard & Poor's Corporation or 'P-1' by Moody's Investors
Service, Inc.; (c) time deposits and certificates of deposit with maturities of
one year or less from the date of acquisition issued by any United States
commercial bank having capital and surplus in excess of One Hundred Million
Dollars ($100,000,000) in an amount for each time deposit account and each such
certificate of deposit not in excess of the maximum FDIC insured amount
39
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with respect thereto; and (d) stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary; (e) pursuant to the Marketing Agreement, (f)
obligations or securities of the Borrower or any of the Borrower's Subsidiaries
held by the Borrower or any Subsidiary in another Subsidiary, (g) loans of up to
Ten Million Dollars ($10,000,000) in principal amount at any time outstanding
from the Borrower to the Parent for the Parent's working capital purposes, which
bear interest at a rate at least equal to the rate that would have been then
applicable to the Seasonal Loans made as Prime Loans on the date such loans from
the Borrower to the Parent were made and (h) investments permitted or required
under Section 8.
SECTION 7.9 GUARANTIES, ETC. Assume, guaranty, endorse, or otherwise be or
become directly or contingently responsible or liable, or permit any Subsidiary
to assume, guaranty, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets goods, or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth, or otherwise to
assure the creditors of any Person against loss), for obligations of any Person,
except guaranties pursuant to the Loan Documents and by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and guaranties of Debt permitted under Section 7.2.
SECTION 7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, or permit any Subsidiary to
enter into any transaction, including, without limitation, the purchase, sale,
or exchange of property or the rendering of any service, with any Affiliate,
except (a) the Borrower and the Subsidiaries will not be prohibited from
declaring or paying any lawful dividend so long as, immediately after giving
effect thereto, no Default shall have occurred and be continuing, (b)
transactions and conduct entered into pursuant to the Marketing Agreement shall
not be prohibited, (c) transactions and conduct permitted by Section 9.6 of the
Parent Guaranty or otherwise by this Agreement shall not be prohibited and (d)
the Borrower and its Subsidiaries shall be entitled to enter into transactions
in the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon terms no less favorable to the
Borrower or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate.
SECTION 7.11 FISCAL YEAR. Change, or permit any Subsidiary to change, its
Fiscal Year.
SECTION 8. INVESTMENT BY BORROWER IN STOCK OF BANK
SECTION 8.1 INITIAL INVESTMENT IN CLASS C STOCK. The Borrower shall
purchase from the Bank on the Closing Date Class C Stock of the Bank (the 'BANK
STOCK') with an aggregate par value equal to the lesser of (a) One Thousand
Dollars ($1,000) and (b) two percent (2%) of the aggregate Loans made on the
Closing Date, provided, however, the Borrower shall have satisfied the foregoing
requirement if the Parent shall have transferred to the Borrower, on or before
the Closing Date, the Parent's entire existing investment in the Bank Stock.
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SECTION 8.2 QUARTERLY INVESTMENT IN CLASS C STOCK. In addition to the
initial purchase of Bank Stock required by Section 8.1, the Borrower shall
purchase additional Bank Stock from the Bank on a quarterly basis, on the first
day of each January, April, July and October at a purchase price equal to its
book value, but not exceeding the par value of One Hundred Dollars ($100.00) per
share, in such amount as is established in the Bank's capitalization by-laws and
capitalization plan, as in effect from time to time and, from and after the
merger of the Bank with and into CoBank, at such purchase price and in such
amounts as shall be established in CoBank's capitalization by-laws and
capitalization plan as in effect from time to time. The Bank shall issue
evidence of said stock purchase to the Borrower as of the end of each Fiscal
Year of the Bank in the amount of the payments made by the Borrower for Bank
Stock during the Fiscal Year.
SECTION 8.3 SECURITY FOR BANK STOCK PURCHASE OBLIGATIONS. The obligations
of the Borrower to purchase Bank Stock set forth in Sections 8.1 and 8.2 shall
be secured by the Collateral.
SECTION 8.4 PLEDGE OF BANK STOCK AND PATRON'S EQUITIES. All shares of Bank
Stock and equity interests now or hereafter acquired by the Borrower in and to
the allocated contingency reserves and allocated surplus of the Bank, now or
hereafter existing, shall be and hereby are pledged to the Bank as security for
payment of all Obligations of the Borrower to the Bank, including, without
limitation, the obligation to purchase Bank Stock set forth in Sections 8.1 and
8.2. If an Event of Default shall occur, in addition to and not in limitation of
the Bank's rights and remedies set forth in Section 9, the Bank may, at its
option, and in accordance with any applicable regulations of the Farm Credit
Administration, (a) retire and cancel all or any part of the Bank Stock owned by
the Borrower, whereupon the Bank shall credit against the then outstanding
obligations an amount equal to the fair market value of such cancelled Bank
Stock, but not exceeding par value thereof, and/or (b) cancel all or part of the
Borrower's equity interests and interests in the allocated contingency reserves
and allocated surplus of the Bank, the aggregate amount of which shall thereupon
be credited against the then outstanding Obligations.
SECTION 9. EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. The occurrence or existence of any one or
more of the following events or conditions shall constitute an 'Event of
Default':
(a) The Borrower fails to make any payment or prepayment of the
principal of, any of the Notes, as and when the same becomes due and
payable, whether at maturity, at a date fixed for prepayment, upon
acceleration or otherwise and such failure continues for thirty (30)
Business Days; or
(b) The Borrower fails to pay any Reimbursement Obligations as and
when the same become due and payable; or
(c) The Borrower fails to make any payment of interest under any of
the Notes or with respect to any Reimbursement Obligations as and when the
same becomes due and payable and such failure continues for thirty (30)
Business Days following the date on which such payment was due and payable
after the Bank gives notice thereof to the Borrower; or
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(d) The Borrower fails to pay any other amounts due and payable under
this Agreement as and when due and payable and such failure continues for
thirty (30) Business Days after the Bank gives notice thereof to the
Borrower; or
(e) Any representation or warranty made or deemed made by the Borrower
in this Agreement or by the Borrower or any Guarantor in any other Loan
Document or which is contained in any certificate, document, opinion, or
any financial statement furnished pursuant to the Parent Guaranty or any
other financial or other statement furnished at any time pursuant to any
Loan Document, shall prove to have been incorrect, incomplete, or
misleading in any material respect on or as of the date made or deemed
made, unless the facts underlying such representation or warranty are
susceptible or being changed and are in fact changed within thirty (30)
days after notice to the Borrower of such inaccuracy so that such
representation or warranty would, upon such change, be correct in all
material respects;
(f) The Borrower shall default in the due and punctual performance of
or compliance with any covenant, condition or agreement to be performed or
observed by it under Sections 7.1, 7.3, 7.5, or 7.7 or shall use the
proceeds of the Loans other than as required by Section 2.18; or
(g) The Borrower or any of its Subsidiaries shall fail to duly and
punctually perform or observe any term, covenant or agreement contained in
any Loan Document on its part to be performed or observed, other than those
described in Sections 9.1(a), (b), (c) (d), (e) and (f), and any such
failure shall continue unremedied for thirty (30) days after the Bank gives
notice thereof to the Borrower; or
(h) Parent shall fail to duly and punctually perform or observe any
term, covenant or agreement contained in Paragraphs 9.1, 9.3, 9.5, 9.6,
9.7, 10.1, 10.2, 10.3, 10.4, or 10.5 of the Parent Guaranty; or
(i) Parent shall fail to duly or punctually perform or observe any
term, covenant or agreement contained in the Parent Guaranty, other than
those described in Sections 9.1(e) and (h) hereof, and any such failure
shall continue unremedied for thirty (30) days after the Bank gives notice
thereof to the Parent;
(j) The Borrower or any Subsidiary shall (i) fail to pay any Debt for
borrowed money in excess of Five Hundred Thousand Dollars ($500,000) of the
Borrower or such Subsidiary (as the case may be) when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise), or (ii) fail to perform or observe any term, covenant,
agreement or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness when required to
be performed or observed, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of, the maturity of
such indebtedness, which such failure to perform or observe shall not have
been waived by the holder of such or any such indebtedness shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity
thereof; or
(k) Any of the Obligors (i) shall generally not pay, or shall be
unable to pay, or shall admit in writing its inability to pay its debts as
such debts become due; or (ii) makes an assignment for
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the benefit of creditors, makes or sends notice of a bulk transfer or calls a
general meeting of its creditors or principal creditors or petitions or applies
to any tribunal for the appointment of a custodian, receiver, or trustee for it
or a substantial part of its assets; or (iii) files any petition or application
for relief under the Bankruptcy Code or any other bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed against it in which an order for relief is
entered or an adjudication or appointment is made, and which remains undismissed
for a period of sixty (60) days or more; or (v) takes any corporate action
indicating its consent to, approval of, or acquiescence in any such petition,
application, proceeding, or order for relief or the appointment of a custodian,
receiver, or trustee for all or any substantial part of its properties; or (vi)
suffers any such custodianship, receivership, or trusteeship to continue
undischarged for a period of sixty (60) days or more (each of the Events of
Default set forth in this Section 9.1(k) being individually referred to herein
as an 'Insolvency Event'); or
(l) One or more final judgments, decrees, or orders for the payment of
money in excess of Five Hundred Thousand Dollars ($500,000) in the
aggregate (or its equivalent in another currency) shall be rendered against
any of the Obligors, and (i) is not adequately covered by insurance or an
indemnity, in each case satisfactory to the Bank, or (ii) such judgment,
decree or order continues unsatisfied and in effect for a period of sixty
(60) consecutive days without being vacated, discharged, satisfied, or
stayed or bonded pending appeal, or (iii) enforcement proceedings shall
have been commenced with respect to such judgment, decree or order; or
(m) Any of the Guaranties shall at any time after execution and
delivery thereof and for any reason cease to be in full force and effect
(except to the extent any Guaranty is assumed through a merger permitted
under Section 7.3) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Guarantor party thereto or
any Guarantor shall deny it has any further liability or obligation under,
or revokes, terminates or shall fail to pay when due its obligations under
its Guaranties; or
(n) Any Security Document shall at any time after its execution and
delivery and for any reason cease (i) to create a valid and perfected first
priority Lien in and to the Collateral purported to be subject to such
Security Document (except for a Permitted Lien); or (ii) to be in full
force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Obligor or any Obligor
party thereto shall deny it has any further liability or obligation under
such Security Document; or
(o) An event of default shall have occurred under and as defined in
any Security Document;
(p) Any of the following events shall occur or exist with respect to
the Borrower and any Commonly Controlled Entity under ERISA (except for the
events described on Schedule 5.10): any Reportable Event shall occur;
complete or partial withdrawal from any Multiemployer Plan shall take
place; any Prohibited Transaction shall occur; a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or
circumstances shall exist which constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan, or the PBGC shall institute such
proceedings; and in each case above, such event or
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condition, together with all other events or conditions, if any, could subject
the Borrower to any tax, penalty, or other liability which in the aggregate may
exceed Five Hundred Thousand Dollars ($500,000);
(q) The occurrence of a Change of Control; or
(r) The occurrence of any default or event of default under and as
defined in the Subordinated Notes Indenture and/or any of the Subordinated
Notes; or
(s) A final judgment is entered by a court of competent jurisdiction
invalidating the Merger and the same is not dismissed or vacated after a
period of thirty (30) days; or
(t) The Borrower ceases to be an eligible borrower under the Farm
Credit Act of 1971, as amended.
SECTION 9.2 REMEDIES. (a) Upon the commencement and during the pendency of
an involuntary case under the Bankruptcy Code of under any other applicable
bankruptcy, insolvency or similar now or hereafter in effect, the Bank shall
have no obligation to make Loans or Letter of Credit Accommodations, (b) upon
the occurrence of any Insolvency Event, all the Commitments shall automatically
terminate and the unpaid principal amount of all of the Obligations shall
automatically become due and payable together with interest accrued thereon and
together with all other amounts payable under any of the Loan Documents, without
presentment, demand, protest or notice, all of which are hereby expressly waived
by the Borrower, and (c) upon the occurrence and continuance of any other Event
of Default, the Bank may, by written notice to the Borrower, (i) cease making
Loans and providing Letter of Credit Accommodations and (ii) declare all of the
Obligations due and payable, whereupon (A) the Notes shall mature and become due
and payable, together with interest accrued thereon and together with all other
amounts payable under any of the Loan Documents, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, and (B) the Bank shall have all rights and remedies
provided in the Security Documents and other Loan Documents, and all the rights
of a secured party under the Uniform Commercial Code or other applicable law.
All rights and remedies of the Bank are cumulative and not exclusive and are
enforceable, at the Bank's option, alternatively, successively, or concurrently
on any one or more occasions and in any order the Bank may determine.
SECTION 10. MISCELLANEOUS
SECTION 10.1 ACCOUNT STATED. The Bank's books and records showing the
accounts between the Bank and the Borrower shall be admissible in evidence in
any action or proceeding as prima facie proof of the items therein set forth,
and the Bank's statements delivered to the Borrower, to the extent to which no
written objection is made within thirty (30) days after the date of receipt
thereof by the Borrower, shall constitute an account stated between the Bank and
the Borrower and be binding on the Borrower. The Bank may apply all payments,
proceeds of Collateral and all other amounts received from or for the account of
the Borrower or any Guarantor to the Obligations in such order and manner as the
Bank shall in its sole discretion determine, except as otherwise provided in
this Agreement or any other Loan Document.
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SECTION 10.2 AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of any Loan Document to which the Borrower is a party,
nor consent to any departure by the Borrower from any Loan Document to which it
is a party, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 10.3 NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be in writing and shall be deemed to have been
duly given or made: if by hand, immediately upon delivery; if by telecopier,
immediately upon sending, provided it is sent on a Business Day, but if not,
then immediately upon the beginning of the first Business Day after being sent;
if by Federal Express, Express Mail or any other overnight delivery service, one
(1) day after dispatch; and if mailed by United States first class certified
mail, return receipt requested, five (5) days after mailing. All notices,
requests and demands are to be given or made to the respective parties at the
following addresses (or to such other addresses as either party may designate by
notice in accordance with the provisions of this Section 10.3):
If to the Borrower: Curtice-Burns Foods, Inc.
90 Linden Place
Rochester, New York 14625
Attention: Mr. William D. Rice
Senior Vice President and
Chief Financial Officer
Telecopier: (716) 383-1568
If to the Bank: Springfield Bank for Cooperatives
67 Hunt Street
Agawam, Massachusetts 01001
Attention: Mr. Roger Murray
Telecopier: (413) 789-0140
SECTION 10.4 NO WAIVER. No failure or delay on the part of the Bank in
exercising any right, power, or remedy hereunder shall 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 10.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower may not assign or transfer
(except to Curtice-Burns pursuant to the Merger) any of its rights under any
Loan Document to which the Borrower is a party without the prior written consent
of the Bank.
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SECTION 10.6 ASSIGNMENTS AND PARTICIPATIONS. The Bank shall not assign any
of its rights or delegate any of its obligations under this Agreement and the
other Loan Documents without the prior consent of the Borrower, which shall not
be unreasonably withheld. The Bank may, without the prior consent of the
Borrower, sell participations in all or any part of the Loans and Letter of
Credit Accommodations or any other interest herein to a bank or other entity.
Any such participant shall have, to the extent of such participation, the same
rights and benefits as it would have had if it were the Bank hereunder, except
as otherwise provided by the terms of such participation; provided, that in the
event of any such sale by the Bank of participating interests under the Loan
Documents, the Bank's obligations under this Agreement to the Borrower shall
remain unchanged, the Bank shall remain solely responsible for the performance
thereof, the Bank shall remain the holder of the Notes for all purposes under
this Agreement and the other Loan Documents, and the Borrower shall continue to
deal solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement and the other Loan Documents; and provided
further that no such participant shall be entitled to receive any greater amount
pursuant to Section 2.19, 2.21 or 2.23 of this Agreement than the Bank would
have been entitled to receive in respect of the amount of the participation
transferred to such participant had no such transfer occurred. The Bank may
furnish any information concerning the Borrower or any Guarantor in the
possession of the Bank from time to time to assignees and participants
(including prospective assignees and participants). For purposes of this Section
10.6, the consummation of the merger of the Bank with and into CoBank shall not
constitute an assignment of the Bank's interest in the Loans and Letter of
Credit Accommodations.
SECTION 10.7 COSTS, EXPENSES, AND TAXES. The Borrower agrees to pay on
demand all costs and expenses incurred by the Bank in connection with the
preparation, execution, delivery, filing, and administration of the Loan
Documents, and of any amendment, modification, or supplement to the Loan
Documents, including, without limitation, title insurance premiums, filing and
recording fees and the reasonable fees and out-of-pocket expenses of counsel for
the Bank, incurred in connection with advising the Bank as to its rights and
responsibilities hereunder. The Borrower also agrees to pay all such costs and
expenses, including court costs, incurred in connection with enforcement of the
Loan Documents, or any amendment, modification, or supplement thereto, whether
by negotiation, legal proceedings, or otherwise. In addition, the Borrower shall
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, and recording of any
of the Loan Documents and the other documents to be delivered under any such
Loan Documents, and agrees to hold the Bank harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or failing
to pay such taxes and fees. This provision shall survive termination of this
Agreement.
SECTION 10.8 INTEGRATION. This Agreement and the Loan Documents contain the
entire agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto,
including, but not limited to, the Commitment Letter, dated September 2, 1994,
delivered by the Bank to Parent and accepted by Parent on or about September 15,
1994.
SECTION 10.9 INDEMNITY. The Borrower hereby agrees to defend, indemnify,
and hold the Bank and its officers, directors, employees, affiliates, agents and
controlling persons harmless from and against any and all losses, claims,
damages, liabilities, judgments, penalties, costs, and reasonable expenses joint
or several (including reasonable attorney fees and court costs now or hereafter
arising from the enforcement of this clause) to which any such Person may become
subject arising directly or indirectly from (a) this
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Agreement or the use of the proceeds of the Loans as provided in Sections 2.18,
or any related transaction, including, but not limited to, any claim,
litigation, investigation or proceeding relating to the Merger and the
assistance provided by the Bank under this Agreement in financing the Merger,
regardless of whether any of such indemnified parties is a party thereto, and to
reimburse each of such indemnified parties upon demand for any reasonable legal
or other expenses incurred in connection with investigating or defending any of
the foregoing, provided that such indemnified parties will not be indemnified
for any such losses, claims, damages, liabilities or expenses resulting from the
gross negligence or willful misconduct of the Bank and (b) the activities of the
Borrower and each of the Guarantors, their respective predecessors in interest,
or third parties with whom it has a contractual relationship, or arising
directly or indirectly from the violation of any environmental protection,
health, or safety law, whether such claims are asserted by any governmental
agency or any other Person. This indemnity shall survive termination of this
Agreement.
SECTION 10.10 GOVERNING LAW. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York, without
reference to the conflicts of laws principles of said State.
SECTION 10.11 CONSENT TO JURISDICTION. The Borrower hereby irrevocably
submits and consents to the non-exclusive jurisdiction of the State and Federal
Courts in the State of New York, in connection with any action or proceeding
arising out of or relating to this Agreement, the Notes or any of the other Loan
Documents, or any matter arising therefrom or relating thereto.
SECTION 10.12 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER 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, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS TO WHICH THE
BORROWER IS A PARTY. NO OFFICER OF THE BANK HAS AUTHORITY TO WAIVE, CONDITION,
OR MODIFY THIS PROVISION.
SECTION 10.13 [INTENTIONALLY OMITTED].
SECTION 10.14 SEVERABILITY OF PROVISIONS. Any provision of any 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 such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 10.15 HEADINGS. Article and Section headings in the Loan Documents
are included in such Loan Documents for the convenience of reference only and
shall not constitute a part of the applicable Loan Documents for any other
purpose.
SECTION 10.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by each of the Borrower and the Bank in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PF ACQUISITION CORP.
By: /s/ Roy A. Myers
____________________________________
Title: President
___________________________________
CURTICE-BURNS FOODS, INC.
By: /s/ William D. Rice
____________________________________
Title: Senior Vice President
___________________________________
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
____________________________________
Title: Vice President
___________________________________
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BORROWER SECURITY AGREEMENT
BY AND AMONG
PF ACQUISITION CORP.,
CURTICE-BURNS FOODS, INC.
AND
SPRINGFIELD BANK FOR COOPERATIVES
DATED AS OF NOVEMBER 3, 1994
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS............................................................... 2
SECTION 1.1 OTHER DEFINITIONAL PROVISIONS............................................. 3
SECTION 2. GRANT OF SECURITY INTEREST................................................ 3
SECTION 3. DEBTOR REMAINS LIABLE..................................................... 3
SECTION 4. REPRESENTATIONS AND WARRANTIES............................................ 3
SECTION 5. COVENANTS................................................................. 5
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS................................ 7
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT. 8
SECTION 8. FURTHER ASSURANCES........................................................ 9
SECTION 9. INSURANCE................................................................. 9
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.................................. 10
SECTION 11. SECURED PARTY MAY PERFORM................................................. 11
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES.................................... 11
SECTION 13. EVENTS OF DEFAULT......................................................... 11
SECTION 14. REMEDIES.................................................................. 12
SECTION 15. APPLICATION OF PROCEEDS................................................... 12
SECTION 16. INDEMNITY................................................................. 13
SECTION 17. SECURITY INTEREST ABSOLUTE................................................ 13
SECTION 18. CONTINUING SECURITY INTEREST.............................................. 14
SECTION 19. AMENDMENTS; ETC........................................................... 14
SECTION 20. NOTICES................................................................... 14
SECTION 21. GOVERNING LAW............................................................. 15
SECTION 22. CONSENT TO JURISDICTION................................................... 15
SECTION 23. WAIVER OF JURY TRIAL...................................................... 15
SECTION 24. HEADINGS.................................................................. 15
SECTION 25. SEVERABILITY.............................................................. 15
SECTION 26. COUNTERPARTS.............................................................. 15
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SCHEDULES
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Schedule I -- Chief Executive Office and Location of Records
Schedule II -- Trade-Names and Fictitious Business
Schedule VII -- Locations of Inventory and Equipment
Schedule IV -- Existing Liens
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BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT, dated as of November 3, 1994 (this
'Agreement'), between PF ACQUISITION CORP., a New York corporation ('PF
Acquisition') and CURTICE-BURNS FOODS, INC., a New York corporation,
('Curtice-Burns', and together with PF Acquisition, individually and
collectively, jointly and severally, 'Debtor') and SPRINGFIELD BANK FOR
COOPERATIVES, a corporation established under the laws of the United States of
America and continuing as a federally-chartered instrumentality of the United
States under the Farm Credit Act of 1971, as amended (the 'Secured Party').
W I T N E S S E T H:
WHEREAS, the Debtor and Secured Party have entered into a Term Loan, Term
Loan Facility and Seasonal Loan Agreement, dated as the date hereof (as amended,
supplemented or modified from time to time, the 'Loan Agreement');
WHEREAS, the Debtor has requested the Secured Party to extend credit to the
Debtor and the Secured Party has agreed to extend credit to the Debtor upon the
terms and subject to the conditions set forth in the Loan Agreement;
WHEREAS, it is a condition precedent to the obligation of the Secured Party
to now or hereafter extend credit to the Debtor under the Loan Agreement that
the Debtor shall have executed and delivered this Security Agreement to the
Secured Party;
WHEREAS, PF Acquisition is a wholly-owned subsidiary of Pro-Fac
Cooperative, Inc., a New York cooperative corporation (the 'Parent');
WHEREAS, PF Acquisition is this day merging with and into Curtice-Burns;
and
WHEREAS, Curtice-Burns, as the survivor of the merger of PF Acquisition
into Curtice-Burns, will be a wholly-owned subsidiary of the Parent;
NOW THEREFORE, in consideration of the foregoing premises and to induce the
Secured Party to enter into the Loan Agreement and extend credit to the Debtor
thereunder, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Debtor hereby agrees with the
Secured Party as follows:
SECTION 1. DEFINITIONS. Terms used herein which are defined in the Loan
Agreement and not otherwise defined herein have the same meanings set forth
in the Loan Agreement. Terms not specifically defined herein which are
defined in the Uniform Commercial Code have the meanings as defined in the
Uniform Commercial Code. The following terms as used in this Agreement have
the following meaning:
'Accounts' means all of Debtor's present and future accounts,
including, without limitation, all of the Debtor's rights to payment for
goods sold or leased or for services rendered, whether or not yet earned
by performance.
'Account Debtor' means the Person who is obligated on or under any
Account.
'Collateral' means all property or rights in which a Lien and
security interest is granted hereunder.
'Contractual Obligations' means, as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
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'Equipment' means all of the Debtor's now owned and hereafter
acquired machinery, equipment, furnishings, fixtures, vehicles and
computers and other electronic data-processing and office equipment and
any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components,
parts, equipment and accessories whether now or hereafter installed
thereon or affixed thereto.
'General Intangibles' means all of the Debtor's now owned and
hereafter acquired general intangibles, including, without limitation,
(i) all patents and copyrights, (ii) all owned or licensed trademarks
and trademark registrations, trade names and trade name registrations
and service marks and service mark registrations, and all of the
goodwill of the business connected with the use of, and symbolized by,
each owned or licensed trademark and trademark registration, trade name
and trade name registration and service mark and service mark
registration, and all continuations and extensions thereof, the right to
sue for infringements or dilutions thereof or for injury to the goodwill
associated therewith, (iii) all rights to payment in respect of loans or
advances, management fees, tax sharing or allocation fees, royalties,
licensing arrangements and pension or tax refunds, and (iv) all rights
arising in favor of Debtor under the Marketing Agreement.
'Inventory' means all of the Debtor's inventory, of every kind and
description, now owned and hereafter acquired, wherever located,
including, without limitation, all raw materials, work in process and
finished goods, and materials used or consumed or to be used or consumed
in the Debtor's business, or the processing, packaging, delivery or
shipping of any of the foregoing, and all goods which are returned to or
repossessed by the Debtor whether or not in transit, and all accessions
and additions thereto and all documents of title covering any of the
foregoing.
'Requirement of Law' means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of any arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
'Uniform Commercial Code' means the Uniform Commercial Code as the
same may from time to time be in effect in the State of New York or any
other applicable jurisdiction.
SECTION 1.1 Other Definitional Provisions; Interpretation. References to
'Sections,' 'Subsections,' and 'Schedules' shall be to Sections, Subsection, and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, 'hereof', 'herein,' 'hereto,' 'hereunder' and the
like mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears; words
importing any gender include the other gender; references to 'writing' include
printing, typing and other means of reproducing words in a tangible visible
form; the words 'including,' 'includes' and 'include' shall be deemed to be
followed by the words 'without limitation'; references to Persons include their
respective permitted successors and assigns or, in the case of Governmental
Authorities, Persons succeeding to the relevant functions of such Governmental
Authorities; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
SECTION 2. GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Obligations, the Debtor hereby assigns to the Secured Party
and grants to the Secured Party a continuing security interest in and lien upon
the following property of the Debtor, whether now or hereafter existing, owned
or acquired: (a) all Accounts (whether invoiced under the name of Debtor or any
tradename or division of Debtor) and all guarantees and other property securing
the payment of or performance under any of the Accounts, (b) all General
Intangibles, (c) all Chattel Paper, (d) all Documents, (e) all Instruments
(other than capital stock), (f) all Inventory, (g) all Equipment; (h) all books
and records relating to any of the foregoing; and (i) all products and proceeds
(including, without limitation, all insurance proceeds) of any of the foregoing.
SECTION 3. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Debtor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the
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exercise by the Secured Party of any of its rights hereunder shall not release
Debtor from any of its duties or obligations under any contracts and agreements
included in the Collateral, to the extent set forth therein, and (c) the Secured
Party shall have no obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Party be obligated to perform any of the obligations or duties of Debtor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants
as follows:
(a) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required either (i) for the grant by Debtor of the
security interest granted hereby or for the execution, delivery or
performance of this Agreement by Debtor or (ii) for the perfection of or
the exercise by the Secured Party of its rights and remedies hereunder,
except for the filing of appropriate financing statements as contemplated
in subsection (d) of this Section and the filing of appropriate documents
with the United States Patent and Trademark Office with respect to certain
General Intangibles.
(b) Ownership of Collateral. Except for the security interests
disclosed in Schedule IV hereto, other Permitted Liens and the security
interests created by this Agreement, Debtor owns the Collateral free and
clear of any Lien. Except with respect to (i) financing statements filed by
The Chase Manhattan Bank, N.A., as Agent, with respect to which the Secured
Party has obtained but not yet filed termination statements, (ii) Permitted
Liens and (iii) such as may have been filed in favor of the Secured Party
relating to this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is
on file in any filing or recording office.
(c) Accounts Valid. To the best of the knowledge of Debtor, at the
time of the creation thereof, and at all times thereafter, each Account of
Debtor constitutes the legal, valid and binding obligation of the party
obligated to pay the same and complies in all material respects with the
provisions of all material applicable laws and regulations, whether
federal, state or local, applicable thereto.
(d) Perfection. Upon proper filing of financing statements, this
Agreement creates a valid perfected security interest in the Collateral in
which a security interest may be perfected by filing financing statements
in favor of the Secured Party under the Uniform Commercial Code.
(e) Office Locations; Fictitious Names. The chief place of business
and the chief executive office of Debtor and the offices where Debtor keeps
its records regarding the Accounts, are set forth on Schedule I hereto.
Debtor does not sell Inventory under any trade-name or fictitious business
name except as set forth on Schedule II hereto;
(f) Locations of Inventory and Equipment. The Inventory and Equipment
of Debtor is located at the places set forth in Schedule III hereto
provided that Schedule III does not include locations where the fair market
of the Inventory or the book value of the Equipment does not, or is not
expected, from time to time, to exceed $25,000, individually or in the
aggregate.
(g) Compliance with The Food Security Act. Except for FSA Notices (as
defined below) regarding Liens not exceeding $330,000 in the aggregate,
Debtor has not, within the one year period ended on September 24, 1994,
received written notice, pursuant to the applicable provisions of The Food
Security Act of 1985, 7 U.S.C. 1631 and rules, regulations and orders
thereunder (the 'FSA') or pursuant to the Uniform Commercial Code or any
other applicable local laws from (i) any of its suppliers or sellers
(collectively, 'Sellers') of farm products, or (ii) any secured party of
any such Sellers of farm products, or (iii) the Secretary of State (or
equivalent official) of any State in which farm products purchased by
Debtor are produced, advising or notifying Debtor of a Lien in favor of
such secured party upon farm products which may be purchased by Debtor (all
of the foregoing, collectively, the 'FSA Notices'). Debtor has properly
registered with the Secretary of State of any State in which farm products
purchased by Debtor are produced which employs a 'central filing system',
as defined in The FSA.
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(h) Compliance with the Perishable Agricultural Commodities Act.
Except for PACA Notices (as defined below) regarding Liens not exceeding
$20,000 in the aggregate, Debtor has not, within the one-year period ended
on September 24, 1994, received written notice, pursuant to the applicable
provisions of the Perishable Agricultural Commodities Act of 1930, 7 U.S.C.
499e(c)(2) and rules, regulations and orders thereunder ('PACA'), from any
of its Sellers of food or other products derived from perishable
agricultural commodities, advising or notifying Debtor of its intent to be
the beneficiary of a trust imposed with respect to those perishable
agricultural commodities or the proceeds thereof ('PACA Notices').
SECTION 5. COVENANTS. Debtor shall:
(a) not use or permit any Collateral to be used in any respect
unlawfully or in violation of any provision of this Agreement, or any
applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral if the consequence of such violation would be a
material fine or if such violation would have a material adverse effect on
the business, operations, properties, assets, or financial condition of
Debtor;
(b) give the Secured Party thirty (30) days' prior written notice of
any change in Debtor's name, identity or corporate structure;
(c) give the Secured Party thirty (30) days' prior written notice of
any change in Debtor's chief executive office;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity or amount thereof is being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Debtor; provided
that Debtor shall in any event pay such taxes, assessments, governmental
charges or levies not later than five (5) days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or
filed against Debtor as a result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Loan Agreement
or in accordance with the written consent of Secured Party;
(f) except for the Liens set forth on Schedule IV, Permitted Liens and
the security interest created by this Agreement, not create or suffer to
exist any Lien upon or with respect to any of the Collateral;
(g) comply, in all material respects, with all existing and future FSA
Notices during their periods of effectiveness under the FSA including,
without limitation, directions to make payments to the Sellers by issuing
payment instruments directly to the secured party or jointly payable to the
Seller and the secured party, as specified in the FSA Notice. Within thirty
(30) days after the end of each fiscal quarter, the Debtor shall notify the
Secured Party in writing of the aggregate amount of Liens contained in FSA
Notices received by the Debtor during such fiscal quarter. If, at any time,
any State in which farm products purchased by Debtor are produced has
implemented or implements the provisions of the FSA with respect to the
creation of a 'central filing system' (as defined in Section (c)(2) of the
FSA, 7 U.S.A. SS 1631(c)(2)), promptly register with the Secretary of State
(or equivalent official of each such State) prior to any further material
purchases of farm products produced in that State, pursuant to the
registration requirements of the FSA, and promptly notify Secured Party in
writing of such registration with the central filing system; and
(h) comply, in all material respects, with all PACA Notices. In
addition, Debtor shall take all other steps as may be reasonably required,
if any, to comply with PACA. Within thirty (30) days of the end of each
fiscal quarter, Debtor shall notify the Secured Party in writing of the
aggregate amount of perishable agricultural products subject to statutory
trusts as reflected in the PACA Notices received by Debtor during such
fiscal quarter.
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS.
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(a) Debtor shall keep its chief place of business, chief executive
office and the office where it keeps its records concerning its Accounts at
the location(s) therefor specified in Schedule I hereof or, upon thirty
(30) days' prior written notice to the Secured Party, at such other
locations as shall have been specified in such notice. In connection
therewith, Debtor shall take such action that the Secured Party may
reasonably request, in order to perfect and protect any security interest
granted hereby or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder with respect to the Accounts. Debtor will
hold and preserve such records and will permit representatives of the
Secured Party at any time during normal business hours and with reasonable
prior notice to inspect and make abstracts from such records and Debtor
agrees to render to the Secured Party, at Debtor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto.
(b) Debtor shall duly fulfill all material obligations on its part to
be fulfilled under or in connection with its Accounts if and so long as the
Account Debtor with respect to such Account shall not be in default
thereunder.
(c) Except as otherwise provided in this subsection (c) of this
Section, Debtor shall continue to collect, at its own expense, all amounts
due or to become due Debtor in respect of its Accounts in the ordinary
course of business, consistent with past practices. In connection with such
collections, Debtor may take such action as Debtor may deem necessary or
advisable to enforce collection of its Accounts consistent with past
practices; provided, however, that upon the occurrence and during the
continuance of an Event of Default, (i) the Secured Party shall have the
right at any time, upon written notice to Debtor, to require that all
amounts and proceeds (including checks and other instruments) received by
Debtor in respect of the Accounts shall be received in trust for the
benefit of the Secured Party, shall be segregated from other funds of
Debtor and shall be forthwith paid over or delivered to the Secured Party
in the same form as so received (with any necessary endorsement) to be
applied as provided by Section 15 hereof, (ii) Debtor shall not adjust,
settle or compromise the amount or payment of any Accounts, or release
wholly or partly any Account Debtor or obligor thereof, or allow any credit
or discount thereon except in the ordinary course of business, consistent
with past practices, without the prior written consent of the Secured
Party, (iii) the Secured Party shall have the right at any time upon
written notice to Debtor of its intention to do so, to notify the Account
Debtors or obligors in respect of Accounts of the assignment of any
Accounts to the Secured Party and to direct such Account Debtors or
obligors to make payment of all amounts due or to become due to Debtor
thereunder directly to the Secured Party, to notify each Person maintaining
a lockbox or similar arrangement to which Account Debtors or obligors in
respect of any Accounts have been directed to make payment to remit all
amounts representing collections on checks or other payment items from time
to time sent to or deposited in such lockbox or other arrangement directly
to the Secured Party to be applied as provided by Section 15 hereof and,
upon such notification and at the expense of Debtor, to enforce collection
of the Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Debtor might have
done, and (iv) upon written request by Secured Party, Debtor shall, and
shall cause each Subsidiary to, arrange for payment by Account Debtors to
be made directly to lock boxes and/or blocked accounts owned or controlled
by Secured Party, or in such other manner as Secured Party may direct.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT.
Debtor shall:
(a) keep its Inventory and Equipment at the places therefor specified
on Schedule III hereto or, upon thirty (30) days' prior written notice to
the Secured Party, at such other places in jurisdictions as shall have been
specified in such notice. In connection therewith, Debtor shall take such
action that the Secured Party may reasonably request, in order to perfect
and protect any security interest granted hereby to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with
respect to such Inventory and Equipment;
(b) keep correct and accurate records of its Inventory, itemizing and
describing in reasonable detail the type and quantity of such Inventory,
Debtor's cost therefor and (where applicable) the current price list for
such Inventory;
(c) if any Inventory at any given location is at any time in the
possession or control of any Person other than such Debtor and if the
aggregate book value of such Inventory at any time exceeds Two Hundred
Fifty Thousand Dollars ($250,000), use commercially reasonable efforts
(without incurring any out-of-pocket expense) to cause to be executed and
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delivered to the Secured Party such consents, waivers,
acknowledgements and other agreements, that may be necessary, or that the
Secured Party may reasonably request, in order to permit, protect and
perfect its security interest in and lien upon such Inventory or to enable
the Secured Party to exercise and enforce its rights and remedies hereunder
with respect to such Inventory, including without limitation, consents,
waivers, acknowledgements and other agreements from processors of such
Inventory, landlords of premises where such Inventory may be located or
warehousemen operating warehouses where such Inventory may be stored;
(d) upon the occurrence and during the continuance of an Event of
Default, if any Inventory at any given location is in possession or control
of any of any Person other than Debtor, if the aggregate book value of all
such Inventory exceeds Twenty Five Thousand Dollars ($25,000), instruct
such Person to hold all such Inventory for the account of the Secured Party
and subject to the instructions of the Secured Party; and
(e) cause the Equipment to be maintained and preserved in good repair,
working order and condition (ordinary wear and tear and obsolete equipment
excepted), in accordance with the applicable manufacturer's manual, if any,
and in accordance with Debtor's past practices, and shall forthwith, or in
the case of any loss or damage to any of the Equipment as quickly as
practicable after the occurrence thereof, make or cause to be made all
repairs, replacements, and other improvements in connection therewith that
are necessary or desirable to such end. Debtor shall promptly furnish
Secured Party a statement respecting any loss or damage to any of the
Equipment in excess of Five Hundred Thousand Dollars ($500,000).
SECTION 8. FURTHER ASSURANCES.
(a) Debtor agrees that from time to time, at the expense of Debtor,
Debtor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the
Secured Party may reasonably request, in order to perfect and protect any
security interest granted hereby or to enable the Secured Party to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Debtor will:
(i) at the request of the Secured Party, upon the occurrence and during the
continuance of an Event of Default, mark conspicuously each of its records
pertaining to the Collateral with a legend, in form and substance
satisfactory to the Secured Party, indicating that such Collateral is
subject to the security interest granted hereby; (ii) if any Account in
excess of Twenty Five Thousand Dollars ($25,000) owing from any Person
shall be evidenced by a promissory note or other instrument (excluding
checks) or chattel paper, upon the occurrence and during the continuance of
an Event of Default, deliver and pledge to the Secured Party hereunder such
note or instrument or chattel paper duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Secured Party; (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as the Secured Party may
reasonably request, in order to perfect and preserve the security interests
granted hereby, (iv) at any reasonable time during business hours, upon
demand and with reasonable prior notice by the Secured Party, exhibit the
Collateral, where located, to and allow inspection of the Collateral by the
Secured Party and (v) at the Secured Party's request, appear in and defend
any action or proceeding that may affect Debtor's title to or Secured
Party's security interest in the Collateral.
(b) Debtor authorizes the Secured Party to file one or more financing
or continuation statements, and amendments thereto, relative to all or any
part of the Collateral with or without the signature of such Debtor. A
carbon, photographic or other reproduction of this Agreement or a financing
statement signed by such Debtor shall be sufficient as a financing
statement.
(c) Debtor will furnish to Secured Party such other information with
respect to the Collateral as the Secured Party may reasonably request.
SECTION 9. INSURANCE.
(a) Debtor shall, at its own expense, at all times maintain with
financially sound insurers, insurance against loss or damage of the kind
and in amounts customarily insured against by corporations of established
reputation engaged in the same or similar business and similarly situated,
including, without limitation, insurance with respect to its Inventory and
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Equipment and business interruption insurance. Each policy shall (i)
name Debtor and the Secured Party as insured parties thereunder (without
any representation or warranty by or obligation upon the Secured Party) as
their interests may appear, (ii) contain an agreement by the insurer that
any loss thereunder shall be payable to the Secured Party notwithstanding
any action, inaction or breach of representation or warranty by Debtor,
(iii) have attached thereto the Lender's Loss Payable Endorsement or its
equivalent reasonably acceptable to the Secured Party, or a Loss Payable
clause reasonably acceptable to the Secured Party, (iv) provide that there
shall be no recourse against the Secured Party for payment of premiums or
other amounts with respect thereto and (v) provide that at least thirty 30
days' prior written notice of cancellation, material amendment, reduction
in scope or limits of coverage or of lapse shall be given to the Secured
Party, by the insurer. Debtor shall, if so requested by the Secured Party,
deliver to the Secured Party a certificate of such insurance and, as often
as the Secured Party may reasonably request, but not more often than once
every six months, a report of a reputable insurance broker with respect to
such insurance.
(b) In case of any loss involving damage to such Inventory or
Equipment when subsection (c) of this Section 9 is not applicable, any
proceeds of insurance maintained by Debtor pursuant to this Section 9
shall, at the option of the Debtor, (i) be paid to Debtor as reimbursement
for the costs of repairs or replacements to such Inventory or Equipment or
(ii) paid to and applied by Secured Party as specified in Section 15.
(c) Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Inventory or Equipment
shall be paid to and applied by Secured Party as specified in Section 15.
(d) No approval by the Secured Party of any insurer shall be construed
to be a representation, certification or warranty of its solvency and no
approval by the Secured Party as to the amount, type and/or form of any
insurance shall be construed to be a representation, certification or
warranty of its sufficiency.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Debtor hereby
irrevocably appoints, effective upon and during the continuance of an Event of
Default, the Secured Party Debtor's attorney-in-fact, with full authority in the
place and stead of Debtor and in the name of Debtor, from time to time in the
Secured Party's discretion to take any action and to execute any instrument that
the Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by such
Debtor or paid to Secured Party pursuant to Section 9 hereof,
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
(c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above,
(d) to file any claims or take any action or institute any proceedings
that the Secured Party may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Secured
Party with respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Secured
Party in its sole discretion, and such payments made by the Secured Party
to become Obligations of Debtor to the Secured Party, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral, and
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(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof for
all purposes, and to do, at the Secured Party's option and Debtor's
expense, at any time, or from time to time, all acts and things that the
Secured Party deems necessary to protect, preserve or realize upon the
Collateral and Secured Party's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as such
Debtor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If Debtor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by Debtor under Section 16
hereof.
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES.
(a) The powers conferred on the Secured Party hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to exercise reasonable care in the custody
and preservation of such Collateral if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its
own property, it being understood that the Secured Party shall have no
responsibility or liability for the collection of any proceeds of any
Collateral or by reason of any invalidity, lack of value or
uncollectibility of any of the payments received by it from obligors or
otherwise.
(b) Secured Party shall not be liable to Debtor (i) for loss or damage
sustained by it, or (ii) for any loss, damage, depreciation or other
diminution in the value of any of the Collateral, that may occur as a
result of, in connection with or that is in any way related to (x) any
exercise by the Secured Party of any right or remedy under this Agreement
or (y) any other act of or failure to act by Secured Party, except to the
extent that the same shall be the result of acts or omissions on the part
of the Secured Party constituting gross negligence or willful misconduct.
The right of the Secured Party to perform any discretionary act enumerated
in or contemplated by this Agreement shall not be construed as a duty.
SECTION 13. EVENTS OF DEFAULT. The occurrence of any 'Event of Default'
under and as defined in the Loan Agreement shall be an 'Event of Default' under
this Agreement.
SECTION 14. REMEDIES. If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral, (a) all
the rights and remedies of a secured party under the Uniform Commercial Code,
(b) all of the rights and remedies provided for in this Agreement, the Loan
Agreement and any other Loan Documents and (c) such other rights and remedies as
may be provided by law or otherwise (such rights and remedies of the Secured
Party to be cumulative and non-exclusive). If any Event of Default shall have
occurred and be continuing, the Secured Party also may (i) require Debtor to,
and Debtor hereby agrees that it will at its expense and upon request of the
Secured Party forthwith, assemble all or part of the Collateral as directed by
the Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent the Secured
Party deems appropriate, (iv) take possession of Debtor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of Debtor's Equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (iii) and
collecting any Obligation and (v) without notice, except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at the Secured Party's office or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as
the Secured Party may deem commercially reasonable. Debtor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days' notice
to Debtor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any sale
of any of the Collateral, if permitted by law, the Secured Party may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
for and purchase the Collateral or any portion thereof for the
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<PAGE>
account of the Secured Party. The Secured Party shall not be obligated to make
any sale of the Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of Debtor. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all of the Obligations,
Debtor shall be liable for the deficiency and the fees of any attorneys employed
by the Secured Party to collect such deficiency.
SECTION 15. APPLICATION OF PROCEEDS. All proceeds received by the Secured
Party in respect of any sale of, collection from or other realization upon all
or any part of the Collateral in accordance with this Agreement shall be applied
first, to the payment of expenses incurred in connection with the Collateral,
including the reasonable fees and disbursements of its counsel, second, to
payment of such of the Obligations in such order as Secured Party may elect,
Debtor remaining liable for any deficiency, and third, after payment in full of
all Obligations, any excess shall, subject to any order of a court of competent
jurisdiction, be remitted to Debtor.
SECTION 16. INDEMNITY . Debtor agrees to indemnify the Secured Party from
and against any and all claims, losses and liabilities arising out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct.
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<PAGE>
SECTION 17. SECURITY INTEREST ABSOLUTE.
(a) All rights of the Secured Party and security interests hereunder,
and all obligations of Debtor hereunder, shall be absolute and
unconditional, irrespective of:
(i) any lack of validity or enforceability of any of the other Loan
Documents;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment or
waiver of or consent to any departure from any of the terms of any of the
Loan Documents;
(iii) any exchange or release of or non-perfection of any Lien in any
other collateral or any release or amendment or waiver of a consent to any
departure from any Guaranty; or
(iv) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Debtor or a third party grantor of a
security interest.
Without limiting the generality of the foregoing, Debtor hereby
consents to, and hereby agrees that the rights of the Secured Party and the
security interests granted hereunder, and the obligations of Debtor
hereunder, shall not be affected by, any and all releases of any Guaranty
or any Collateral from the liens and security interests created by any
Security Documents, whether for purposes of sales or other dispositions of
assets pursuant to this Agreement or any of the other Loan Documents or for
some other purpose, except to the extent expressly provided in such
releases.
SECTION 18. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until termination of the Commitments under the Loan Agreement,
the cancellation or expiration of all outstanding Letter of Credit
Accommodations and the payment in full of the Obligations, (b) be binding upon
Debtor, its successors and assigns and (c) inure, together with the rights and
remedies of the Secured Party hereunder, to the benefit of the Secured Party and
its successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), and subject to the applicable provisions of the Loan
Agreement, Secured Party may assign or otherwise transfer the Obligations to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Secured Party herein or otherwise.
Upon the cancellation or termination of the Commitments, cancellation or
expiration of all outstanding Letter of Credit Accommodations and the payment in
full of all Obligations, the security interest granted hereby shall terminate
and all rights to the Collateral shall revert to Debtor. Upon any such
termination, the Secured Party will, at Debtor's expense, execute and deliver to
such Debtor such documents as Debtor shall reasonably request to evidence such
termination.
SECTION 19. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by Debtor herefrom, shall in any
event be effective unless the same shall be in writing, agreed to by the Secured
Party and the Debtor, and then such Amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 20. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be made and delivered in
accordance with Section 10.3 of the Loan Agreement.
SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
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SECTION 22. CONSENT TO JURISDICTION. The Debtor hereby irrevocably submits
and consents to the non-exclusive jurisdiction of the State and Federal Courts
in the State of New York, in connection with any action or proceeding arising
out of or relating to this Agreement or any matter arising therefrom or relating
thereto.
SECTION 23. WAIVER OF JURY TRIAL. DEBTOR AND THE SECURED PARTY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT.
SECTION 24. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of the Agreement or be given any substantive effect.
SECTION 25. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 26. 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 constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Debtor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
PF ACQUISITION CORP.
By: /s/ Roy A. Myers
.....................................
Roy A. Myers
Title: President
.....................................
CURTICE-BURNS FOODS, INC.
By: /s/ William Rice
.....................................
William Rice
Title: Senior Vice President
.....................................
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
.....................................
C. Scott Herring
Title: Vice President
.....................................
13
<PAGE>
TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
AGREEMENT made as of this 3rd day of November, 1994 by and between
CURTICE-BURNS FOODS, INC., a New York corporation ('Debtor'), with its chief
executive office at 90 Linden Place, Rochester, New York 14625 and SPRINGFIELD
BANK FOR COOPERATIVES, a corporation established under the laws of the United
States of America and continuing as a federally-chartered instrumentality of the
United States under the Farm Credit Act of 1971, as amended ('Secured Party'),
having an office at 67 Hunt Street, Agawam, Massachusetts 01001.
W I T N E S S E T H:
WHEREAS, Debtor, PF Acquisition Corp., a New York corporation ('PF'), and
Secured Party have entered into a Term Loan, Term Loan Facility and Seasonal
Loan Agreement dated as of the date hereof ('Loan Agreement');
WHEREAS, Debtor has requested Secured Party to extend credit to Debtor and
PF and the Secured Party has agreed to extend credit to Debtor and PF upon the
terms and subject to the conditions set forth in the Loan Agreement;
WHEREAS, it is a condition precedent to the obligation of Secured Party to
now or hereafter extend credit to Debtor and PF under the Loan Agreement that
Debtor shall have executed and delivered this Trademark Collateral Assignment
and Security Agreement to Secured Party;
WHEREAS, PF is a wholly-owned subsidiary of Pro-Fac Cooperative, Inc., a
New York cooperative corporation (the 'Parent');
WHEREAS, PF is this day merging with and into Curtice-Burns; and
WHEREAS, Curtice-Burns, as the survivor of the merger of PF into
Curtice-Burns, will be a wholly-owned subsidiary of the Parent;
NOW THEREFORE, in consideration of the foregoing premises and to induce the
Secured Party to enter into the Loan Agreement and extend credit to Debtor
thereunder, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtor hereby agrees with the Secured
Party as follows:
<PAGE>
1. TERMS USED HEREIN
Terms used herein which are defined in the Loan Agreement and are not
otherwise defined herein shall have the same meaning set forth in the Loan
Agreement.
2. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and payment
in full of all of the Obligations, Debtor hereby grants to Secured Party a
continuing security interest in and a general lien upon, and hereby assigns and
transfers to Secured Party: (a) all of Debtor's now existing or hereafter
acquired right, title, and interest in and to: all of Debtor's trademarks, trade
names, tradestyles and service marks; all prints and labels on which said
trademarks, trade names, tradestyles and service marks appear, have appeared or
will appear, and all designs and general intangibles of a like nature; all
applications, registrations and recordings relating to the foregoing in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof, any political subdivision thereof or in
any other countries, and all reissues, extensions and renewals thereof including
those trademarks, terms, designs and applications described in Exhibit A hereto
(the 'Trademarks'); (b) the goodwill of the business symbolized by each of the
Trademarks, including, without limitation, all customer lists and other records
relating to the distribution of products or services bearing the Trademarks; and
(c) any and all proceeds of any of the foregoing, including, without limitation,
any claims by Debtor against third parties for infringement of the Trademarks or
any licenses with respect thereto (all of the foregoing are collectively
referred to herein as the 'Trademark Collateral').
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Debtor hereby represents, warrants and covenants to Secured Party the
following, each of which shall survive the closing of the transactions
contemplated by the Loan Agreement:
(a) Except for Trademark Collateral that is not material to the
business of Debtor, all of the existing Trademark Collateral is valid and
subsisting in full force and effect, and Debtor owns the sole, full, and clear
title thereto, and the right and power to grant the security interests granted
hereunder. Debtor will, at Debtor's expense, perform all acts and execute all
documents necessary to maintain the existence of all registered trademarks
included in the Trademark Collateral that are useful to the business of Debtor
as valid, subsisting and registered trademarks, including, without limitation,
the filing of any renewal affidavits and applications. The Trademark Collateral
is not subject to any liens, claims, mortgages, assignments, licenses, security
interests, encumbrances or other Liens, except the security interests granted
hereunder and under the Borrower Security Agreement and (i) Liens for current
taxes not delinquent or for taxes being contested in Good Faith and by
appropriate proceedings, (ii) Liens arising in the ordinary course of business
for sums not due or sums being contested in Good Faith and by appropriate
proceedings and not involving any deposits or advances or borrowed money or the
deferred purchase price of property or services, (iii) Liens in connection with
the acquisition of property after the date hereof permitted by Section 7.1(i) of
the Loan Agreement, and (iv) Permitted Liens.
(b) Except for granting licenses that do not materially decrease the
value of the Trademark Collateral and except as permitted herein or in the Loan
Agreement, Debtor will not assign, sell, mortgage, lease,
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<PAGE>
transfer, pledge, hypothecate, grant a security interest in or other Lien
upon, encumber or otherwise dispose of any of the Trademark Collateral without
the prior written consent of Secured Party.
(c) Debtor will, at Debtor's expense, perform all acts and execute all
documents reasonably requested at any time by Secured Party to evidence,
perfect, maintain, record, or enforce the security interest in the Trademark
Collateral granted hereunder or to otherwise further the provisions of this
Agreement. Debtor hereby authorizes Secured Party to execute and file one or
more financing statements (or similar documents) with respect to the Trademark
Collateral, signed only by Secured Party or as otherwise determined by Secured
Party. Debtor further authorizes Secured Party to have this or any other similar
security agreement filed with the United States Commissioner of Patents and
Trademarks or other appropriate federal, state or government office.
(d) As of the date hereof, Debtor does not have any material
Trademarks registered, or subject to pending applications, in the United States
Patent and Trademark Office other than those described in Exhibit A annexed
hereto and has not granted any licenses with respect thereto that materially
decrease the value of any such Trademark.
(e) Debtor will, concurrently with the execution and delivery of this
Agreement, execute and deliver to Secured Party five (5) originals of a Power of
Attorney in the form of Exhibit B annexed hereto for the implementation of the
assignment, sale or other disposition of the Trademark Collateral pursuant to
Secured Party's exercise of the rights and remedies granted to Secured Party
hereunder.
(f) Secured Party may, in its discretion, pay any amount or do any act
which Debtor fails to pay or do as required hereunder or as reasonably requested
by Secured Party to preserve, defend, protect, maintain, or realize upon the
Trademark Collateral, or the security interest granted hereunder, including, but
not limited to all filing or recording fees, and reasonable attorneys' fees.
Debtor will be liable to Secured Party for any such payment, which shall be
payable on demand together with interest at the then default rate for Prime
Loans set forth in Section 2.13(g)(ii) of the Loan Agreement and shall be deemed
part of the Obligations.
(g) If Debtor files any application for the registration of a
Trademark with the United States Patent and Trademark Office or any similar
office or agency in the United States, any state therein, or any other country,
Debtor shall within ninety (90) days of such filing give written notice to
Secured Party of such action. Upon request of Secured Party, Debtor shall
execute and deliver to Secured Party any and all assignments, agreements,
instruments, documents and such other papers as may be requested by Secured
Party to evidence the security interests of Secured Party in such Trademark.
(h) Debtor has not abandoned any of the Trademarks that remain useful
in the business of Debtor and Debtor will not do any act, nor omit to do any
act, whereby any such Trademark is reasonably likely to become abandoned,
invalidated, unenforceable, avoided or avoidable.
(i) Debtor will render any assistance reasonably necessary to Secured
Party in any proceeding before the United States Patent and Trademark Office,
any federal or state court, or any similar office or agency in the United States
or any state therein or any other country to maintain such application and
registration of the Trademarks as Debtor's exclusive property and to protect
Secured Party's interest therein,
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<PAGE>
including, without limitation, filing of renewals, affidavits of use, affi
davits of incontestability and opposition, interference, and cancellation
proceedings.
(j) Debtor assumes all responsibility and liability arising from the use of
the Trademarks and Debtor hereby indemnifies and holds Secured Party harmless
from and against any claim, suit, loss, damage, or expense (including reasonable
attorneys' fees) arising out of any alleged defect in any product manufactured,
promoted, or sold by Debtor (or any Affiliate or Subsidiary) in connection with
any Trademark or out of the manufacture, promotion, labelling, sale or
advertisement of any such product by Debtor (or any Affiliate or Subsidiary).
(k) Debtor will promptly pay Secured Party for any and all reasonable
expenditures made by Secured Party pursuant to the provisions of this Agreement
or for the defense, protection, or enforcement of the Trademark Collateral, or
the security interests granted hereunder, including, but not limited to, all
filing or recording fees, court costs, collection charges, travel expenses, and
legal expenses, including reasonable attorneys' fees. Such expenditures shall be
payable on demand, together with interest (i) prior to the occurrence of an
Event of Default, at the then rate for Seasonal Loans that are Prime Loans and
(ii) upon and during the continuance of an Event of Default, at the then default
rate for Seasonal Loans that are Prime Loans set forth in Section 2.13(g)(ii) of
the Loan Agreement, and shall be deemed part of the Obligations.
4. EVENTS OF DEFAULT
The occurrence of an Event of Default under and as defined in the Loan
Agreement shall be an 'Event of Default' under this Agreement.
5. RIGHTS AND REMEDIES
While any Event of Default is continuing, in addition to all other rights
and remedies of Secured Party, whether provided under law, the Loan Agreement,
the Borrower Security Agreement or otherwise, Secured Party shall have the
following rights and remedies which may be exercised without notice to, or
consent by, Debtor, except as such notice or consent is expressly provided for
hereunder:
(a) Secured Party may make use of any Trademarks on a royalty-free
basis for the sale of goods, completion of work in process or rendering of
services in connection with enforcing any other security interest granted in the
Collateral to Secured Party by Debtor.
(b) Secured Party may grant such license or licenses relating to the
Trademark Collateral for such term or terms, on such conditions, and in such
manner, as Secured Party shall in its discretion deem appropriate. Such license
or licenses may be general, special, or otherwise, and may be granted on an
exclusive or non-exclusive basis throughout all or any part of the United States
of America, its territories and possessions, and all foreign countries.
(c) Secured Party may assign, sell or otherwise dispose of the
Trademark Collateral or any part thereof, either with or without special
conditions or stipulations except that if notice to Debtor of intended
disposition of Trademark Collateral is required by law, the giving of ten (10)
days notice in the manner set forth
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<PAGE>
in subparagraph 6(b) hereof shall be deemed reasonable notice thereof
and Debtor waives any other notice with respect thereto. Secured Party shall
have the power to buy the Trademark Collateral or any part thereof, and Secured
Party shall also have the power to execute assurances and perform all other acts
which Secured Party may, in its discretion, deem appropriate or proper to
complete such assignment, sale, or disposition.
(d) In addition to the foregoing, in order to implement the
assignment, sale, or other disposition of any of the Trademark Collateral
pursuant to Subparagraph 5(c) hereof, Secured Party may execute and deliver on
behalf of Debtor, pursuant to the authority granted in the Powers of Attorney
described in Subparagraph 3(e) hereof, one or more instruments of assignment of
the Trademarks (or any application, registration, or recording relating
thereto), in form suitable for filing, recording, or registration. Debtor agrees
to pay Secured Party on demand all costs incurred in any such transfer of the
Trademark Collateral, including, but not limited to, any taxes, fees, and legal
expenses, including, without limitation, reasonable attorneys' fees and
expenses.
(e) Secured Party may first apply the proceeds actually received from
any such license, assignment, sale, or other disposition of Trademark Collateral
to the costs and expenses thereof, including, without limitation, reasonable
attorneys' fees and all other legal, travel and other expenses which may be
incurred by Secured Party. Thereafter, Secured Party may apply any remaining
proceeds to such of the Obligations and in such order and manner as Secured
Party may in its discretion determine. Debtor shall remain liable to Secured
Party for any Obligations remaining unpaid after the application of such
proceeds, and Debtor will pay Secured Party on demand any such unpaid amount,
together with interest at a rate equal to the then default rate for Prime Loans
set forth in Section 2.13(g)(ii) of the Loan Agreement.
(f) Debtor shall supply to Secured Party, or its designee, Debtor's
knowledge and expertise relating to the manufacture and sale of the products and
services bearing the Trademarks and Debtor's customer lists and other records
relating to the Trademarks and the distribution thereof.
(g) Nothing contained in this Section 5 shall be construed as
requiring Secured Party to exercise any right or remedy at any time. All of
Secured Party's rights and remedies, whether provided under law, the Loan
Agreement, this Agreement, the Borrower Security Agreement or otherwise, shall
be cumulative and none is exclusive. Such rights and remedies may be enforced
alternatively, successively, or concurrently.
6. MISCELLANEOUS
(a) Any failure or delay by Secured Party to require strict
performance by Debtor of any of the provisions, warranties, terms, and
conditions contained herein or in any other Loan Document shall not affect
Secured Party or Secured Party's right to demand strict compliance and
performance therewith, and any waiver of any default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions, and
terms contained herein or in any other Loan Document shall be deemed to have
been waived by any act or knowledge of Secured Party, its agents, officers, or
employees, but only by an instrument in writing, signed by an officer of Secured
Party and directed to Debtor, specifying such waiver.
5
<PAGE>
(b) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be made and delivered in accordance with
Section 10.03 of the Loan Agreement.
(c) In the event that any provision hereof shall be deemed to be
invalid by any court, such invalidity shall not affect the remainder of this
Agreement.
(d) All references to Debtor and Secured Party herein shall include
their respective successors and assigns. All references to the term 'person' or
'Person' herein shall mean any individual, sole proprietorship, limited
partnership, general partnership, corporation (including a business trust),
unincorporated association, joint stock corporation, trust, joint venture,
association, organization or other entity or government or any agency or
instrumentality or political subdivision thereof.
(e) This Agreement shall be binding upon and for the benefit of the
parties hereto and their respective successors and assigns. No provision hereof
shall be modified, altered or limited except by a written instrument expressly
referring to this Agreement signed by the party to be charged thereby.
(f) The validity, interpretation, and effect of this Agreement shall
be governed by the laws of the State of New York, without reference to the
conflicts of law principles of said State.
(g) DEBTOR AND SECURED PARTY EACH HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRADEMARK COLLATERAL.
(h) Debtor hereby irrevocably submits and consents to the
non-exclusive jurisdiction of the State and Federal Courts located in the State
of New York with respect to any action or proceeding arising out of this
Agreement, the other Loan Documents, the Obligations or the Trademark
Collateral. In any such litigation, Debtor waives personal service of any
summons, complaint or other process and agrees that service thereof may be made
by certified or registered mail directed to Debtor at its address set forth
above.
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<PAGE>
IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement
as of the day and year first above written.
CURTICE-BURNS FOODS, INC.
By: /s/ William Rice
---------------------------
William Rice
Title: Senior Vice President
------------------------------
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
------------------------------
C. Scott Herring
Title: Vice President
------------------------------
7
<PAGE>
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
AGREEMENT made as of this 3rd day of November, 1994 by and between
CURTICE-BURNS FOODS, INC., f/k/a Curtice-Burns, Inc., a New York corporation
('Debtor'), with its chief executive office at 90 Linden Place, Rochester, New
York 14625 and SPRINGFIELD BANK FOR COOPERATIVES, a corporation established
under the laws of the United States of America and continuing as a
federally-chartered instrumentality of the United States under the Farm Credit
Act of 1971, as amended ('Secured Party'), having an office at 67 Hunt Street,
Agawam, Massachusetts 01001.
W I T N E S S E T H:
WHEREAS, Debtor, PF Acquisition Corp., a New York corporation ('PF'), and
Secured Party have entered into a Term Loan, Term Loan Facility and Seasonal
Loan Agreement dated as of the date hereof ('Loan Agreement');
WHEREAS, Debtor has requested Secured Party to extend credit to Debtor and
PF and Secured Party has agreed to extend credit to Debtor and PF upon the terms
and subject to the conditions set forth in the Loan Agreement;
WHEREAS, it is a condition precedent to the obligation of Secured Party to
now or hereafter extend credit to Debtor and PF under the Loan Agreement that
Debtor shall have executed and delivered this Patent Collateral Assignment and
Security Agreement to Secured Party;
WHEREAS, PF is a wholly-owned subsidiary of Pro-Fac Cooperative, Inc., a
New York cooperative corporation (the 'Parent');
WHEREAS, PF is this day merging with and into Curtice-Burns; and
WHEREAS, Curtice-Burns, as the survivor of the merger of PF into
Curtice-Burns, will be a wholly-owned subsidiary of the Parent;
NOW THEREFORE, in consideration of the foregoing premises and to induce
Secured Party to enter into the Loan Agreement and extend credit to Debtor
thereunder, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtor hereby agrees with Secured
Party as follows:
<PAGE>
1. TERMS USED HEREIN
Terms used herein which are defined in the Loan Agreement and are not
otherwise defined herein shall have the same meaning set forth in the Loan
Agreement.
2. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations, Debtor hereby grants to
Secured Party a continuing security interest in and a general lien upon, and
hereby assigns and transfers to Secured Party: (a) all of Debtor's now existing
or hereafter acquired right, title and interest in and to: all of Debtor's
interest in any patents; all applications, registrations and recordings relating
to such patents in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, any political
subdivision thereof or in any other countries, and all reissues, extensions and
renewals thereof including, without limitation, those patents, applications,
registrations and recordings described in Exhibit A hereto (the 'Patents'), and
(b) any and all proceeds of any of the foregoing, including, without limitation,
any claims by Debtor against third parties for infringement of the Patents or
any licenses with respect thereto (all of the foregoing are collectively
referred to herein as the 'Patent Collateral').
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Debtor hereby represents, warrants and covenants to Secured Party the
following, each of which shall survive the closing of the transactions
contemplated by the Loan Agreement:
(a) Except for Patent Collateral that is not material to the business
of Debtor, all of the existing Patent Collateral is valid and subsisting in full
force and effect, and Debtor owns the sole, full, and clear title thereto, and
the right and power to grant the security interests granted hereunder. Debtor
will, at Debtor's expense, perform all acts and execute all documents necessary
to maintain the existence of all registered Patents included in the Patent
Collateral that are useful to the business of Debtor as valid, subsisting and
registered patents including, without limitation, the filing of any renewal
affidavits and applications. The Patent Collateral is not subject to any liens,
claims, mortgages, assignments, licenses, security interests, or encumbrances or
other Liens of any nature whatsoever, except the security interests granted
hereunder and pursuant to the Loan Agreement, and (i) Liens for current taxes
not delinquent or for taxes being contested in Good Faith and by appropriate
proceedings, (ii) Liens arising in the ordinary course of business for sums not
due or sums being contested in Good Faith and by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred purchase
price of property or services, and (iii) Liens in connection with the
acquisition of property after the date hereof permitted by Section 7.1(i) of the
Loan Agreement, and (iv) Permitted Liens.
(b) Except for granting licenses that do not materially decrease the
value of the Patent Collateral, and except as permitted herein or in the Loan
Agreement, Debtor will not assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant a security interest in or lien upon, encumber, grant an
exclusive or non-exclusive license relating to the Patent Collateral, or
otherwise dispose of any of the Patent Collateral without the prior written
consent of Secured Party.
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(c) Debtor will, at Debtor's expense, perform all acts and execute all
documents reasonably requested at any time by Secured Party to evidence,
perfect, maintain, record, or enforce the security interest in the Patent
Collateral granted hereunder or to otherwise further the provisions of this
Agreement. Debtor hereby authorizes Secured Party to execute and file one or
more financing statements (or similar documents) with respect to the Patent
Collateral signed only by Secured Party or as otherwise determined by Secured
Party. Debtor further authorizes Secured Party to have this or any other similar
security agreement filed with the United States Commissioner of Patents and
Trademarks or other appropriate federal, state or government office.
(d) As of the date hereof, Debtor does not have any material Patents
registered, or subject to pending applications, in the United States Patent and
Trademark Office or any similar office or agency in the United States other than
those described in Exhibit A annexed hereto and has not granted any licenses
with respect thereto that materially decrease the value of any such Patent.
(e) Debtor will, concurrently with the execution and delivery of this
Agreement, execute and deliver to Secured Party five (5) originals of a Special
Power of Attorney in the form of Exhibit B annexed hereto for the implementation
of the assignment, sale or other disposition of the Patent Collateral pursuant
to Secured Party's exercise of the rights and remedies granted to Secured Party
hereunder.
(f) Secured Party may, in its discretion, pay any reasonable amount or
do any act which Debtor fails to pay or do as required hereunder or as
reasonably requested by Secured Party to preserve, defend, protect, maintain, or
realize upon the Patent Collateral, or the security interest granted hereunder,
including, but not limited to all filing or recording fees, and reasonable
attorneys' fees. Debtor will be liable to Secured Party for any such payment,
which shall be payable on demand together with interest (i) prior to an Event of
Default, at the then rate for Seasonal Loans that are Prime Loans and (ii) upon
and during the continuance of an Event of Default, at the then default rate for
Seasonal Loans that are Prime Loans set forth in Section 2.13(g)(ii) of the Loan
Agreement, and shall be deemed part of the Obligations.
(g) If Debtor files any application for the registration of a Patent
with the United States Patent and Trademark Office or any similar office or
agency in the United States, any state therein, or any other country, Debtor
shall within ninety (90) days of such filing give written notice to Secured
Party of such action. Upon request of Secured Party, Debtor shall execute and
deliver to Secured Party any and all assignments, agreements, instruments,
documents and such other papers as may be requested by Secured Party to evidence
the security interests of Secured Party in such Patent.
(h) Debtor has not abandoned any of the Patents that remain useful in
the business of Debtor and Debtor will not do any act, nor omit to do any act,
whereby any such Patent is reasonably likely to become abandoned, invalidated,
unenforceable, avoided, or avoidable.
(i) Debtor will render any assistance reasonably necessary to Secured
Party in any proceeding before the United States Patent and Trademark Office,
any federal or state court, or any similar office or agency in the United States
or any state therein or any other country to maintain such application and
registration of the Patents as Debtor's exclusive property and to protect
Secured Party's interest therein, including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference, and cancellation proceedings.
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(j) Debtor will promptly notify Secured Party if Debtor (or any
affiliate or subsidiary thereof) learns of any use by any person of any other
process or product which infringes upon any Patent. If requested by Secured
Party, Debtor, at Debtor's expense, shall join with Secured Party in such action
as Secured Party, in Secured Party's discretion, may deem advisable for the
protection of Secured Party's interest in and to the Patents.
(k) Debtor assumes all responsibility and liability arising from the
use of the Patents and Debtor hereby indemnifies and holds Secured Party
harmless from and against any claim, suit, loss, damage, or expense (including
reasonable attorneys' fees) arising out of any alleged defect in any product
manufactured, promoted, or sold by Debtor (or any Affiliate or Subsidiary) in
connection with any Patent or out of the manufacture, promotion, labelling, sale
or advertisement of any such product by Debtor (or any Affiliate or Subsidiary).
(l) Debtor will promptly pay Secured Party for any and all reasonable
expenditures made by Secured Party pursuant to the provisions of this Agreement
or for the defense, protection, or enforcement of the Patent Collateral, or the
security interests granted hereunder, including, but not limited to, all filing
or recording fees, court costs, collection charges, travel expenses, and legal
expenses, including reasonable attorneys' fees. Such expenditures shall be
payable on demand, together with interest (i) prior to an Event of Default, at
the then rate for Seasonal Loans that are Prime Loans and (ii) upon and during
the continuance of an Event of Default, at the then default rate for Seasonal
Loans that are Prime Loans set forth in Section 2.13(g)(ii) of the Loan
Agreement, and shall be deemed part of the Obligations.
4. EVENTS OF DEFAULT
The occurrence of an Event of Default under and as defined in the Loan
Agreement shall be an 'Event of Default' under this Agreement:
5. RIGHTS AND REMEDIES
While any Event of Default is continuing, in addition to all other rights
and remedies of Secured Party, whether provided under law, the Loan Agreement,
the Borrower Security Agreement or otherwise, Secured Party shall have the
following rights and remedies which may be exercised without notice to, or
consent by, Debtor, except as such notice or consent is expressly provided for
hereunder:
(a) Secured Party may make use of any Patents on a royalty-free basis
for the sale of goods, completion of work in process or rendering of services in
connection with enforcing any other security interest granted in the Collateral
to Secured Party by Debtor.
(b) Secured Party may grant such license or licenses relating to the
Patent Collateral for such term or terms, on such conditions, and in such
manner, as Secured Party shall in its discretion deem appropriate. Such license
or licenses may be general, special, or otherwise, and may be granted on an
exclusive or non-exclusive basis throughout all or any part of the United States
of America, its territories and possessions, and all foreign countries.
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<PAGE>
(c) Secured Party may assign, sell or otherwise dispose of the Patent
Collateral or any part thereof, either with or without special conditions or
stipulations except that if notice to Debtor of intended disposition of Patent
Collateral is required by law, the giving of ten (10) days notice in the manner
set forth in subparagraph 6(b) hereof shall be deemed reasonable notice thereof
and Debtor waives any other notice with respect thereto. Secured Party shall
have the power to buy the Patent Collateral or any part thereof, and Secured
Party shall also have the power to execute assurances and perform all other acts
which Secured Party may, in its discretion, deem appropriate or proper to
complete such assignment, sale, or disposition.
(d) In addition to the foregoing, in order to implement the
assignment, sale, or other disposition of any of the Patent Collateral pursuant
to Subparagraph 5(c) hereof, Secured Party may execute and deliver on behalf of
Debtor, pursuant to the authority granted in the Powers of Attorney described in
Subparagraph 3(e) hereof, one or more instruments of assignment of the Patents
(or any application, registration, or recording relating thereto), in form
suitable for filing, recording, or registration. Debtor agrees to pay Secured
Party on demand all costs incurred in any such transfer of the Patent
Collateral, including, but not limited to, any taxes, fees, and legal expenses,
including, without limitation, reasonable attorneys' fees and expenses.
(e) Secured Party may first apply the proceeds actually received from
any such license, assignment, sale, or other disposition of Patent Collateral to
the costs and expenses thereof, including, without limitation, reasonable
attorneys' fees and all other legal, travel and other expenses which may be
incurred by Secured Party. Thereafter, Secured Party may apply any remaining
proceeds to such of the Obligations and in such order and manner as Secured
Party may in its discretion determine. Debtor shall remain liable to Secured
Party for any Obligations remaining unpaid after the application of such
proceeds, and Debtor will pay Secured Party on demand any such unpaid amount,
together with interest at a rate equal to the then default rate for Seasonal
Loans that are Prime Loans set forth in Section 2.13(g)(ii) of the Loan
Agreement.
(f) Debtor shall supply to Secured Party, or its designee, Debtor's
knowledge and expertise relating to the manufacture and sale of the products and
services involving the Patents and Debtor's customer lists and other records
relating to the Patents and the distribution thereof.
(g) Nothing contained in this Section 5 shall be construed as
requiring Secured Party to exercise any right or remedy at any time. All of
Secured Party's rights and remedies, whether provided under law, the Loan
Agreement, this Agreement, the Borrower Security Agreement or otherwise, shall
be cumulative and none is exclusive. Such rights and remedies may be enforced
alternatively, successively, or concurrently.
6. MISCELLANEOUS
(a) Any failure or delay by Secured Party to require strict
performance by Debtor of any of the provisions, warranties, terms, and
conditions contained herein or in any other Loan Document shall not affect
Secured Party or Secured Party's right to demand strict compliance and
performance therewith, and any waiver of any default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions, and
terms contained herein or in any Loan Document shall be deemed to have been
waived by any act or knowledge of Secured Party, its agents, officers, or
employees, but only by an instrument in writing, signed by an officer of Secured
Party and directed to Debtor, specifying such waiver.
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(b) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be made and delivered in accordance with
Section 10.03 of the Loan Agreement.
(c) In the event that any provision hereof shall be deemed to be
invalid by any court, such invalidity shall not affect the remainder of this
Agreement.
(d) All references to Debtor and Secured Party herein shall include
their respective successors and assigns. All references to the term 'person' or
'Person' herein shall mean any individual, sole proprietorship, limited
partnership, general partnership, corporation (including a business trust),
unincorporated association, joint stock corporation, trust, a joint venture,
association, organization or other entity or government or any agency or
instrumentality or political subdivision thereof.
(e) This Agreement shall be binding upon and for the benefit of the
parties hereto and their respective successors and assigns. No provision hereof
shall be modified, altered or limited except by a written instrument expressly
referring to this Agreement signed by the party to be charged thereby.
(f) The validity, interpretation, and effect of this Agreement shall
be governed by the laws of the State of New York, without reference to the
conflicts of law principles of said State.
(g) DEBTOR AND SECURED PARTY EACH HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE PATENT COLLATERAL.
(h) Debtor hereby irrevocably submits and consents to the
non-exclusive jurisdiction of the State and Federal Courts located in the State
of New York with respect to any action or proceeding arising out of this
Agreement, the other Loan Documents, the Obligations or the Patent Collateral.
In any such litigation, Debtor waives personal service of any summons, complaint
or other process and agrees that service thereof may be made by certified or
registered mail directed to Debtor at its address set forth above.
IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement
as of the day and year first above written.
CURTICE-BURNS FOODS, INC.
f/k/a Curtice-Burns, Inc.
By: /s/ William Rice
---------------------------
William Rice
Title: Senior Vice President
-----------------------------
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By: /s/ C. Scott Herring
---------------------------
C. Scott Herring
Title: Vice President
---------------------------
7
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----------------------------------------------------------
GUARANTY
by
PRO-FAC COOPERATIVE, INC.
in favor of
SPRINGFIELD BANK FOR COOPERATIVES
Dated as of November 3, 1994
----------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. TERMS USED HEREIN; ACCOUNTING TERMS. . . . . . . . . . . . 1
2. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. WAIVER OF NOTICE, RENEWALS, EXTENSIONS,
MODIFICATIONS, ETC.. . . . . . . . . . . . . . . . . . . . 3
4. GUARANTY ABSOLUTE AND UNCONDITIONAL. . . . . . . . . . . . 3
5. NONIMPAIRMENT OF GUARANTY. . . . . . . . . . . . . . . . . 3
6. GUARANTOR'S SUBORDINATION. . . . . . . . . . . . . . . . . 3
7. REPRESENTATIONS AND WARRANTIES
7.1 Incorporation, Good Standing, and Due
Qualification. . . . . . . . . . . . . . . . . . . 4
7.2 Corporate Power and Authority. . . . . . . . . . . . 4
7.3 Legally Enforceable Agreement. . . . . . . . . . . . 4
7.4 Financial Statements.. . . . . . . . . . . . . . . . 4
7.5 Labor Disputes and Acts of God.. . . . . . . . . . . 5
7.6 Other Agreements.. . . . . . . . . . . . . . . . . . 5
7.7 Litigation.. . . . . . . . . . . . . . . . . . . . . 6
7.8 No Defaults on Outstanding Judgments or Orders.. . . 6
7.9 Ownership and Liens. . . . . . . . . . . . . . . . . 6
7.10 Subsidiaries and Ownership of Stock. . . . . . . . . 6
7.11 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 6
7.12 Operation of Business. . . . . . . . . . . . . . . . 7
7.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 7
7.14 Debt . . . . . . . . . . . . . . . . . . . . . . . . 7
7.15 Environment. . . . . . . . . . . . . . . . . . . . . 7
7.16 Restructuring Proposal.. . . . . . . . . . . . . . . 8
7.17 Closing Date Pro-Forma Balance Sheet.. . . . . . . . 9
7.18 Eligible Borrower Status.. . . . . . . . . . . . . . 9
8. AFFIRMATIVE COVENANTS
8.1 Maintenance of Existence . . . . . . . . . . . . . . 9
8.2 Maintenance of Records . . . . . . . . . . . . . . . 9
8.3 Maintenance of Properties. . . . . . . . . . . . . . 9
8.4 Conduct of Business. . . . . . . . . . . . . . . . . 10
8.5 Maintenance of Insurance . . . . . . . . . . . . . . 10
8.6 Compliance With Laws . . . . . . . . . . . . . . . . 10
8.7 Right of Inspection. . . . . . . . . . . . . . . . . 10
8.8 Reporting Requirements . . . . . . . . . . . . . . . 10
8.9 Environment. . . . . . . . . . . . . . . . . . . . . 13
8.10 Eligible Borrower Status . . . . . . . . . . . . . . 13
8.11 Capital Contributions to Borrower. . . . . . . . . . 13
8.12 Transfer of Bank Stock to Borrower . . . . . . . . . 13
<PAGE>
9. NEGATIVE COVENANTS
9.1 Liens. . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Debt . . . . . . . . . . . . . . . . . . . . . . . . 15
9.3 Mergers, Etc . . . . . . . . . . . . . . . . . . . . 16
9.4 Leases . . . . . . . . . . . . . . . . . . . . . . . 16
9.5 Sale and Leaseback . . . . . . . . . . . . . . . . . 16
9.6 Dividends; Patronage . . . . . . . . . . . . . . . . 17
9.7 Sale of Assets . . . . . . . . . . . . . . . . . . . 17
9.8 Investments. . . . . . . . . . . . . . . . . . . . . 18
9.9 Guaranties, Etc. . . . . . . . . . . . . . . . . . . 18
9.10 Transactions With Affiliates . . . . . . . . . . . . 18
9.11 Fiscal Year. . . . . . . . . . . . . . . . . . . . . 19
10. FINANCIAL COVENANTS
10.1 Minimum Working Capital . . . . . . . . . . . . . . 19
10.2 Minimum Tangible Net Worth. . . . . . . . . . . . . 19
10.3 Long Term Debt to Equity Ratio. . . . . . . . . . . 19
10.4 Total Net Worth.. . . . . . . . . . . . . . . . . . 19
10.5 Cash Flow Coverage Ratio. . . . . . . . . . . . . . 20
10.6 Capital Expenditures. . . . . . . . . . . . . . . . 20
10.7 Consequence of Non-Compliance.. . . . . . . . . . . 20
11. NO ENFORCEMENT WAITING PERIOD . . . . . . . . . . . . . . 20
12. NO SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY. 20
13. REINSTATEMENT OF GUARANTY.. . . . . . . . . . . . . . . . 21
14. NO WAIVER; CUMULATIVE RIGHTS. . . . . . . . . . . . . . . 21
15. ACCOUNT STATED. . . . . . . . . . . . . . . . . . . . . . 21
16. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 22
17. SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . . . 22
19. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. . . . . . 22
20. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 22
21. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 23
22. PARAGRAPH HEADINGS. . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE>
GUARANTY
GUARANTY, dated as of November 3, 1994 (the 'Guaranty') made by PRO-FAC
COOPERATIVE, INC., a New York cooperative corporation (the 'Guarantor') in favor
of SPRINGFIELD BANK FOR COOPERATIVES, a corporation established under the laws
of the United States of America and continuing as a federally chartered
instrumentality of the United States under the Farm Credit Act of 1971, as
amended (the 'Bank').
W I T N E S S E T H
WHEREAS, PF Acquisition Corp., a New York corporation ('PF Acquisition')
and Curtice-Burns Foods, Inc., a New York corporation ('Curtice-Burns';
together with PF Acquisition, individually and collectively, jointly and
severally, the 'Borrower') have entered into with the Bank a Term Loan, Term
Loan Facility and Seasonal Loan Agreement, dated as the date hereof (as amended,
supplemented or modified from time to time, the 'Agreement');
WHEREAS, the Borrower has requested the Bank to extend credit and the Bank
has agreed to extend credit to the Borrower upon the terms and subject to the
conditions set forth in the Agreement;
WHEREAS, it is a condition precedent to the obligation of the Bank to
extend credit to the Borrower under the Agreement that the Guarantor shall have
executed and delivered this Guaranty to the Bank;
WHEREAS, PF Acquisition is a wholly-owned subsidiary of the Guarantor;
WHEREAS, PF Acquisition is this day merging with and into Curtice-Burns;
WHEREAS, Curtice-Burns, as the survivor of the merger of PF Acquisition
into Curtice-Burns, will be a wholly-owned subsidiary of the Guarantor; and
WHEREAS, the Guarantor has close business connections with Curtice-Burns
pursuant to which the Guarantor sells to Curtice-Burns crops grown by its
members and Curtice-Burns processes and sells such crops.
NOW THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Agreement, the Guarantor hereby agrees with the Bank as follows:
1. TERMS USED HEREIN; ACCOUNTING TERMS.
1.1 Terms used herein which are defined in the Agreement and are not
otherwise defined herein have the same meanings set forth in the Agreement.
1.2 The following terms as used in this Guaranty have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
'Agreement' shall have the meaning assigned to such term in the first
sentence of the recitals of this Guaranty.
'Available Net Proceeds' shall have the meaning assigned to such term in
Paragraph 9.6(b).
'Bank' shall have the meaning assigned to such term in the first sentence
of this Guaranty.
'Borrower' shall have the meaning assigned to such term in the first
sentence of the recitals of this Guaranty.
'Commercial Market Value' means, with respect to the purchase of crops by
the Borrower from the Guarantor under and as determined in accordance with the
Marketing Agreement, the weighted average of the prices paid by other commercial
processors for similar crops sold under pre-season contracts in the open market
in the same or competing market areas.
'Curtice-Burns' shall have the meaning assigned to such term in the first
sentence of the recitals of this Guaranty.
<PAGE>
'Guaranteed Obligations' shall have the meaning assigned to such term in
Paragraph 2(b).
'Guarantor' shall have the meaning assigned to such term in the first
sentence of this Guaranty.
'Permitted Liens' shall have the meaning assigned to such term in Paragraph
9.1.
'PF Acquisition' shall have the meaning assigned to such term in the first
sentence of the recitals of this Guaranty.
'Pro-Forma Balance Sheet' shall have the meaning assigned to such term in
Paragraph 7.17.
'Restricted Payment' shall have the meaning assigned to such term in
Section 9.6(a).
'Subsidiary' means, as to the Guarantor, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by the Guarantor.
1.3 All accounting terms not specifically defined herein shall be construed
in accordance with GAAP consistent with those applied in the preparation of the
financial statements referred to in paragraph 7.4 of this Guaranty and all
financial data submitted pursuant to this Guaranty shall be prepared in
accordance with such principles.
2. GUARANTY.
As an inducement for and in consideration of the Bank extending financial
accommodations to the Borrower pursuant to the Agreement, the Guarantor
absolutely, irrevocably and unconditionally:
(a) guarantees and agrees to be liable for full and indefeasible payment
and performance when due of any and all obligations, liabilities and
indebtedness of the Borrower to the Bank of every kind and description now
existing and hereafter arising under the Agreement or any of the other Loan
Documents, however, evidenced, whether direct or indirect, absolute or
contingent, joint or several, secured or unsecured, due or not due, primary or
secondary, liquidated or unliquidated, whether arising before, during or after
the initial or any renewal term of the Agreement, or after the commencement of
any case with respect to the Borrower under the Bankruptcy Code or any similar
statute, including, without limitation, all principal, interest, fees,
commissions and expenses payable to the Bank, including, but not limited to,
reasonable attorneys' fees and disbursements, chargeable to the Borrower and due
from the Borrower under the Agreement or any of the other Loan Documents; and
(b) agrees to pay to the Bank on demand the amount of all expenses
(including, without limitation, reasonable attorneys' fees) incurred by the Bank
in collecting or attempting to collect any of the Borrower's obligations to the
Bank, whether from the Borrower, the Guarantor or any other Obligor, or by
realizing upon Collateral (all of the foregoing described in clauses (a) and (b)
being collectively referred to herein as the 'Guaranteed Obligations').
3. WAIVER OF NOTICE, RENEWALS, EXTENSIONS,
MODIFICATIONS, ETC.
Notice of acceptance of this Guaranty, the making of loans and extensions
of credit to the Borrower and presentment, demand, protest, notice of protest,
notice of nonpayment and all other notices to which the Borrower or the
Guarantor is entitled are hereby waived, except for notices specifically
provided for in this Guaranty or any other Loan Document. The Guarantor also
waives notice of changes in terms or extensions of time of payment, the taking
and releasing of Collateral or guaranties, and the settlement, compromise or
release of any Guaranteed Obligations, and agrees that, as to the Guarantor, the
amount of the Guaranteed Obligations shall not be diminished by any of the
foregoing.
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4. GUARANTY ABSOLUTE AND UNCONDITIONAL.
This Guaranty is absolute, unconditional and continuing. Payment by the
Guarantor shall be made to the Bank at its offices from time to time on demand
as Guarantor's liability for the Guaranteed Obligations becomes due hereunder.
One or more successive or concurrent actions may be brought hereon against the
Guarantor, either in the same action in which the Borrower is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Guaranty is brought against the Guarantor, the Guarantor agrees
not to deduct, set-off, or seek to counterclaim for or recoup any amounts which
are or may be owed by the Bank or the Borrower to the Guarantor.
5. NONIMPAIRMENT OF GUARANTY.
No invalidity, irregularity or unenforceability of all or any part of the
Guaranteed Obligations shall affect, impair or be a defense to this Guaranty,
nor shall any other circumstance which might otherwise constitute a defense
available to, or legal or equitable discharge of, the Borrower in respect of any
of the Guaranteed Obligations or the Guarantor in respect of this Guaranty,
affect, impair or be a defense to this Guaranty. Without limitation of the
foregoing, the liability of the Guarantor hereunder shall not be discharged or
impaired in any respect by reason of any failure by the Bank to perfect or
continue perfection of any lien or security interest in any security for the
Guaranteed Obligations or any delay by the Bank in perfecting any such lien or
security interest.
6. GUARANTOR'S SUBORDINATION.
Subject to Paragraph 12 hereof, to the extent permitted by law, payment of
all amounts now or hereafter owed to the Guarantor by the Borrower or any other
Obligor of Guaranteed Obligations (whether by right of contribution or
otherwise) is hereby subordinated to full and indefeasible payment to the Bank
of the Guaranteed Obligations and is hereby assigned to the Bank as security
therefor, except for amounts paid under the Marketing Agreement prior to the
occurrence and during the continuance of an Event of Default.
7. REPRESENTATIONS AND WARRANTIES.
The Guarantor represents and warrants to the Bank the following, each of
which shall survive the closing of the transactions contemplated by the
Agreement:
7.1 Incorporation, Good Standing, and Due Qualification. The Guarantor and
each of its operating Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposes to be engaged in;
and is duly qualified as a foreign corporation and in good standing under the
laws of each other jurisdiction in which such qualification is required, except
where the failure to be so qualified would not have a material adverse effect on
the Guarantor and its operating Subsidiaries, taken as a whole.
7.2 Corporate Power and Authority. The execution, delivery, and performance
by the Guarantor and the Subsidiaries of the Loan Documents to which each is a
party have been duly authorized by all necessary corporate action and do not and
will not (a) require any consent or approval of the stockholders of such
corporation that has not been obtained; (b) contravene such corporation's
charter or bylaws; (c) violate any provision of any law, rule, regulation
(including, without limitation Regulations U and X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to such
corporation; (d) result in a breach of or constitute a default under any
material indenture, including, without limitation, the Subordinated Notes
Indenture, or material loan or credit agreement or any other agreement, lease or
instrument to which such corporation is a party or by which it or its properties
may be bound or affected; or (e) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties now owned
or hereafter acquired by such corporation, except as contemplated by the Loan
Documents.
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7.3 Legally Enforceable Agreement. This Guaranty is, and when delivered
will be, a legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally.
7.4 Financial Statements. The combined balance sheet of the Guarantor and
its Subsidiaries and of Curtice-Burns and its Subsidiaries as at June 25, 1994,
and the related combined statements of income and retained earnings of the
Guarantor and its Subsidiaries and of Curtice-Burns and its Subsidiaries for the
Fiscal Year then ended and the accompanying footnotes together with the opinion
thereon, of Price Waterhouse, LLP, independent certified public accountants,
dated in the case of the Guarantor's statements, September 28, 1994 and, in the
case of Curtice-Burns' statements, August 10, 1994 (except as to Note 3, which
is as of September 22, 1994), copies of which have been furnished to the Bank,
are complete and correct and fairly present on a combined basis the consolidated
financial condition of the Guarantor and its Subsidiaries and of Curtice-Burns
and its Subsidiaries as at such dates and the consolidated results of the
operations of the Guarantor and its Subsidiaries and of Curtice-Burns and its
Subsidiaries for the periods covered by such statements, all in accordance with
GAAP consistently applied, and since June 25, 1994, there has been no material
adverse change in the condition (financial or otherwise), business or operations
of the Guarantor and its Subsidiaries, taken as a whole, or Curtice-Burns and
its Subsidiaries, taken as a whole. There are no liabilities of the Guarantor or
any of its Subsidiaries or Curtice-Burns or any of its Subsidiaries fixed or
contingent, which are material but are not reflected in the financial statements
or in the notes thereto other than liabilities arising in the ordinary course of
business since June 25, 1994 and liabilities arising in connection with the
Offer and the Merger.
7.5 Labor Disputes and Acts of God. Neither the business nor the properties
of Guarantor or any Subsidiary are affected by any fire, explosion, accident,
strike, lockout, or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance), materially and adversely affecting such business or
properties or the operation of the Guarantor and its Subsidiaries, taken as a
whole, except as has been disclosed to the Bank.
7.6 Other Agreements. Except as otherwise set forth in the Agreement,
neither the Guarantor nor any Subsidiary is a party to any indenture, loan or
credit agreement or to any lease or other agreement or instrument or subject to
any charter or corporate restriction which is reasonably likely to have a
material adverse effect on the business, properties, assets, operations or
condition, financial or otherwise, of the Guarantor and its Subsidiaries, taken
as a whole, or the ability of the Guarantor or any Subsidiary to carry out its
obligations under the Loan Documents to which it is a party. Except as set forth
in the Agreement, neither the Guarantor nor any Subsidiary is in default in any
material respect of the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
7.7 Litigation. Except as otherwise set forth in the Agreement, there is no
pending or, to the Guarantor's knowledge, threatened action or proceeding
against or affecting the Guarantor or any of its Subsidiaries before any court,
governmental agency or arbitrator, which is reasonably likely to, in any one
case or in the aggregate, materially adversely affect the financial condition,
operations, properties or business of the Guarantor and its Subsidiaries, taken
as a whole, or the ability of the Guarantor or any Subsidiary to perform its
obligations under the Loan Documents to which it is a party.
7.8 No Defaults on Outstanding Judgments or Orders. The Guarantor and its
Subsidiaries have complied with their respective obligations under all judgments
in excess of Five Hundred Thousand Dollars ($500,000) and neither the Guarantor
nor any Subsidiary is in default with respect to any material judgment, writ,
injunction, decree, rule, or regulation of any court, arbitrator or federal,
state, municipal, or other governmental authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
7.9 Ownership and Liens. The Guarantor and each Subsidiary has title to or
valid leasehold interests in, all of their properties and assets, real and
personal, including the properties and assets and leasehold interest reflected
in the financial statements referred to in paragraph 7.4 (other than any
properties or assets disposed of in the ordinary course of business or pursuant
to the transactions described in Schedule 4.1(a) of the Agreement) and none of
the properties and assets owned by the Guarantor or any Subsidiary and none of
their leasehold interests is subject to any Lien, except Permitted Liens, and
except for such interests, properties and assets as are no longer used or useful
in the conduct of its businesses or as have been disposed of in the ordinary
course of business.
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7.10 Subsidiaries and Ownership of Stock. The Borrower is a wholly-owned
subsidiary of the Guarantor, incorporated under the laws of the State of New
York. Set forth in Schedule 5.9 of the Agreement is a complete and accurate list
of all other Subsidiaries of the Guarantor, showing the jurisdiction of
incorporation of each and showing the ownership of the outstanding stock of each
Subsidiary. All of the outstanding capital stock of the Borrower has been
validly issued, is fully paid and nonassessable and is owned by the Guarantor
free and clear of all Liens, except for Permitted Liens.
7.11 ERISA. The Guarantor and each Subsidiary are in compliance in all
material respects with all applicable provisions of ERISA to the extent such
provisions are applicable thereto. Neither a Reportable Event nor a Prohibited
Transaction is continuing with respect to any Plan; except as set forth in
Schedule 5.10 of the Agreement, no notice of intent to terminate a Plan has been
filed nor has any Plan been terminated since September 1, 1989; no circumstances
exist which constitute grounds entitling the PBGC to institute proceedings to
terminate or appoint a trustee to administer a Plan, nor has the PBGC instituted
any such proceedings; except as set forth in Schedule 5.10 of the Agreement,
neither the Guarantor nor any Commonly Controlled Entity has completely or
partially withdrawn from a Multiemployer Plan since September 1, 1989; the
Guarantor and each Commonly Controlled Entity have met their minimum funding
requirements (if any) under ERISA with respect to all of their Plans and, except
as set forth in the Agreement, the present value of all vested benefits under
each Plan does not exceed the fair market value of all Plan assets allocable to
such benefits, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA; and neither the Guarantor nor any
Commonly Controlled Entity has incurred any liability to the PBGC under ERISA.
7.12 Operation of Business. The Guarantor and its Subsidiaries possess all
licenses, permits, franchises, patents, copyrights, trademarks, and trade names
or rights thereto, to conduct their respective businesses substantially as now
conducted and as presently proposed to be conducted and the Guarantor and its
Subsidiaries are not in violation of any valid rights of others with respect to
any of the foregoing, except where the failure to possess or any such violation
would not have a material adverse effect on the Guarantor and its Subsidiaries,
taken as a whole.
7.13 Taxes. Except as set forth in the Agreement, Guarantor and each of its
Subsidiaries have filed all tax returns (federal, state, and local) required to
be filed and have paid all taxes, assessments, and governmental charges and
levies thereon to be due, including interest and penalties. The federal income
tax liabilities of the Guarantor and its Subsidiaries have been audited by the
Internal Revenue Service and have been finally determined and satisfied for all
taxable years up to and including the taxable year 1988.
7.14 Debt. Schedule 5.13 to the Agreement is a complete and correct list of
all credit agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other agreements and arrangements presently in effect providing for
or relating to extensions of credit for borrowed money (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which the Guarantor or any Subsidiary is in any manner directly or
contingently obligated in an aggregate principal amount in excess of Two Hundred
Fifty Thousand Dollars ($250,000); and the maximum principal or face amounts of
the credit in question outstanding as of August 27, 1994 are correctly stated,
and all Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule 5.13.
7.15 Environment. Except as set forth in the Agreement, to the best of the
Guarantor's knowledge, the Guarantor and each Subsidiary have duly complied with
and their businesses, operations, assets, equipment, property, leaseholds or
other facilities are in compliance with the provisions of all federal, state and
local environmental, health and safety laws, codes and ordinances and all rules
and regulations promulgated thereunder. To the best of the Guarantor's
knowledge, Guarantor and each Subsidiary have been issued all required federal,
state and local permits, licenses, certificates and approvals relating to (a)
air emissions; (b) discharges to surface water or groundwater; (c) noise
emissions; (d) solid or liquid waste disposal; (e) the use, generation, storage
transportation, or disposal of toxic or hazardous substances or wastes (intended
hereby and hereafter to include any and all such materials listed in any
federal, state, or local law, code or ordinance and all rules and regulations
promulgated thereunder as hazardous or potentially hazardous); or (f) other
environmental, health, or safety matters. A true, accurate, complete, and
current list of all such permits, licenses certificates and approvals has been
delivered to the Bank. Except as described in Schedule 5.14 to the Agreement,
neither the Guarantor nor any Subsidiary has received notice of, nor knows of
nor suspects facts which might constitute any violations of any federal, state,
or local environmental, health or safety laws, codes or ordinances, and any
rules or regulations promulgated thereunder with respect to its businesses,
operations, assets, equipment, property, leaseholds, or other facilities. Except
as described in Schedule 5.14 of the Agreement, to the best of the Guarantor's
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knowledge, there has been no emission, spill, release, or discharge into or upon
(a) the air; (b) soils, or any improvements located thereon; (c) surface water
or groundwater; or (d) the sewer, septic system or waste treatment, storage or
disposal system servicing the premises, in violation of any applicable laws, of
any toxic or hazardous substances or wastes at or from the premises; and the
premises of the Guarantor and its Subsidiaries are free of all such toxic or
hazardous substances or wastes. Except as set forth in Schedule 5.14 to the
Agreement, to the best of the Guarantor's knowledge, there has been no
complaint, order, directive, claim, citation, or notice by any governmental
authority or any person or entity with respect to (a) air emissions; (b) spills,
releases, or discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or disposal
systems servicing the premises; (c) noise emissions; (d) solid or liquid waste
disposal; (f) the use, generation, storage, transportation, or disposal of toxic
or hazardous substances or waste; or (g) other environmental, health or safety
matters affecting the Guarantor or any Subsidiary or any of their businesses,
operations, assets, equipment, property, leaseholds, or other facilities. To the
best of the Guarantor's knowledge, neither the Guarantor nor its Subsidiaries
have any indebtedness, obligations, or liability, absolute or contingent,
matured or not matured, with respect to the storage, treatment, cleanup or
disposal of any solid wastes, hazardous wastes, or other toxic or hazardous
substances (including without limitation any such indebtedness, obligation or
liability with respect to any current regulation, law, or statute regarding such
storage, treatment, cleanup, or disposal) which is not shown on Schedule 5.14 of
the Agreement. Set forth in Schedule 5.14 of the Agreement is a list of all real
property owned or leased by the Guarantor and its Subsidiaries at any time since
November 1, 1991 wherever located, and a brief description of the business
conducted at such location.
7.16 Restructuring Proposal. No changes have been made at any time prior to
the Closing Date to the Guarantor's Restructuring Proposal, dated August 25,
1994, and the supplement thereto, dated September 1, 1994, other than changes
which have been disclosed to the Bank.
7.17 Closing Date Pro-Forma Balance Sheet. The Guarantor has in Good Faith
prepared and furnished to the Bank a pro forma consolidated balance sheet of the
Borrower and its Subsidiaries as of immediately after consummation of the Merger
and the transactions incident thereto and attached hereto as Schedule 7.17 (the
'Pro Forma Balance Sheet'). The Pro-Forma Balance Sheet is based on assumptions
which the Guarantor believes are reasonable and have been applied consistently
with those used in the preparation of the financial statements referred to in
paragraph 7.4 and, to the best of the Guarantor's knowledge, fairly presents the
financial condition of the Borrower and its Subsidiaries as of immediately after
the consummation of the Merger and the transactions incident thereto. The
Guarantor makes no representation or warranty as to the actual occurrence of the
matters reflected in such projections or the nonoccurrence of events not
reflected in such projections.
7.18 Eligible Borrower Status. The Guarantor is an eligible borrower under
the Farm Credit Act of 1971, as amended.
8. AFFIRMATIVE COVENANTS.
Until the Guaranteed Obligations have been paid in full and the Bank has no
Commitment under the Agreement, the Guarantor will:
8.1 Maintenance of Existence. Preserve and maintain, and cause each
operating Subsidiary to preserve and maintain, its corporate existence and good
standing in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each operating Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified would not have a material
adverse effect on the Guarantor and its operating Subsidiaries, taken as a
whole, and except as otherwise contemplated by Section 9.3.
8.2 Maintenance of Records. Keep, and cause each operating Subsidiary to
keep, adequate records and books of account, in which complete entries will be
made in accordance with GAAP (in all material respects) consistently applied,
reflecting all financial transactions of the Guarantor and its operating
Subsidiaries.
8.3 Maintenance of Properties. Maintain, keep, and preserve, and cause each
operating Subsidiary to maintain, keep, and preserve, all of its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
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8.4 Conduct of Business. Continue, and cause each operating Subsidiary to
continue, to engage in a business of the same general type as conducted by it on
the date of this Guaranty and to not permit any non-operating Subsidiary to
engage in a business other than one of the same general type as conducted by the
Guarantor or any Subsidiary as of the date of this Agreement.
8.5 Maintenance of Insurance. Maintain, and cause each operating Subsidiary
to 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 a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
8.6 Compliance With Laws. Comply, and cause each Subsidiary to comply, in
all material respects with all applicable laws, rules, regulations, and orders,
such compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property, except for such taxes, assessments and other charges being
contested in Good Faith by appropriate proceedings and for which appropriate
reserves are maintained.
8.7 Right of Inspection. At any reasonable time and from time to time upon
at least two (2) Business Days' notice prior to the occurrence of an Event of
Default and at any time and without prior notice upon and during the continuance
of an Event of Default, permit the Bank or any agent or representative thereof
to examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Guarantor and any Subsidiary, and
to discuss the affairs, finances, and accounts of the Guarantor and any
Subsidiary with any of their respective officers and directors and the
Guarantor's independent certified public accountants.
8.8 Reporting Requirements. Furnish to the Bank:
(a) Quarterly financial statements. As soon as available, and in any
event within forty-five (45) days after the end of each of the first three
quarters of each Fiscal Year of the Guarantor, consolidated balance sheets of
the Guarantor and its consolidated Subsidiaries as of the end of such quarter,
consolidated statements of cash flow and net proceeds of the Guarantor and its
consolidated Subsidiaries for the period commencing at the end of the previous
Fiscal Year and ending with the end of such quarter, and consolidated statements
of changes in shareholders' and members' capitalization of the Guarantor and its
consolidated Subsidiaries for the portion of the Fiscal Year ended with the last
day of such quarter, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the previous
Fiscal Year and all prepared in accordance with GAAP, consistently applied
(except for the absence of footnotes and subject to year-end adjustments), and
certified by the chief financial officer of the Guarantor;
(b) Annual financial statements. As soon as available, and in any
event within ninety (90) days after the end of each Fiscal Year of the
Guarantor, consolidated balance sheets of the Guarantor and its consolidated
Subsidiaries as of the end of such Fiscal Year, and consolidated statements of
cash flow and net proceeds of the Guarantor and its consolidated Subsidiaries
for such Fiscal Year, and consolidated statements of changes in shareholders'
and members' capitalization of the Guarantor and its consolidated Subsidiaries
for such Fiscal Year, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior Fiscal
Year and all prepared in accordance with GAAP, consistently applied, and as to
the consolidated statements, accompanied by an opinion thereon by Price
Waterhouse LLP or other independent certified public accountants selected by the
Guarantor and reasonably acceptable to the Bank.
(c) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Guarantor or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements of
the Guarantor or any Subsidiary made by such accountants;
(d) Certificate of No Default. Within forty-five (45) days after the
end of each of the first three fiscal quarters of each Fiscal Year of the
Guarantor and within ninety (90) days after the end of each Fiscal Year of the
Guarantor, a certificate of the chief financial officer of the Guarantor (i)
certifying that to the best of his knowledge no Default or Event of Default has
occurred and is continuing, or if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (ii) with computations
demonstrating compliance with the covenants contained in paragraph 10;
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(e) Accountant's report. Simultaneously with the delivery of the
annual financial statements referred to in paragraph 8.8(b), a certificate of
the independent public accountants who audited such statements to the effect
that, in making the examination necessary for the audit of such statements, they
have obtained no knowledge of any condition or event which constitutes a Default
or Event of Default under paragraphs 9.2, 9.6, 9.8, or 10.1 through 10.6,
inclusive, of this Guaranty, or if such accountants shall have obtained
knowledge of any such condition or event, specify in such certificate each such
condition or event of which they have knowledge and the nature and status
thereof;
(f) Notice of litigation. Promptly after becoming aware of the same,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Guarantor or any Subsidiary which is reasonably likely to
have a material adverse effect on the financial condition, properties, or
operations of the Guarantor or such Subsidiary;
(g) Notice of Defaults and Events of Default. As soon as possible and
in any event within five (5) Business Days after becoming aware of the
occurrence of each Default or Event of Default, a written notice setting forth
the details of such Default or Event of Default and the action which is proposed
to be taken by the Guarantor with respect thereto;
(h) ERISA reports. As soon as possible, and in any event within thirty
(30) days after the Guarantor knows or has reason to know that any circumstances
exist that constitute grounds entitling the PBGC to institute proceedings to
terminate a Plan subject to ERISA with respect to the Guarantor or any Commonly
Controlled Entity, and promptly, but in any event within two (2) Business Days
of receipt by the Guarantor or any Commonly Controlled Entity of notice that the
PBGC intends to terminate a Plan or appoint a trustee to administer the same,
and promptly, but in any event within five (5) Business Days of the receipt of
notice concerning the imposition of withdrawal liability in excess of Two
Hundred Fifty Thousand Dollars ($250,000) with respect to the Guarantor or any
Commonly Controlled Entity, the Guarantor will deliver to the Bank a certificate
of the chief financial officer of the Guarantor setting forth all relevant
details and the action which the Guarantor proposes to take with respect
thereto;
(i) Reports to other creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture including without limitation, the Subordinated Notes
Indenture, loan, credit, or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this paragraph 8.8;
(j) Financial Reports. Promptly after the sending or filing thereof,
copies of all financial statements, and reports which the Guarantor sends to its
stockholders generally and copies of all regular, periodic and special reports
and all registration statements which the Guarantor or any Subsidiary files with
the Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or with any national securities exchange;
(k) Financial Plans. No later than sixty (60) days prior to the
commencement of each Fiscal Year, provide the Bank with a financial plan for
such Fiscal Year, prepared in a manner substantially consistent with the
Guarantor's past practice. The Bank shall advise the Guarantor within ten (10)
days after its receipt of such plan if such plan is not reasonably satisfactory
to the Bank. Following receipt of such notice, the Guarantor and the Bank will
work in Good Faith to develop such a plan that is reasonably satisfactory to the
Guarantor and the Bank.
(l) General information. Such other information respecting the
condition or operations, financial or otherwise, of the Guarantor or any
Subsidiary as the Bank may from time to time reasonably request.
8.9 Environment. Except as set forth in Schedule 5.14 of the Agreement, be
and remain, and cause each Subsidiary to be and remain, in compliance in all
material respects with the provisions of all federal, state, and local
environmental, health and safety laws, codes and ordinances, and all rules and
regulations issued thereunder provided, that, with respect to the matters set
forth in Schedule 5.14 of the Agreement, diligently exercise its reasonably
commercial efforts to remedy, and cause each Subsidiary to diligently exercise
its reasonably commercial efforts to remedy, same; notify the Bank immediately
after becoming aware of any hazardous discharge or environmental complaint
received from any governmental agency or any other party; notify the Bank
promptly after becoming aware of any hazardous discharge from or affecting its
premises; immediately contain and remove the same, in compliance with all
applicable laws; promptly pay any fine or penalty assessed in connection
therewith,
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except as such fine or penalty is being contested in Good Faith by appropriate
proceedings and for which appropriate reserves are maintained; permit the Bank,
upon reasonable notice prior to the occurrence of an Event of Default and at any
time and without prior notice upon and during the continuance of an Event of
Default, to inspect the premises, to conduct tests thereon and to inspect all
books, correspondence, and records pertaining thereto; and, at the Bank's
request, and at the Guarantor's expense, provide a report with respect to any
Real Property Collateral designated by the Bank of a qualified environmental
engineer, reasonably satisfactory in scope, form and content to the Bank.
8.10 Eligible Borrower Status. Be and remain an eligible borrower under
the Farm Credit Act of 1971, as amended.
8.11 Capital Contributions to Borrower. As promptly as practicable, and in
any event within ten (10) Business Days, after receipt from the Borrower of any
payment made in excess of the Commercial Market Value for crops and services
pursuant to the Marketing Agreement, the Guarantor will invest in cash as equity
in the Borrower an amount equal to at least 70% of such excess.
8.12 Transfer of Fixed Assets and Bank Stock to Borrower. On or before the
Closing Date, transfer to the Borrower, as a capital contribution to the
Borrower, (a) the entire existing investment of the Guarantor in Bank Stock and
(b) all, or substantially all, of the Guarantor's fixed assets.
9. NEGATIVE COVENANTS.
Until the Guaranteed Obligations have been paid in full and the Bank has no
Commitment under the Agreement, the Guarantor will not:
9.1 Liens. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any Lien, upon or with
respect to any of its properties now owned or hereafter acquired, except the
following (collectively, the 'Permitted Liens'):
(a) Liens in favor of the Bank;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanics', materialmen's,
landlord's, warehousemen's, and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than ninety (90) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(d) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation securing obligations that are not past due and
for which appropriate reserves have been established;
(e) Monetary deposits or pledges or bonds to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Guaranty), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) Judgment and other similar Liens arising in connection with court
proceedings, other than those, or any portion thereof, for which an insurance
company has unconditionally agreed to provide coverage, securing Debt in an
amount not in excess of Two Hundred and Fifty Thousand Dollars ($250,000)
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
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(g) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Guarantor or any Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(h) Liens securing obligations of a Subsidiary to the Guarantor or the
Borrower or another Guarantor;
(i) Purchase-money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition (and
not created in contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title retention agreement or a
Capital Lease; provided that:
(i) Any property subject to any of the foregoing is acquired by
the Guarantor or any Subsidiary in the ordinary course of its respective
business and the Lien on any such property attaches to such asset concurrently
or within twenty (20) days after the acquisition thereof;
(ii) The obligation secured by any Lien so created, assumed or
existing shall not exceed the lesser of the cost or the fair market value as of
the time of acquisition of the property covered thereby to the Guarantor or
Subsidiary acquiring the same;
(iii) Each such Lien shall attach only to the property so acquired
and fixed improvements thereon;
(iv) The Debt secured by all such Liens shall not exceed One
Hundred Thousand Dollars ($100,000) at any time outstanding in the aggregate;
(v) The Debt secured by such Lien is permitted by the provisions
of paragraph 9.2, and the related expenditure is permitted under paragraph 10.6.
(j) Liens permitted under any of the other Loan Documents in favor
of a Person other than the Bank; and
(k) Subject to compliance by the Guarantor and the Subsidiaries with
the covenants contained in the Parent Security Agreement, the Borrower Security
Agreement and the Subsidiaries Security Agreement, respectively, (i) Liens on
farm products purchased by the Guarantor or any Subsidiary and on accounts
arising from the sale thereof in favor of the sellers of such farm products or
any secured lender to such seller, and (ii) statutory trusts created under the
Perishable Agricultural Commodities Act in favor of the Guarantor's or any
Subsidiary's suppliers of food products derived from perishable agricultural
commodities; and
(l) Liens pursuant to Capital Leases permitted under paragraph 9.2(i).
9.2 Debt. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist any Debt, except:
(a) Debt of the Borrower under the Agreement or of the Guarantor
under this Guaranty or of the Subsidiary Guarantors under the Subsidiaries
Guaranty;
(b) Debt described in Schedule 7.2(b) of the Agreement, but no
voluntary prepayment, renewals, extensions, or refinancing thereof, except for
renewals or extensions of Capital Leases or as described on such Schedule;
(c) Debt of the Borrower subordinated on terms reasonably satisfactory
to the Bank to the Borrower's obligations under the Agreement, including,
without limitation, the Debt evidenced by the Subordinated Notes (and guarantees
thereof by the Guarantor and the Subsidiaries);
(d) Debt of the Guarantor to any Subsidiary or of any Subsidiary to
the Guarantor or another Subsidiary;
10
<PAGE>
(e) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), of which an
aggregate amount not in excess of One Hundred Thousand Dollars ($100,000) is
more than ninety (90) days past due at any time, in each case incurred in the
ordinary course of business, as presently conducted, and paid within the
specified time, unless contested in good faith and by appropriate proceedings;
(f) Debt of the Guarantor or any Subsidiary secured by purchase-money
Liens permitted by paragraph 9.1(i);
(g) Debt arising under the Marketing Agreement;
(h) Debt of the Guarantor to the Borrower, up to a principal amount
outstanding at any time of Ten Million Dollars ($10,000,000) for the Guarantor's
working capital purposes;
(i) Debt of the Guarantor or any Subsidiary in respect of any Capital
Lease in an aggregate principal amount not in excess of Four Million Dollars
($4,000,000) at any time outstanding.
(j) Debt of the Borrower for the purposes of fixing or hedging
interest rate risk of other Debt permitted under the Agreement;
(k) Debt with respect to deferred compensation arrangements,
post-retirement benefits and other employee, unemployment or retiree benefits,
in each case incurred in the ordinary course of business and consistent with
past practice;
(l) Debt for taxes payable (but not past due, unless being contested
in Good Faith by appropriate proceedings and for which appropriate reserves have
been taken) or deferred in accordance with the Code or other applicable law;
(m) Debt of the Guarantor to its members incurred in the ordinary
course of business and consistent with past practice;
(n) Debt arising under guaranties permitted under paragraph 9.9; and
(o) Debt (other than Debt permitted pursuant to clauses (a) through
(n) of this paragraph 9.2) in an aggregate amount not to exceed One Million
Dollars ($1,000,000) at any time outstanding.
9.3 Mergers, Etc. Except for the Merger, wind up, liquidate or dissolve
itself, reorganize, merge or consolidate with or into or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person, or permit any Subsidiary to do so,
except (a) that any Subsidiary may merge into or transfer assets to the
Borrower, (b) that any Subsidiary other than the Borrower may merge into or
consolidate with or transfer assets to any other Subsidiary, and (c) in
connection with any of the transactions described in Schedule 4.1(q) to the Loan
Agreement.
9.4 Leases. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any obligation as
lessee for the rental or hire of any real or personal property, except: (a)
Capital Leases permitted by paragraph 9.2(i); (b) leases (other than Capital
Leases) which do not in the aggregate require the Guarantor and its Subsidiaries
on a consolidated basis to make payments (including taxes, insurance,
maintenance, and similar expenses which the Guarantor or any Subsidiary is
required to pay under the terms of any lease) in any Fiscal Year of the
Guarantor in excess of Fifteen Million Dollars ($15,000,000); and (c) leases
between the Guarantor and any Subsidiary or between any Subsidiaries.
9.5 Sale and Leaseback. Sell, transfer, or otherwise dispose of, or permit
any Subsidiary to sell, transfer or otherwise dispose of any real or personal
property to any Person and thereafter directly or indirectly lease back the same
or similar property.
9.6 Dividends; Patronage.
11
<PAGE>
(a) Declare or pay any dividends; or purchase, redeem, retire, or
otherwise acquire for value any of its capital stock now or hereafter
outstanding; or allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of
any shares of its capital stock; or make any other distribution by reduction of
capital or otherwise in respect of any shares of its capital stock; or permit
any of its Subsidiaries to purchase or otherwise acquire for value any stock of
the Guarantor (collectively, a 'Restricted Payment'), except that, solely from
legally available funds and provided no Event of Default has occurred and is
continuing, or will occur as a result of a Restricted Payment, (i) any
Subsidiary may make a Restricted Payment to any other Subsidiary or to the
Borrower or the Guarantor, (ii) the Guarantor may issue preferred stock or other
equity securities in respect of outstanding securities or Retains solely in
accordance with the Guarantor's current member's equity program, previously
submitted to the Bank, which members equity program shall not be amended in any
manner or replaced without the prior written consent of the Bank, (iii) the
Guarantor may make a Restricted Payment with respect to its capital stock in an
aggregate amount not to exceed (A) Six Million Dollars ($6,000,000) for the
Fiscal Year ending June, 1995, (B) Seven Million Five Hundred Thousand Dollars
($7,500,000) for each of the Fiscal Years ending June, 1996 and 1997, (C) Eight
Million Dollars ($8,000,000) for the Fiscal Year ending June, 1998, (D) Eight
Million Five Hundred Thousand Dollars ($8,500,000) for the Fiscal Year ending
June, 1999 and (E) Nine Million Dollars ($9,000,000) for each Fiscal Year
therafter, and (iv) payments permitted under paragraph 9.6(b).
(b) Make any cash distribution to its stockholders (other than
Restricted Payments permitted by paragraph 9.6(a) and payments of Commercial
Market Value for crops), except that the Guarantor may make cash distributions
to its members to the extent of one hundred percent (100%) of 'net proceeds
available to members' of the Guarantor, as that term is used in the Guarantor's
then most recent audited financial statements for the immediately preceding
Fiscal Year ('Available Net Proceeds'), provided, however, that if any Event of
Default has occurred or would occur as a result of any such cash distribution,
then the cash distributions described in this paragraph 9.6(b) shall not exceed
that amount of Available Net Proceeds that is equal to the then minimum
percentage of Available Net Proceeds required to be distributed by the Guarantor
to its stockholders in order to qualify the distribution as a deductible
patronage distribution for federal income tax purposes.
9.7 Sale of Assets. Sell, lease, assign, transfer, or otherwise dispose of,
or permit any Subsidiary to sell, lease, assign, transfer, or otherwise dispose
of, any of its now owned or hereafter acquired assets (including, without
limitation, shares of stock and indebtedness of Subsidiaries, accounts
receivable, and leasehold interests), except: (a) inventory disposed of in the
ordinary course of business; (b) the sale or other disposition of assets no
longer used or useful in the conduct of its business; (c) that any Subsidiary
may sell, lease, assign, or otherwise transfer its assets to the Borrower or to
another Subsidiary located in the continental United States; (d) as contemplated
by the transactions described in Schedule 4.1(q) to the Agreement; (e) assets
(including shares of stock disposed of that have a fair market value not
exceeding Five Hundred Thousand Dollars ($500,000) in the aggregate for each
Fiscal year of the Guarantor; and (f) assets (including shares of stock)
disposed of for net proceeds not in excess of Five Hundred Thousand Dollars
$500,000 in the aggregate for each Fiscal Year of the Guarantor. Net proceeds
arising from sales of assets permitted by clauses (d), (e) and (f) of this
paragraph 9.7 shall be promptly delivered to the Bank for application by the
Bank to the prepayment of the Term Loan or the Term Loan Facility, as elected by
the Borrower in the manner provided by Section 2.16 of the Agreement.
9.8 Investments. Make, or permit any Subsidiary to make, any loan or
advance to any Person or purchase or otherwise acquire, or permit any Subsidiary
to purchase or otherwise acquire, any capital stock, assets, obligations, or
other securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person, or participate as a partner or joint
venturer with any other Person, except: (a) direct obligations of the United
States or any agency thereof with maturities of one year or less from the date
of acquisition; (b) commercial paper of a domestic issuer rated at least 'A-1'
by Standard & Poor's Corporation or 'P-1' by Moody's Investors Service, Inc.;
(c) certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank having capital and surplus in excess
of One Hundred Million Dollars ($100,000,000); (d) stock, obligations or
securities received in settlement of debts (created in the ordinary course of
business) owing to the Guarantor or any Subsidiary; (e) pursuant to the
Marketing Agreement; (f) equity securities held by the Guarantor or any
Subsidiary in another Subsidiary; (g) loans of up to Ten Million Dollars
($10,000,000) in principal amount at any time outstanding from the Borrower to
the Guarantor for the Guarantor's working capital purposes, which bear interest
at a rate at least equal to the rate that would have been then applicable to the
Seasonal Loans made as Prime Loans on the date such loans from the Borrower to
the Parent were made; and (h) investments permitted or required under Section 8
of the Agreement.
12
<PAGE>
9.9 Guaranties, Etc. Assume, guaranty, endorse, or otherwise be or become
directly or contingently responsible or liable, or permit any Subsidiary to
assume, guaranty, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods, or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth, or otherwise to
assure the creditors of any Person against loss), for obligations of any Person,
except guaranties pursuant to the Loan Documents by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and guaranties of Debt permitted under paragraph 9.2.
9.10 Transactions With Affiliates. Enter into any transaction, including,
without limitation. the purchase, sale. or exchange of property or the rendering
of any service, with any Affiliate, or permit any Subsidiary to enter into any
such transaction, including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate, except (a) the
Borrower and its Subsidiaries will not be prohibited from declaring or paying
any lawful dividend so long as, immediately after giving effect thereto, no
Default shall have occurred and be continuing; (b) transactions and conduct
entered into pursuant to the Marketing Agreement shall not be prohibited; (c)
transactions and conduct permitted by paragraph 9.6 of this Agreement or
otherwise by the Loan Agreement shall not be prohibited; and (d) the Guarantor
and its Subsidiaries shall be entitled to enter into transactions in the
ordinary course of and pursuant to the reasonable requirements of the
Guarantor's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Guarantor or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
9.11 Fiscal Year. Change its Fiscal Year.
10. FINANCIAL COVENANTS.
Until the Guaranteed Obligations have been paid in full and the Bank has no
Commitment under the Agreement:
10.1 Minimum Working Capital. The Guarantor will achieve and maintain
consolidated working capital of not less than One Hundred Million Dollars
($100,000,000) as of the Closing Date and the end of each month thereafter.
10.2 Minimum Tangible Net Worth. Within One Hundred and Twenty (120) days
after completion of the Merger, the Guarantor will deliver to the Bank the
Guarantor's calculation of its consolidated tangible net worth as of the time
immediately after the consummation of the Merger, subject to final adjustments
made in accordance with GAAP. At the end of each month thereafter and before the
Termination Date, the Guarantor will achieve and maintain at all times
consolidated tangible net worth of not less than the amount so determined after
completion of the Merger.
10.3 Long Term Debt to Equity Ratio. The Guarantor will maintain a
consolidated long term debt to equity ratio of not greater than the following
minimum ratios at the end of each month during the following periods:
<TABLE>
<CAPTION>
Minimum Ratio Period
<S> <C>
3.1 to 1.0 Closing Date through May, 1995
2.8 to 1.0 For the Fiscal Year ending June, 1995 through May, 1996
2.7 to 1.0 For the Fiscal Year ending June, 1996 through May, 1997
2.5 to 1.0 For the Fiscal Year ending June, 1997 through May, 1998
2.15 to 1.0 For the Fiscal Year ending June, 1998 through May, 2001
1.8 to 1.0 For the Fiscal Year ending June, 2001 and each Fiscal Year
therafter
</TABLE>
13
<PAGE>
10.4 Total Net Worth. (a) The Guarantor and its Subsidiaries will achieve
and maintain a consolidated total net worth (including capital stock, earnings
allocated to members of the Guarantor and earned surplus) of not less than the
following minimum percentages of total assets as at the end of each month during
the periods set forth below, other than the last month of a Fiscal Year:
<TABLE>
<CAPTION>
Minimum Percentage Period
<S> <C>
15% Closing Date through the Fiscal Year ending June, 2000
20% Fiscal Year ending June, 2001 and each Fiscal Year
thereafter
</TABLE>
(b) The Guarantor and its Subsidiaries will achieve and maintain a
consolidated total net worth (including capital stock, earnings allocated to
members of the Guarantor and earned surplus) of not less than the following
minimum percentages of total assets as at the end of each Fiscal Year set forth
below:
14
<PAGE>
<TABLE>
<CAPTION>
Minimum Percentage Fiscal Year Ending
<S> <C>
19% June, 1995 and 1996
20% June, 1997, 1998, 1999 and 2000
25% June, 2001 and at the end of each Fiscal Year thereafter
</TABLE>
10.5 Cash Flow Coverage Ratio. The Guarantor will achieve and maintain a
cash flow coverage ratio on a consolidated basis at the end of each Fiscal Year
of (1) net income after taxes, plus depreciation, plus amortization, plus
deferred finance charges for such Fiscal Year to (2) the current portion of long
term debt, plus capital expenditures, plus dividends to preferred stockholders,
plus cash patronage payments for such Fiscal Year, of not less than 1.0 to 1.0
for the Fiscal Year ending June, 1995 and not less than 1.1 to 1.0 for each
Fiscal Year thereafter.
10.6 Capital Expenditures. The Guarantor and its Subsidiaries will not
purchase any fixed or capital assets (collectively, 'Capital Expenditures') in
any Fiscal Year of the Guarantor and its Subsidiaries in excess of the sum of
(a) the amount of depreciation reflected on the year-end consolidated financial
statements of the Guarantor and its Subsidiaries for such Fiscal Year (the
'Annual CapEx Limit'), plus (b) an amount equal to the aggregate sum of the
amount, if any, by which the Annual CapEx Limit for all prior Fiscal Years
exceeded, on a cumulative basis, the aggregate amount of Capital Expenditures in
all such prior Fiscal Years, commencing with the Fiscal Year ending June, 1994.
10.7 Consequence of Non-Compliance. If the Guarantor fails to comply with
any of the financial covenants set forth in paragraphs 10.1 through 10.5
inclusive, then, without in any way limiting or waiving any of the Bank's rights
or remedies under this Guaranty, the Agreement or the other Loan Documents, the
Guarantor shall make no cash payments to growers for raw products in excess of
ninety percent (90%) of Commercial Market Value therefor in any Fiscal Year in
which such covenant default occurs.
11. NO ENFORCEMENT WAITING PERIOD.
The Guarantor agrees that its liability hereunder may be enforced when
Guaranteed Obligations are due or at any time thereafter and that the Bank shall
not be required to attempt to first collect any Guaranteed Obligations from the
Borrower or other Obligor or to realize upon any Collateral.
12. NO SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY.
Notwithstanding anything to the contrary in this Guaranty, the Guarantor
hereby irrevocably waives, for so long as any Obligation is due the Bank or the
Bank has any Commitment, all rights which may have arisen in connection with
this Guaranty to be subrogated to any of the rights (whether contractual, under
the Bankruptcy Code, under common law or otherwise) of the Bank against the
Borrower for the payment of the Guaranteed Obligations. The Guarantor hereby
further irrevocably waives, for so long as any Obligation is due the Bank or the
Bank has any Commitment, all contractual, common law, statutory or other rights
of reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against the Borrower or any other Person which may have arisen in
connection with this Guaranty. Until the Guaranteed Obligations have been paid
in full and the Bank shall have no Commitment under the Agreement, if any amount
shall be paid by or on behalf of the Borrower to the Guarantor on account of any
of the rights waived in this paragraph, such amount shall be held by the
Guarantor in trust, segregated from other funds of the Guarantor, and shall
forthwith upon receipt by the Guarantor, be turned over to the Bank in the exact
form received by the Guarantor (duly endorsed by the Guarantor to the Bank, if
required), to be applied against the Guaranteed Obligations, whether matured or
unmatured, in such order as the Bank may determine. The provisions of this
paragraph shall survive for a period of one (1) year after the termination of
this Guaranty and the payment in full of the Guaranteed Obligations and the
termination of the Commitment.
15
<PAGE>
13. REINSTATEMENT OF GUARANTY.
Guarantor agrees that this Guaranty shall remain in full force and effect
or be reinstated, as the case may be, if at any time payment of any of the
Guaranteed Obligations is rescinded or otherwise restored by the Bank to the
Borrower, the Guarantor or to any other party who made such payment, or to the
creditors of the Borrower or the Guarantor or a representative of any such
creditors.
14. NO WAIVER; CUMULATIVE RIGHTS.
No delay on the Bank's part in exercising any rights hereunder or failure
to exercise the same shall constitute a waiver of such rights. No notice or
demand on Guarantor shall be deemed to be a waiver of the obligation of
Guarantor to take further action without notice or demand as provided herein. No
waiver of any of the Bank's rights hereunder and no modification or amendment of
this Guaranty shall be deemed to be made by the Bank unless the same shall be in
writing, duly signed on the Bank's behalf, and each such waiver, if any, shall
apply only with respect to the specific instance involved and shall in no way
impair the Bank's rights or the obligations of Guarantor to the Bank in any
other respect at any other time.
15. ACCOUNT STATED.
The Bank's books and records showing the accounts between the Bank and the
Borrower shall be admissible in evidence in any action or proceeding as prima
facie proof of the items therein set forth, and the Bank's statements delivered
to the Borrower, to the extent to which no written objection is made within
thirty (30) days after the date of receipt thereof, shall constitute an account
stated between the Bank and the Borrower and be binding on Guarantor. The Bank
may apply all payments, proceeds of Collateral and all other amounts received
from or for the account of the Borrower or the Guarantor to the Guaranteed
Obligations in such order and manner as the Bank shall in its sole discretion
determine, except as may be otherwise provided in the Agreement or any other
Loan Document.
16. TERMINATION.
The Guarantor shall continue liable hereunder until one of the Bank's
officers actually receives written termination notice by certified mail, return
receipt requested; but the giving of such notice shall not relieve Guarantor
from liability in respect of any Guaranteed Obligations incurred and Loans and
Letter of Credit Accommodations, if any, which the Bank has committed before
such written notice is received to advance to or for the account of the
Borrower, or for post-termination collection expenses and interest pertaining to
any Guaranteed Obligations arising before termination.
16
<PAGE>
17. SEVERABILITY OF PROVISIONS.
Guarantor agrees that in the event any provision hereof shall be deemed to
be invalid by any court or statute, such invalidity shall not affect the
remainder of the Guaranty.
18. GOVERNING LAW.
This Guaranty shall be governed by and interpreted and construed in
accordance with the laws of the State of New York, without reference to the
conflicts of laws principles of said State.
19. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
Guarantor hereby irrevocably submits and consents to the non-exclusive
jurisdiction of State and Federal Courts in the State of New York in connection
with any action or proceeding arising out of or relating to this Guaranty, or
any motion arising therefrom or relating thereto.
20. WAIVER OF JURY TRIAL.
THE GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS GUARANTY.
21. SUCCESSORS AND ASSIGNS.
This Guaranty shall be binding upon Guarantor and its successors and
assigns and shall benefit the Bank and its successors, endorsees, transferees
and assigns.
22. PARAGRAPH HEADINGS.
Paragraph headings are for convenience of reference only and shall not be
deemed a part of this Guaranty.
IN WITNESS WHEREOF, Pro-Fac Cooperative, Inc. has executed and delivered
this Guaranty as of this 3rd day of November, 1994.
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
--------------------------
Roy A. Myers
Title: General Manager
----------------------------
17
<PAGE>
-----------------------------------------------------
PARENT SECURITY AGREEMENT
between
PRO-FAC COOPERATIVE, INC.
and
SPRINGFIELD BANK FOR COOPERATIVES
Dated as of November 3, 1994
-----------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.1 OTHER DEFINITIONAL PROVISIONS . . . . . . . . . . . 3
SECTION 2. GRANT OF SECURITY INTEREST.. . . . . . . . . . . . . 3
SECTION 3. DEBTOR REMAINS LIABLE. . . . . . . . . . . . . . . . 3
SECTION 4. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . 3
SECTION 5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS.. . . . . 7
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT. 8
SECTION 8. FURTHER ASSURANCES.. . . . . . . . . . . . . . . . . 9
SECTION 9. INSURANCE. . . . . . . . . . . . . . . . . . . . . . 9
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. . . . . . 10
SECTION 11. SECURED PARTY MAY PERFORM.. . . . . . . . . . . . . 11
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES. . . . . . . 11
SECTION 13. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . 11
SECTION 14. REMEDIES. . . . . . . . . . . . . . . . . . . . . . 12
SECTION 15. APPLICATION OF PROCEEDS.. . . . . . . . . . . . . . 12
SECTION 16. INDEMNITY . . . . . . . . . . . . . . . . . . . . . 13
SECTION 17. SECURITY INTEREST ABSOLUTE. . . . . . . . . . . . . 13
SECTION 18. CONTINUING SECURITY INTEREST. . . . . . . . . . . . 14
SECTION 19. AMENDMENTS; ETC.. . . . . . . . . . . . . . . . . . 14
SECTION 20. NOTICES.. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 21. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . 15
SECTION 22. CONSENT TO JURISDICTION.. . . . . . . . . . . . . . 15
SECTION 23. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . 15
SECTION 24. HEADINGS. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 25. SEVERABILITY. . . . . . . . . . . . . . . . . . . . 15
SECTION 26. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
Schedule I- [Intentionally Omitted]
Schedule II- [Intentionally Omitted]
Schedule VII- Locations of Inventory and Equipment
Schedule IV- Existing Liens
</TABLE>
<PAGE>
PARENT SECURITY AGREEMENT
PARENT SECURITY AGREEMENT, dated as of November 3, 1994 (this
'Agreement'), between PRO-FAC COOPERATIVE, INC., a New York cooperative
corporation, ('Debtor') and SPRINGFIELD BANK FOR COOPERATIVES, a corporation
established under the laws of the United States of America and continuing as a
federally-chartered instrumentality of the United States under the Farm Credit
Act of 1971, as amended (the 'Secured Party').
W I T N E S S E T H:
WHEREAS, PF Acquisition Corp., a New York corporation ('PF
Acquisition') and Curtice-Burns Foods, Inc. a New York corporation
('Curtice-Burns'), together with PF Acquisition, individually and collectively,
jointly and severally, the 'Borrower') have entered into a Term Loan, Term Loan
Facility and Seasonal Loan Agreement with the Secured Party, dated as the date
hereof (as amended, supplemented or modified from time to time, the 'Loan
Agreement');
WHEREAS, the Borrower has requested the Secured Party to extend credit
and the Secured Party has agreed to extend credit to the Borrower upon the terms
and subject to the conditions set forth in the Loan Agreement;
WHEREAS, it is a condition precedent to the obligation of the Secured
Party to extend credit to the Borrower under the Loan Agreement that Debtor
shall have executed and delivered its Guaranty (the 'Parent Guaranty') to the
Secured Party dated the date hereof pursuant to which Debtor guarantees to the
Secured Party the payment and performance when due of the Obligations of the
Borrower to the Secured Party under the Loan Agreement;
WHEREAS, it is a condition precedent to the obligation of the Secured
Party to now or hereafter extend credit to the Borrower under the Loan Agreement
that the Debtor shall have executed and delivered this Security Agreement to the
Secured Party;
WHEREAS, PF Acquisition is a wholly-owned subsidiary of Debtor;
WHEREAS, PF Acquisition is this day merging with and into
Curtice-Burns; and
WHEREAS, Curtice-Burns, as the survivor of the merger of PF
Acquisition into Curtice- Burns, will be a wholly-owned subsidiary of Debtor;
NOW THEREFORE, in consideration of the foregoing premises and to
induce the Secured Party to enter into the Loan Agreement and extend credit to
the Borrower thereunder, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Debtor hereby agrees
with the Secured Party as follows:
SECTION 1.DEFINITIONS. Terms used herein which are defined in the
Parent Guaranty and not otherwise defined herein have the same meanings set
forth in the Parent Guaranty. Terms not specifically defined herein which are
defined in the Uniform Commercial Code have the meanings as defined in the
Uniform Commercial Code. The following terms as used in this Agreement have the
following meaning:
'Accounts' means all of Debtor's present and future accounts,
including, without limitation, all of the Debtor's rights to payment for goods
sold or leased or for services rendered, whether or not yet earned by
performance.
'Account Debtor' means the Person who is obligated on or under any
Account.
'Collateral' means all property or rights in which a Lien and security
interest is granted hereunder.
<PAGE>
'Contractual Obligations' means, as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.
'Equipment' means all of the Debtor's now owned and hereafter acquired
machinery, equipment, furnishings, fixtures, vehicles and computers and other
electronic data-processing and office equipment and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
whether now or hereafter installed thereon or affixed thereto.
'General Intangibles' means all of the Debtor's now owned and
hereafter acquired general intangibles, including, without limitation, (i) all
patents and copyrights, (ii) all owned or licensed trademarks and trademark
registrations, trade names and trade name registrations and service marks and
service mark registrations, and all of the goodwill of the business connected
with the use of, and symbolized by, each owned or licensed trademark and
trademark registration, trade name and trade name registration and service mark
and service mark registration, and all continuations and extensions thereof, the
right to sue for infringements or dilutions thereof or for injury to the
goodwill associated therewith, (iii) all rights to payment in respect of loans
or advances, management fees, tax sharing or allocation fees, royalties,
licensing arrangements and pension or tax refunds, and (iv) all rights arising
in favor of Debtor under the Marketing Agreement.
'Inventory' means all of the Debtor's inventory, of every kind and
description, now owned and hereafter acquired, wherever located, including,
without limitation, all raw materials, work in process and finished goods, and
materials used or consumed or to be used or consumed in the Debtor's business,
or the processing, packaging, delivery or shipping of any of the foregoing, and
all goods which are returned to or repossessed by the Debtor whether or not in
transit, and all accessions and additions thereto and all documents of title
covering any of the foregoing.
'Requirement of Law' means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of any
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
'Uniform Commercial Code' means the Uniform Commercial Code as the
same may from time to time be in effect in the State of New York or any other
applicable jurisdiction.
SECTION 1.1 Other Definitional Provisions; Interpretation. References
to 'Sections,' 'Subsections,' and 'Schedules' shall be to Sections, Subsection,
and Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, 'hereof', 'herein,' 'hereto,' 'hereunder' and the
like mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears; words
importing any gender include the other gender; references to 'writing' include
printing, typing and other means of reproducing words in a tangible visible
form; the words 'including,' 'includes' and 'include' shall be deemed to be
followed by the words 'without limitation'; references to Persons include their
respective permitted successors and assigns or, in the case of Governmental
Authorities, Persons succeeding to the relevant functions of such Governmental
Authorities; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
SECTION 2. GRANT OF SECURITY INTEREST. As security for the
payment and performance of the Guaranteed Obligations, the Debtor hereby assigns
to the Secured Party and grants to the Secured Party a continuing security
interest in and lien upon the following property of the Debtor, whether now or
hereafter existing, owned or acquired: (a) all Accounts (whether invoiced under
the name of Debtor or any tradename or division of Debtor) and all guarantees
and other property securing the payment of or performance under any of the
Accounts, (b) all General Intangibles, (c) all Chattel Paper, (d) all Documents,
(e) all Instruments (other than capital stock), (f) all Inventory, (g) all Farm
Products, (h) all Equipment, (i) all books and records relating to any of the
foregoing; and (i) all products and proceeds (including, without limitation, all
insurance proceeds) of any of the foregoing.
SECTION 3. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Debtor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights hereunder shall not release Debtor from any of its duties or
obligations under any contracts and agreements included in the Collateral, to
the extent set forth therein, and (c) the Secured Party shall have no
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obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement, nor shall the Secured Party be
obligated to perform any of the obligations or duties of Debtor thereunder or to
take any action to collect or enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants as follows:
(a) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required either (i) for the grant by Debtor of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Debtor or (ii) for the perfection of or the exercise by the Secured
Party of its rights and remedies hereunder, except for the filing of appropriate
financing statements as contemplated in subsection (d) of this Section and the
filing of appropriate documents with the United States Patent and Trademark
Office with respect to certain General Intangibles.
(b) Ownership of Collateral. Except for the security interests
disclosed in Schedule IV hereto, other Permitted Liens and the security
interests created by this Agreement, Debtor owns the Collateral free and clear
of any Lien. Except with respect to (i) financing statements filed by The Chase
Manhattan Bank, as Agent, with respect to which the Secured Party has obtained
but not yet filed termination statements, (ii) Permitted Liens and (iii) such as
may have been filed in favor of the Secured Party relating to this Agreement, no
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording office.
(c) Accounts Valid. To the best of the knowledge of Debtor, at the
time of the creation thereof, and at all times thereafter, each Account of
Debtor constitutes the legal, valid and binding obligation of the party
obligated to pay the same and complies in all material respects with the
provisions of all material applicable laws and regulations, whether federal,
state or local, applicable thereto.
(d) Perfection. Upon proper filing of financing statements, this
Agreement creates a valid perfected security interest in the Collateral in which
a security interest may be perfected by filing financing statements in favor of
the Secured Party under the Uniform Commercial Code.
(e) Office Locations; Fictitious Names. The chief place of business
and the chief executive office of Debtor and the offices where Debtor keeps its
records regarding the Accounts is at 90 Linden Place, Rochester, New York.
Debtor does not sell Inventory under any trade-name or fictitious business name.
(f) Locations of Inventory and Equipment. The Inventory and Equipment
of Debtor is located at the places set forth in Schedule III hereto provided
that Schedule III does not include locations where the fair market of the
Inventory or the book value of the Equipment does not, or is not expected, from
time to time, to exceed Twenty Five Thousand Dollars ($25,000) individually or
in the aggregate.
(g) Compliance with The Food Security Act. Debtor has not, within the
one year period ended September 24, 1994, received written notice, pursuant to
the applicable provisions of The Food Security Act of 1985, 7 U.S.C. 1631 and
rules, regulations and orders thereunder (the 'FSA') or pursuant to the Uniform
Commercial Code or any other applicable local laws from (i) any of its suppliers
or sellers (collectively, 'Sellers') of farm products, or (ii) any secured party
of any such Sellers of farm products, or (iii) the Secretary of State (or
equivalent official) of any State in which farm products purchased by Debtor are
produced, advising or notifying Debtor of a Lien in favor of such secured party
upon farm products which may be purchased by Debtor (all of the foregoing,
collectively, the 'FSA Notices'). Debtor has properly registered with the
Secretary of State of any State in which farm products purchased by Debtor are
produced which employs a 'central filing system', as defined in The FSA.
(h) Compliance with the Perishable Agricultural Commodities Act.
Debtor has not, within the one year period ended September 24, 1994, received
written notice, pursuant to the applicable provisions of the Perishable
Agricultural Commodities Act of 1930, 7 U.S.C. SS 499e(c)(2) and rules,
regulations and orders thereunder ('PACA'), from any of its Sellers of food or
other products derived from perishable agricultural commodities, advising or
notifying Debtor of its intent to be the beneficiary of a trust imposed with
respect to those perishable agricultural commodities or the proceeds thereof
('PACA Notices').
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SECTION 5. COVENANTS. Debtor shall:
(a) not use or permit any Collateral to be used in any respect
unlawfully or in violation of any provision of this Agreement, or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral if the consequence of such violation would be a material fine or if
such violation would have a material adverse effect on the business, operations,
properties, assets, or financial condition of Debtor;
(b) give the Secured Party thirty (30) days' prior written notice of
any change in Debtor's name, identity or corporate structure;
(c) give the Secured Party thirty (30) days' prior written notice of
any change in Debtor's chief executive office;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity or amount thereof is being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Debtor; provided that Debtor shall in
any event pay such taxes, assessments, governmental charges or levies not later
than five (5) days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment entered or filed against Debtor as a result of the
failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Loan Agreement or
in accordance with the written consent of Secured Party;
(f) except for the Liens set forth on Schedule IV, Permitted Liens and
the security interest created by this Agreement, not create or suffer to exist
any Lien upon or with respect to any of the Collateral;
(g) comply, in all material respects, with all existing and future FSA
Notices during their periods of effectiveness under the FSA including, without
limitation, directions to make payments to the Sellers by issuing payment
instruments directly to the secured party or jointly payable to the Seller and
the secured party, as specified in the FSA Notice. Within thirty (30) days after
the end of each fiscal quarter, the Debtor shall notify the Secured Party in
writing of the aggregate amount of Liens contained in FSA Notices received by
the Debtor during such fiscal quarter. If, at any time, any State in which farm
products purchased by Debtor are produced has implemented or implements the
provisions of the FSA with respect to the creation of a 'central filing system'
(as defined in Section (c)(2) of the FSA, 7 U.S.A. 1631(c)(2)), promptly
register with the Secretary of State (or equivalent official of each such State)
prior to any further material purchases of farm products produced in that State,
pursuant to the registration requirements of the FSA, and promptly notify
Secured Party in writing of such registration with the central filing system;
and
(h) comply, in all material respects, with all PACA Notices. In
addition, Debtor shall take all other steps as may be reasonably required, if
any, to comply with PACA. Within thirty (30) days of the end of each fiscal
quarter, Debtor shall notify the Secured Party in writing of the aggregate
amount of perishable agricultural products subject to statutory trusts as
reflected in the PACA Notices received by Debtor during such fiscal quarter.
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS.
(a) Debtor shall keep its chief place of business, chief executive
office and the office where it keeps its records concerning its Accounts at 90
Linden Place, Rochester, New York or, upon thirty (30) days' prior written
notice to the Secured Party, at such other locations as shall have been
specified in such notice. In connection therewith, Debtor shall take such action
that the Secured Party may reasonably request, in order to perfect and protect
any security interest granted hereby or to enable the Secured Party to exercise
and enforce its rights and remedies hereunder with respect to the Accounts.
Debtor will hold and preserve such records and will permit representatives of
the Secured Party at any time during normal business hours and with reasonable
prior notice to inspect and make abstracts from such records and Debtor agrees
to render to the Secured Party, at Debtor's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.
(b) Debtor shall duly fulfill all material obligations on its part to
be fulfilled under or in connection with its Accounts if and so long as the
Account Debtor with respect to such Account shall not be in default thereunder.
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(c) Except as otherwise provided in this subsection (c) of this
Section, Debtor shall continue to collect, at its own expense, all amounts due
or to become due Debtor in respect of its Accounts in the ordinary course of
business, consistent with past practices. In connection with such collections,
Debtor may take such action as Debtor may deem necessary or advisable to enforce
collection of its Accounts consistent with past practices; provided, however,
that upon the occurrence and during the continuance of an Event of Default, (i)
the Secured Party shall have the right at any time, upon written notice to
Debtor, to require that all amounts and proceeds (including checks and other
instruments) received by Debtor in respect of the Accounts shall be received in
trust for the benefit of the Secured Party, shall be segregated from other funds
of Debtor and shall be forthwith paid over or delivered to the Secured Party in
the same form as so received (with any necessary endorsement) to be applied as
provided by Section 15 hereof, (ii) Debtor shall not adjust, settle or
compromise the amount or payment of any Accounts, or release wholly or partly
any Account Debtor or obligor thereof, or allow any credit or discount thereon
except in the ordinary course of business, consistent with past practices,
without the prior written consent of the Secured Party, (iii) the Secured Party
shall have the right at any time upon written notice to Debtor of its intention
to do so, to notify the Account Debtors or obligors in respect of Accounts of
the assignment of any Accounts to the Secured Party and to direct such Account
Debtors or obligors to make payment of all amounts due or to become due to
Debtor thereunder directly to the Secured Party, to notify each Person
maintaining a lockbox or similar arrangement to which Account Debtors or
obligors in respect of any Accounts have been directed to make payment to remit
all amounts representing collections on checks or other payment items from time
to time sent to or deposited in such lockbox or other arrangement directly to
the Secured Party to be applied as provided by Section 15 hereof and, upon such
notification and at the expense of Debtor, to enforce collection of the Accounts
and to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as Debtor might have done, and (iv) upon written
request by Secured Party, Debtor shall, and shall cause each Subsidiary to,
arrange for payment by Account Debtors to be made directly to lock boxes and/or
blocked accounts owned or controlled by Secured Party, or in such other manner
as Secured Party may direct.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT.
Debtor shall:
(a) keep its Inventory and Equipment at the places therefor specified
on Schedule III hereto or, upon 30 days' prior written notice to the Secured
Party, at such other places in jurisdictions as shall have been specified in
such notice. In connection therewith, Debtor shall take such action that the
Secured Party may reasonably request, in order to perfect and protect any
security interest granted hereby to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to such Inventory and
Equipment;
(b) keep correct and accurate records of its Inventory, itemizing and
describing in reasonable detail the type and quantity of such Inventory,
Debtor's cost therefor and (where applicable) the current price list for such
Inventory;
(c) if any Inventory at any given location is at any time in the
possession or control of any Person other than such Debtor and if the aggregate
book value of such Inventory at any time exceeds Two Hundred Fifty Thousand
Dollars ($250,000), use commercially reasonable efforts (without incurring any
out-of-pocket expense) to cause to be executed and delivered to the Secured
Party such consents, waivers, acknowledgements and other agreements, that may be
necessary, or that the Secured Party may reasonably request, in order to permit,
protect and perfect its security interest in and lien upon such Inventory or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to such Inventory, including without limitation,
consents, waivers, acknowledgements and other agreements from processors of such
Inventory, landlords of premises where such Inventory may be located or
warehousemen operating warehouses where such Inventory may be stored;
(d) upon the occurrence and during the continuance of an Event of
Default, if any Inventory at any given location is in possession or control of
any of any Person other than Debtor, if the aggregate book value of all such
Inventory exceeds Twenty Five Thousand Dollars ($25,000), instruct such Person
to hold all such Inventory for the account of the Secured Party and subject to
the instructions of the Secured Party; and
(e) cause the Equipment to be maintained and preserved in good repair,
working order and condition (ordinary wear and tear and obsolete equipment
excepted), in accordance with the applicable manufacturer's manual, if any, and
in accordance with Debtor's past practices, and shall forthwith, or in the case
of any loss or damage to any of the Equipment as quickly as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements, and
other improvements in
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connection therewith that are necessary or desirable to such end.
Debtor shall promptly furnish Secured Party a statement respecting any loss or
damage to any of the Equipment in excess of $500,000.
SECTION 8. FURTHER ASSURANCES.
(a) Debtor agrees that from time to time, at the expense of Debtor,
Debtor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary, or that the Secured Party
may reasonably request, in order to perfect and protect any security interest
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Debtor will: (i) at the request of the Secured
Party, upon the occurrence and during the continuance of an Event of Default,
mark conspicuously each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Secured Party, indicating that
such Collateral is subject to the security interest granted hereby; (ii) if any
Account in excess of Twenty Five Thousand Dollars ($25,000) owing from any
Person shall be evidenced by a promissory note or other instrument (excluding
checks) or chattel paper, upon the occurrence and during the continuance of an
Event of Default, deliver and pledge to the Secured Party hereunder such note or
instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Secured Party; (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Secured Party may reasonably request, in
order to perfect and preserve the security interests granted hereby, (iv) at any
reasonable time during business hours, upon demand and with reasonable prior
notice by the Secured Party, exhibit the Collateral, where located, to and allow
inspection of the Collateral by the Secured Party and (v) at the Secured Party's
request, appear in and defend any action or proceeding that may affect Debtor's
title to or Secured Party's security interest in the Collateral.
(b) Debtor authorizes the Secured Party to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral with or without the signature of such Debtor. A carbon,
photographic or other reproduction of this Agreement or a financing statement
signed by such Debtor shall be sufficient as a financing statement.
(c) Debtor will furnish to Secured Party such other information with
respect to the Collateral as the Secured Party may reasonably request.
SECTION 9. INSURANCE.
(a) Debtor shall, at its own expense, at all times maintain with
financially sound insurers, insurance against loss or damage of the kind and in
amounts customarily insured against by corporations of established reputation
engaged in the same or similar business and similarly situated, including,
without limitation, insurance with respect to its Inventory and Equipment and
business interruption insurance. Each policy shall (i) name Debtor and the
Secured Party as insured parties thereunder (without any representation or
warranty by or obligation upon the Secured Party) as their interests may appear,
(ii) contain an agreement by the insurer that any loss thereunder shall be
payable to the Secured Party notwithstanding any action, inaction or breach of
representation or warranty by Debtor, (iii) have attached thereto the Lender's
Loss Payable Endorsement or its equivalent reasonably acceptable to the Secured
Party, or a Loss Payable clause reasonably acceptable to the Secured Party, (iv)
provide that there shall be no recourse against the Secured Party for payment of
premiums or other amounts with respect thereto and (v) provide that at least 30
days' prior written notice of cancellation, material amendment, reduction in
scope or limits of coverage or of lapse shall be given to the Secured Party, by
the insurer. Debtor shall, if so requested by the Secured Party, deliver to the
Secured Party a certificate of such insurance and, as often as the Secured Party
may reasonably request, but not more often than once every six months, a report
of a reputable insurance broker with respect to such insurance.
(b) In case of any loss involving damage to such Inventory or
Equipment when subsection (c) of this Section 9 is not applicable, any proceeds
of insurance maintained by Debtor pursuant to this Section 9 shall, at the
option of the Debtor, (i) be paid to Debtor as reimbursement for the costs of
repairs or replacements to such Inventory or Equipment or (ii) paid to and
applied by Secured Party as specified in Section 15.
(c) Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Inventory or Equipment shall
be paid to and applied by Secured Party as specified in Section 15.
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(d) No approval by the Secured Party of any insurer shall be construed
to be a representation, certification or warranty of its solvency and no
approval by the Secured Party as to the amount, type and/or form of any
insurance shall be construed to be a representation, certification or warranty
of its sufficiency.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Debtor hereby
irrevocably appoints, effective upon and during the continuance of an Event of
Default, the Secured Party Debtor's attorney-in-fact, with full authority in the
place and stead of Debtor and in the name of Debtor, from time to time in the
Secured Party's discretion to take any action and to execute any instrument that
the Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by Debtor
or paid to Secured Party pursuant to Section 9 hereof,
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
(c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above,
(d) to file any claims or take any action or institute any proceedings
that the Secured Party may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Secured Party with
respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Secured Party in
its sole discretion, and such payments made by the Secured Party to become
Guaranteed Obligations of Debtor to the Secured Party, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts, assignments, verifications and
notices in connection with Accounts and other documents relating to the
Collateral, and
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Secured Party were the absolute owner thereof for all purposes,
and to do, at the Secured Party's option and Debtor's expense, at any time, or
from time to time, all acts and things that the Secured Party deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's security
interest therein, in order to effect the intent of this Agreement, all as fully
and effectively as such Debtor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If Debtor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by Debtor under Section 16
hereof.
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES.
(a) The powers conferred on the Secured Party hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Secured Party shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Secured Party shall be deemed to exercise
reasonable care in the custody and preservation of such Collateral if such
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property, it being understood that the Secured Party shall
have no responsibility or liability for the collection of any proceeds of any
Collateral or by reason of any invalidity, lack of value or uncollectibility of
any of the payments received by it from obligors or otherwise.
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(b) Secured Party shall not be liable to Debtor (i) for loss or damage
sustained by it, or (ii) for any loss, damage, depreciation or other diminution
in the value of any of the Collateral, that may occur as a result of, in
connection with or that is in any way related to (x) any exercise by the Secured
Party of any right or remedy under this Agreement or (y) any other act of or
failure to act by Secured Party, except to the extent that the same shall be the
result of acts or omissions on the part of the Secured Party constituting gross
negligence or willful misconduct. The right of the Secured Party to perform any
discretionary act enumerated in or contemplated by this Agreement shall not be
construed as a duty.
SECTION 13. EVENTS OF DEFAULT. The occurrence of any 'Event of Default'
under and as defined in the Loan Agreement shall be an 'Event of Default' under
this Agreement.
SECTION 14. REMEDIES. If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral, (a) all
the rights and remedies of a secured party under the Uniform Commercial Code,
(b) all of the rights and remedies provided for in this Agreement, the Loan
Agreement and any other Loan Documents and (c) such other rights and remedies as
may be provided by law or otherwise (such rights and remedies of the Secured
Party to be cumulative and non-exclusive). If any Event of Default shall have
occurred and be continuing, the Secured Party also may (i) require Debtor to,
and Debtor hereby agrees that it will at its expense and upon request of the
Secured Party forthwith, assemble all or part of the Collateral as directed by
the Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent the Secured
Party deems appropriate, (iv) take possession of Debtor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of Debtor's Equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (iii) and
collecting any Guaranteed Obligation and (v) without notice, except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at the Secured Party's office or elsewhere, for cash, on credit
or for future delivery, and at such price or prices and upon such other terms as
the Secured Party may deem commercially reasonable. Debtor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days' notice
to Debtor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any sale
of any of the Collateral, if permitted by law, the Secured Party may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
for and purchase the Collateral or any portion thereof for the account of the
Secured Party. The Secured Party shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each purchaser at any such sale
shall hold the property sold absolutely, free from any claim or right on the
part of Debtor. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all of the Guaranteed Obligations, Debtor
shall be liable for the deficiency and the fees of any attorneys employed by the
Secured Party to collect such deficiency.
SECTION 15. APPLICATION OF PROCEEDS. All proceeds received by the Secured
Party in respect of any sale of, collection from or other realization upon all
or any part of the Collateral in accordance with this Agreement shall be applied
first, to the payment of expenses incurred in connection with the Collateral,
including the reasonable fees and disbursements of its counsel, second, to
payment of such of the Guaranteed Obligations in such order as Secured Party may
elect, Debtor remaining liable for any deficiency, and third, after payment in
full of all Guaranteed Obligations, any excess shall, subject to any order of a
court of competent jurisdiction, be remitted to Debtor.
SECTION 16. INDEMNITY. Debtor agrees to indemnify the Secured Party from
and against any and all claims, losses and liabilities arising out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct.
SECTION 17. SECURITY INTEREST ABSOLUTE.
(a) All rights of the Secured Party and security interests hereunder, and
all obligations of Debtor hereunder, shall be absolute and unconditional,
irrespective of:
(i) any lack of validity or enforceability of any of the other
Loan Documents;
8
<PAGE>
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations or any other
amendment or waiver of or consent to any departure from any of the
terms of any of the Loan Documents;
(iii) any exchange or release of or non-perfection of any Lien in
any other collateral or any release or amendment or waiver of a
consent to any departure from any Guaranty; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Debtor or a third party
grantor of a security interest.
Without limiting the generality of the foregoing, Debtor hereby
consents to, and hereby agrees that the rights of the Secured Party and the
security interests granted hereunder, and the obligations of Debtor hereunder,
shall not be affected by, any and all releases of any Guaranty or any Collateral
from the liens and security interests created by any Security Documents, whether
for purposes of sales or other dispositions of assets pursuant to this Agreement
or any of the other Loan Documents or for some other purpose, except to the
extent expressly provided in such releases.
SECTION 18. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until termination of the Commitments under the Loan Agreement,
the cancellation or expiration of all outstanding Letter of Credit
Accommodations and the payment in full of the Guaranteed Obligations, (b) be
binding upon Debtor, its successors and assigns and (c) inure, together with the
rights and remedies of the Secured Party hereunder, to the benefit of the
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), and subject to the applicable provisions
of the Loan Agreement, Secured Party may assign or otherwise transfer the
Guaranteed Obligations to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon the cancellation or termination of the
Commitments, cancellation or expiration of all outstanding Letter of Credit
Accommodations and the payment in full of all Guaranteed Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Debtor. Upon any such termination, the Secured Party
will, at Debtor's expense, execute and deliver to such Debtor such documents as
Debtor shall reasonably request to evidence such termination.
SECTION 19. AMENDMENTS; ETC. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Debtor herefrom, shall in any event be
effective unless the same shall be in writing, agreed to by the Secured Party
and the Debtor, and then such Amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 20. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be made and delivered in
accordance with Section 10.3 of the Loan Agreement.
SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
SECTION 22. CONSENT TO JURISDICTION. Debtor hereby irrevocably submits
and consents to the non-exclusive jurisdiction of the State and Federal Courts
in the State of New York, in connection with any action or proceeding arising
out of or relating to this Agreement or any matter arising therefrom or relating
thereto.
SECTION 23. WAIVER OF JURY TRIAL. DEBTOR AND THE SECURED PARTY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT.
SECTION 24. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of the Agreement or be given any substantive effect.
9
<PAGE>
SECTION 25. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 26. 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 constitute one and the same Agreement.
IN WITNESS WHEREOF, Debtor and the Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy Myers
-----------------------------------
Roy Myers
Title: General Manager
-----------------------------------
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
-----------------------------------
C. Scott Herring
Title: Vice President
-----------------------------------
10
<PAGE>
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY, dated as of November 3, 1994 (the 'Subsidiaries
Guaranty'), made by each of the undersigned corporations (collectively, the
'Subsidiary Guarantors') in favor of SPRINGFIELD BANK FOR COOPERATIVES, a
corporation established under the laws of the United States of America and
continuing as a federally chartered instrumentality of the United States under
the Farm Credit Act of 1971, as amended (the 'Bank').
W I T N E S S E T H
WHEREAS, PF Acquisition Corp., a New York corporation ('PF Acquisition')
and Curtice-Burns Foods, Inc., a New York corporation ('CURTICE-BURNS'; together
with PF Acquisition, individually and collectively, jointly and severally, the
'Borrower') have entered into a Term Loan, Term Loan Facility and Seasonal Loan
Agreement, dated as the date hereof (as amended, supplemented or modified from
time to time, the 'Agreement');
WHEREAS, the Borrower has requested the Bank to extend credit and the Bank
has agreed to extend credit to the Borrower upon the terms and subject to the
conditions set forth in the Agreement;
WHEREAS, it is a condition precedent to the obligation of the Bank to
extend credit to the Borrower under the Agreement that the Subsidiary Guarantors
shall have executed and delivered this Subsidiaries Guaranty to the Bank;
WHEREAS, PF Acquisition is this day merging with and into Curtice-Burns;
WHEREAS, Curtice-Burns, as the survivor of the merger of PF Acquisition
into Curtice-Burns is the owner of all the issued and outstanding capital stock
of each of the Subsidiary Guarantors;
WHEREAS, Curtice-Burns, as the survivor of the merger of PF Acquisition
into Curtice-Burns, will be the wholly-owned subsidiary of Pro-Fac Cooperative,
Inc.; and
WHEREAS, each of the Subsidiary Guarantors has close business
connections with the Borrower pursuant to which such Subsidiary Guarantor
benefits from the financial accommodations made by the Bank to the Borrower;
NOW THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Agreement, the Subsidiary Guarantors hereby agree, jointly and
severally, individually and collectively, with the Bank as follows:
1. Terms Used Herein.
1.1 Terms used herein which are defined in the Agreement and are not
otherwise defined herein have the same meanings set forth in the Agreement.
2. Guaranty.
<PAGE>
As an inducement for and in consideration of the Bank extending financial
accommodations to the Borrower pursuant to the Agreement, each of the Subsidiary
Guarantors, jointly and severally, individually and collectively, absolutely,
irrevocably and unconditionally:
(a) guarantees and agrees to be liable for full and indefeasible payment
and performance when due of any and all obligations, liabilities and
indebtedness of the Borrower to the Bank of every kind and description now
existing and hereafter arising under the Agreement or any of the other Loan
Documents, however, evidenced, whether direct or indirect, absolute or
contingent, joint or several, secured or unsecured, due or not due, primary or
secondary, liquidated or unliquidated, whether arising before, during or after
the initial or any renewal term of the Agreement, or after the commencement of
any case with respect to the Borrower under the Bankruptcy Code or any similar
statute, including, without limitation, all principal, interest, fees,
commissions and expenses payable to the Bank, including, but not limited to,
reasonable attorneys' fees and disbursements, chargeable to the Borrower and due
from the Borrower under the Agreement or any of the other Loan Documents; and
(b) agrees to pay to the Bank on demand the amount of all expenses
(including, without limitation, reasonable attorneys' fees) incurred by the Bank
in collecting or attempting to collect any of the Borrower's obligations to the
Bank, whether from the Borrower, any Subsidiary Guarantor or any other Obligor,
or by realizing upon Collateral (all of the foregoing described in clauses (a)
and (b) being collectively referred to herein as the 'Guaranteed Obligations').
3. Waiver of Notice, Renewals, Extensions, Modifications, etc.
Notice of acceptance of this Subsidiaries Guaranty, the making of loans and
extensions of credit to the Borrower and presentment, demand, protest, notice of
protest, notice of nonpayment and all other notices to which the Borrower or the
Subsidiary Guarantors are entitled are hereby waived, except for notice
specifically provided for in this Guaranty or any other Loan Document. The
Subsidiary Guarantors also waive notice of changes in terms or extensions of
time of payment, the taking and releasing of Collateral or guaranties, and the
settlement, compromise or release of any Guaranteed Obligations, and agree that,
as to the Subsidiary Guarantors, the amount of the Guaranteed Obligations shall
not be diminished by any of the foregoing.
4. Subsidiaries Guaranty Absolute and Unconditional.
This Subsidiaries Guaranty is absolute, unconditional and continuing.
Payment by the Subsidiary Guarantors shall be made to the Bank at its offices
from time to time on demand as the Subsidiary Guarantors' liability for the
Guaranteed Obligations becomes due hereunder. One or more successive or
concurrent actions may be brought hereon against the Subsidiary Guarantors, or
any of them, either in the same action in which the Borrower is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Subsidiaries Guaranty is brought against the Subsidiary
Guarantors, or any of them, the Subsidiary Guarantors agree not to deduct,
set-off, or seek to counterclaim for or recoup any amounts which are or may be
owed by the Bank or the Borrower to any Subsidiary Guarantor.
5. Nonimpairment of Subsidiaries Guaranty.
2
<PAGE>
No invalidity, irregularity or unenforceability of all or any part of the
Guaranteed Obligations shall affect, impair or be a defense to this Subsidiaries
Guaranty, nor shall any other circumstance which might otherwise constitute a
defense available to, or legal or equitable discharge of, the Borrower in
respect of any of the Guaranteed Obligations or the Subsidiary Guarantors in
respect of this Subsidiaries Guaranty, affect, impair or be a defense to this
Subsidiaries Guaranty. Without limitation of the foregoing, the liability of the
Subsidiary Guarantors hereunder shall not be discharged or impaired in any
respect by reason of any failure by the Bank to perfect or continue perfection
of any lien or security interest in any security for the Guaranteed Obligations
or any delay by the Bank in perfecting any such lien or security interest.
6. Guarantor's Subordination.
Subject to Paragraph 8 hereof, payment of all amounts now or hereafter owed
to any Subsidiary Guarantor by the Borrower or any other Obligor of Guaranteed
Obligations (whether by right of contribution or otherwise) is hereby
subordinated to full and indefeasible payment to the Bank of the Guaranteed
Obligations and is hereby assigned to the Bank as security therefor.
7. No Enforcement Waiting Period.
Each Subsidiary Guarantor agrees that its liability hereunder may be
enforced when Guaranteed Obligations are due or at any time thereafter and that
the Bank shall not be required to attempt to first collect any Guaranteed
Obligations from the Borrower or other Obligor or to realize upon any
Collateral.
8. No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Subsidiaries Guaranty,
each Subsidiary Guarantor hereby irrevocably waives, for so long any Obligation
is due the Bank or the Bank has any Commitment, all rights which may have arisen
in connection with this Subsidiaries Guaranty to be subrogated to any of the
rights (whether contractual, under the Bankruptcy Code, under common law or
otherwise) of the Bank against the Borrower for the payment of the Guaranteed
Obligations. Each Subsidiary Guarantor hereby further irrevocably waives, for so
long any Obligation is due the Bank or the Bank has any Commitment, all
contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Borrower or any other Guarantor which may have arisen in connection with
this Subsidiaries Guaranty. Until the Guaranteed Obligations have been paid in
full and the Bank shall have no Commitment under the Agreement, if any amount
shall be paid by or on behalf of the Borrower to a Subsidiary Guarantor on
account of any of the rights waived in this paragraph, such amount shall be held
by such Subsidiary Guarantor in trust, segregated from other funds of such
Subsidiary Guarantor, and shall forthwith upon receipt by such Subsidiary
Guarantor, be turned over to the Bank in the exact form received by such
Subsidiary Guarantor (duly endorsed by such Subsidiary Guarantor to the Bank, if
required), to be applied against the Guaranteed Obligations, whether matured or
unmatured, in such order as the Bank may determine. The provisions of this
paragraph shall survive for a period of one (1) year after the termination of
this Subsidiaries Guaranty and the payment in full of the Guaranteed Obligations
and the termination of the Commitment.
9. Reinstatement of Subsidiaries Guaranty.
3
<PAGE>
Each Subsidiary Guarantor agrees that this Subsidiaries Guaranty shall
remain in full force and effect or be reinstated, as the case may be, if at any
time payment of any of the Guaranteed Obligations is rescinded or otherwise
restored by the Bank to the Borrower, a Subsidiary Guarantor or to any other
party who made such payment, or to the creditors of the Borrower or a Subsidiary
Guarantor or a representative of any such creditors.
10. No Waiver; Cumulative Rights.
No delay on the Bank's part in exercising any rights hereunder or failure
to exercise the same shall constitute a waiver of such rights. No notice or
demand on any Subsidiary Guarantors shall be deemed to be a waiver of the
obligation of the Subsidiary Guarantors to take further action without notice or
demand as provided herein. No waiver of any of the Bank's rights hereunder and
no modification or amendment of this Subsidiaries Guaranty shall be deemed to be
made by the Bank unless the same shall be in writing, duly signed on the Bank's
behalf, and each such waiver, if any, shall apply only with respect to the
specific instance involved and shall in no way impair the Bank's rights or the
obligations of the Subsidiary Guarantors to the Bank in any other respect at any
other time.
11. Account Stated.
The Bank's books and records showing the accounts between the Bank and the
Borrower shall be admissible in evidence in any action or proceeding as prima
facie proof of the items therein set forth, and the Bank's statements delivered
to the Borrower, to the extent to which no written objection is made within
thirty (30) days after the date of receipt thereof, shall constitute an account
stated between the Bank and the Borrower and be binding on the Subsidiary
Guarantors. The Bank may apply all payments, proceeds of Collateral and all
other amounts received from or for the account of the Borrower or any Subsidiary
Guarantor to the Guaranteed Obligations in such order and manner as the Bank
shall in its sole discretion determine, except as may be otherwise provided in
the Agreement of any other Loan Document.
12. Termination.
Each Subsidiary Guarantor shall continue liable hereunder until one of the
Bank's officers actually receives written termination notice by certified mail,
return receipt requested from such Subsidiary Guarantor; but the giving of such
notice shall not relieve such Subsidiary Guarantor from liability in respect of
any Guaranteed Obligations incurred and Loans and Letter of Credit
Accommodations, if any, which the Bank has committed before such written notice
is received to advance to or for the account of the Borrower, or for
post-termination collection expenses and interest pertaining to any Guaranteed
Obligations arising before termination.
13. Severability.
Each Subsidiary Guarantor agrees that (a) in the event any provision hereof
shall be deemed to be invalid by any court or statute, such invalidity shall not
affect the remainder of the Subsidiaries Guaranty, and (b) in the event this
Subsidiaries Guaranty shall be deemed to be invalid as to one or more Subsidiary
Guarantors by any court or statute, such invalidity shall not affect this
Subsidiaries Guaranty as to the remainder of the Subsidiary Guarantors.
4
<PAGE>
14. Governing Law.
This Subsidiaries Guaranty shall be governed by and interpreted and
construed in accordance with the laws of the State of New York, without
reference to the conflict of laws principles of said State.
15. Submission to Jurisdiction; Service of Process.
Each Subsidiary Guarantor hereby irrevocably submits and consents to the
non-exclusive jurisdiction of State and Federal Courts in the State of New York
in connection with any action or proceeding arising out of or relating to this
Subsidiaries Guaranty, or any motion arising therefrom or relating thereto.
16. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR IN ANY WAY
RELATED TO THIS SUBSIDIARIES GUARANTY.
17. Successors and Assigns.
This Subsidiaries Guaranty shall be binding upon the Subsidiary Guarantors
and their respective successors and assigns and shall benefit the Bank and its
successors, endorsees, transferees and assigns.
18. Paragraph Headings.
Paragraph headings are for convenience of reference only and shall not be
deemed a part of this Subsidiaries Guaranty.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE>
IN WITNESS WHEREOF, Subsidiary Guarantors have executed and delivered this
Subsidiaries Guaranty as of this 3rd day of November, 1994.
CURTICE-BURNS EXPRESS, INC.
By: /s/ William Rice
.......................................
William Rice
Title: Vice President
.......................................
CURTICE-BURNS MEAT SNACKS, INC.
By: /s/ William Rice
......................................
William Rice
Title: Vice President
.....................................
FINGER LAKES PACKAGING COMPANY, INC.
By: /s/ William Rice
....................................
William Rice
Title: Vice President
....................................
HUSMAN SNACK FOODS COMPANY, INC.
By: /s/ William Rice
....................................
William Rice
Title: Vice President
....................................
[SIGNATURES CONTINUED ON NEXT PAGE]
6
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
KENNEDY ENDEAVORS, INCORPORATED
By: /s/ William Rice
.......................................
William Rice
Title: Vice President
......................................
NALLEY'S CANADA LIMITED
By: /s/ William Rice
......................................
William Rice
Title: Vice President
......................................
QUALITY SNAX OF MARYLAND, INC.
By: /s/ William Rice
.....................................
William Rice
Title: Vice President
....................................
SEASONAL EMPLOYERS, INC.
By: /s/ William Rice
....................................
William Rice
Title: Vice President
....................................
PRO-FAC HOLDING COMPANY OF IOWA, INC.
By: /s/ William Rice
....................................
William Rice
Title: Vice President
....................................
7
<PAGE>
SUBSIDIARIES SECURITY AGREEMENT
BY AND AMONG
CURTICE-BURNS EXPRESS, INC.,
CURTICE-BURNS MEAT SNACKS, INC.,
FINGER LAKES PACKAGING COMPANY, INC.,
HUSMAN SNACK FOODS COMPANY, INC.,
KENNEDY ENDEAVORS, INCORPORATED,
NALLEY'S CANADA LIMITED,
QUALITY SNAX OF MARYLAND, INC.,
SEASONAL EMPLOYERS, INC.,
PRO-FAC HOLDING COMPANY OF IOWA, INC.
and
SPRINGFIELD BANK FOR COOPERATIVES
Dated as of November 3, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. DEFINITIONS............................................................................... 7
SECTION 1.1 OTHER DEFINITIONAL PROVISIONS............................................................. 3
SECTION 2. GRANT OF SECURITY INTEREST................................................................ 3
SECTION 3. DEBTOR REMAINS LIABLE..................................................................... 3
SECTION 4. REPRESENTATIONS AND WARRANTIES............................................................ 3
SECTION 5. COVENANTS................................................................................. 5
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS................................................ 7
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT................................. 8
SECTION 8. FURTHER ASSURANCES........................................................................ 9
SECTION 9. INSURANCE................................................................................. 9
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.................................................. 10
SECTION 11. SECURED PARTY MAY PERFORM................................................................. 11
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES.................................................... 11
SECTION 13. EVENTS OF DEFAULT......................................................................... 11
SECTION 14. REMEDIES.................................................................................. 12
SECTION 15. APPLICATION OF PROCEEDS................................................................... 12
SECTION 16. INDEMNITY................................................................................. 13
SECTION 17. SECURITY INTEREST ABSOLUTE................................................................ 13
SECTION 18. CONTINUING SECURITY INTEREST.............................................................. 14
SECTION 19. AMENDMENTS; ETC........................................................................... 14
SECTION 20. NOTICES................................................................................... 14
SECTION 21. GOVERNING LAW............................................................................. 15
SECTION 22. CONSENT TO JURISDICTION................................................................... 15
SECTION 23. WAIVER OF JURY TRIAL...................................................................... 15
SECTION 24. HEADINGS.................................................................................. 15
SECTION 25. SEVERABILITY.............................................................................. 15
SECTION 26. COUNTERPARTS.............................................................................. 15
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<S> <C> <C>
Schedule I- Chief Executive Office and Location of Records
Schedule II- Trade-Names and Fictitious Business
Schedule VII- Locations of Inventory and Equipment
Schedule IV- Existing Liens
</TABLE>
<PAGE>
SUBSIDIARIES SECURITY AGREEMENT
SUBSIDIARIES SECURITY AGREEMENT, dated as of November 3, 1994 (this
'Agreement'), between the undersigned corporations, (individually, 'Debtor' and
collectively, 'Debtors') and SPRINGFIELD BANK FOR COOPERATIVES, a corporation
established under the laws of the United States of America and continuing as a
federally-chartered instrumentality of the United States under the Farm Credit
Act of 1971, as amended (the 'Secured Party').
WITNESSETH:
WHEREAS, PF Acquisition Corp., a New York corporation ('PF Acquisition')
and Curtice-Burns Foods, Inc., a New York Corporation ('Curtice-Burns');
together with PF Acquisition, individually and collectively, jointly and
severally, the 'Borrower') have entered into a Term Loan, Term Loan Facility and
Seasonal Loan Agreement with the Secured Party, dated as of the date hereof (as
amended, supplemented or modified from time to time, the 'Loan Agreement');
WHEREAS, the Borrower has requested the Secured Party to extend credit to
the Debtor and the Secured Party has agreed to extend credit to the Borrower
upon the terms and subject to the conditions set forth in the Loan Agreement;
WHEREAS, it is a condition pursuant to the obligations of the Secured Party
to now or hereafter extend credit to the Borrower under the Loan Agreement that
Debtors shall have executed and delivered the Subsidiaries Guaranty to the Bank
dated the date hereof pursuant to which Debtors have guaranteed payment and
performance to the Bank of all Obligations of Borrower under the Loan Agreement.
WHEREAS, it is a condition precedent to the obligation of the Secured Party
to now or hereafter extend credit to the Borrower under the Loan Agreement that
the Debtors shall have executed and delivered this Subsidiaries Security
Agreement to the Secured Party;
WHEREAS, PF Acquisition is this day merging with and into Curtice-Burns;
and
WHEREAS, Curtice-Burns, as the survivor of the merger of PF Acquisition
into Curtice-Burns, will be the owner of all the issued and outstanding capital
stock of each of the Debtors;
WHEREAS, each of the Debtors has close business connections with the
Borrower pursuant to which each such Debtor benefits from the financial
accommodations made by the Secured Party to the Borrower;
NOW THEREFORE, in consideration of the foregoing premises and to induce the
Secured Party to enter into the Loan Agreement and extend credit to the Borrower
thereunder, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtors, jointly and severally,
individually and collectively, hereby agree with the Secured Party as follows:
SECTION 1. DEFINITIONS. Terms used herein which are defined in the
Subsidiaries Guaranty and not otherwise defined herein have the same meanings
set forth in the Subsidiaries Guaranty. Terms not specifically defined herein
which are defined in the Uniform Commercial Code have the meanings as defined in
the Uniform Commercial Code. The following terms as used in this Agreement have
the following meaning:
'Accounts' means all of a Debtor's present and future accounts, including,
without limitation, all of such Debtor's rights to payment for goods sold or
leased or for services rendered, whether or not yet earned by performance.
'Account Debtor' means the Person who is obligated on or under any Account.
'Collateral' means all property or rights in which a Lien and security
interest is granted hereunder.
<PAGE>
'Contractual Obligations' means, as to any Person, any provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
'Equipment' means all of a Debtor's now owned and hereafter acquired
machinery, equipment, furnishings, fixtures, vehicles and computers and other
electronic data-processing and office equipment and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
whether now or hereafter installed thereon or affixed thereto.
'General Intangibles' means all of a Debtor's now owned and hereafter
acquired general intangibles, including, without limitation, (i) all patents and
copyrights, (ii) all owned or licensed trademarks and trademark registrations,
trade names and trade name registrations and service marks and service mark
registrations, and all of the goodwill of the business connected with the use
of, and symbolized by, each owned or licensed trademark and trademark
registration, trade name and trade name registration and service mark and
service mark registration, and all continuations and extensions thereof, the
right to sue for infringements or dilutions thereof or for injury to the
goodwill associated therewith, and (iii) all rights to payment in respect of
loans or advances, management fees, tax sharing or allocation fees, royalties,
licensing arrangements and pension or tax refunds.
'Inventory' means all of a Debtor's inventory, of every kind and
description, now owned and hereafter acquired, wherever located, including,
without limitation, all raw materials, work in process and finished goods, and
materials used or consumed or to be used or consumed in such Debtor's business,
or the processing, packaging, delivery or shipping of any of the foregoing, and
all goods which are returned to or repossessed by such Debtor whether or not in
transit, and all accessions and additions thereto and all documents of title
covering any of the foregoing.
'Requirement of Law' means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of any
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
'Uniform Commercial Code' means, as applicable, the Uniform Commercial Code
as the same may from time to time be in effect in the State of New York or any
other applicable jurisdiction and the Personal Property Security Act, as the
same may from time to time be in effect in the Province of British Columbia,
Canada or any other applicable jurisdiction.
SECTION 1.1 Other Definitional Provisions; Interpretation. References to
'Sections,' 'Subsections,' and 'Schedules' shall be to Sections, Subsection, and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, 'hereof', 'herein,' 'hereto,' 'hereunder' and the
like mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears; words
importing any gender include the other gender; references to 'writing' include
printing, typing and other means of reproducing words in a tangible visible
form; the words 'including,' 'includes' and 'include' shall be deemed to be
followed by the words 'without limitation'; references to Persons include their
respective permitted successors and assigns or, in the case of Governmental
Authorities, Persons succeeding to the relevant functions of such Governmental
Authorities; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
SECTION 2. GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Guaranteed Obligations, each Debtor hereby assigns to the
Secured Party and grants to the Secured Party a continuing security interest in
and lien upon all of such Debtor's personal property, whether now or hereafter
existing, owned or acquired including but not limited to: (a) all Accounts
(whether invoiced under the name of such Debtor or any tradename or division of
such Debtor) and all guarantees and other property securing the payment of or
performance under any of the Accounts, (b) all General Intangibles, (c) all
Chattel Paper, (d) all Documents, (e) all Instruments (other than shares of
capital stock), (f) all Inventory, (g) all Equipment; (h) all books and records
relating to any of the foregoing; and (i) all products and proceeds (including,
without limitation, all insurance proceeds) of any of the foregoing, provided,
however, that no patent or trademark or any interest therein now or hereafter
included in the Collateral owned by Nalley's Canada Limited and governed by
federal Canadian legislation is assigned hereby to the Secured Party.
SECTION 3. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) each Debtor shall remain liable under any contracts and
agreements included in its Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the
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exercise by the Secured Party of any of its rights hereunder shall not release
any Debtor from any of its duties or obligations under any contracts and
agreements included in its Collateral, to the extent set forth therein, and (c)
the Secured Party shall have no obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Secured Party be obligated to perform any of the obligations or duties of any
Debtor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Debtor represents and
warrants as follows:
(a) Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority or regulatory
body is required either (i) for the grant by such Debtor of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by such Debtor or (ii) for the perfection of or the exercise by the
Secured Party of its rights and remedies hereunder, except for the filing of
appropriate financing statements as contemplated in subsection (d) of this
Section and the filing of appropriate documents with the United States Patent
and Trademark Office with respect to certain General Intangibles.
(b) Ownership of Collateral. Except for the security interests disclosed in
Schedule IV hereto, other Permitted Liens and the security interests created by
this Agreement, such Debtor owns its Collateral free and clear of any Lien.
Except with respect to (i) financing statements filed by The Chase Manhattan
Bank, as Agent, with respect to which the Secured Party has obtained but not yet
filed termination statements, (ii) Permitted Liens and (iii) such as may have
been filed in favor of the Secured Party relating to this Agreement, no
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording office.
(c) Accounts Valid. To the best of the knowledge of such Debtor, at the
time of the creation thereof, and at all times thereafter, each Account of such
Debtor constitutes the legal, valid and binding obligation of the party
obligated to pay the same and complies in all material respects with the
provisions of all material applicable laws and regulations, whether federal,
state or local, applicable thereto.
(d) Perfection. Upon proper filing of financing statements, this Agreement
creates a valid perfected security interest in its Collateral in which a
security interest may be perfected by filing financing statements in favor of
the Secured Party under the Uniform Commercial Code.
(e) Office Locations; Fictitious Names. The chief place of business and the
chief executive office of such Debtor and the offices where such Debtor keeps
its records regarding the Accounts, are set forth on Schedule I hereto. Such
Debtor does not sell Inventory under any trade-name or fictitious business name
except as set forth on Schedule II hereto;
(f) Locations of Inventory and Equipment. The Inventory and Equipment of
such Debtor is located at the places set forth in Schedule III hereto provided
that Schedule III does not include locations where the fair market of the
Inventory or the book value of the Equipment does not, or is not expected, from
time to time, to exceed Twenty Five Thousand Dollars ($25,000) individually or
in the aggregate.
(g) Compliance with The Food Security Act. Except for FSA Notices (as
defined below) regarding Liens not exceeding $160,000 in the aggregate, other
than Nalley's Canada Limited, such Debtor has not, within the one year period
ended September 24, 1994, received written notice, pursuant to the applicable
provisions of The Food Security Act of 1985, 7 U.S.C. SS 1631 and rules,
regulations and orders thereunder (the 'FSA') or pursuant to the Uniform
Commercial Code or any other applicable local laws from (i) any of its suppliers
or sellers (collectively, 'Sellers') of farm products, or (ii) any secured party
of any such Sellers of farm products, or (iii) the Secretary of State (or
equivalent official) of any State in which farm products purchased by Debtor are
produced, advising or notifying such Debtor of a Lien in favor of such secured
party upon farm products which may be purchased by such Debtor (all of the
foregoing, collectively, the 'FSA Notices'). Such Debtor has properly registered
with the Secretary of State of any State in which farm products purchased by
such Debtor are produced which employs a 'central filing system', as defined in
The FSA.
(h) Compliance with the Perishable Agricultural Commodities Act. Other than
Nalley's Canada Limited, within the one year period ended on September 24, 1994,
such Debtor has not received written notice, pursuant to the applicable
provisions of the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. SS
499e(c)(2) and rules, regulations and orders thereunder ('PACA'), from any of
its Sellers of food or other products derived from perishable agricultural
commodities, advising or
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notifying Debtor of its intent to be the beneficiary of a trust imposed with
respect to those perishable agricultural commodities or the proceeds thereof
('PACA Notices').
SECTION 5. COVENANTS. Each Debtor shall:
(a) not use or permit any of its Collateral to be used in any respect
unlawfully or in violation of any provision of this Agreement, or any applicable
statute, regulation or ordinance or any policy of insurance covering its
Collateral if the consequence of such violation would be a material fine or if
such violation would have a material adverse effect on the business, operations,
properties, assets, or financial condition of such Debtor;
(b) give the Secured Party thirty (30) days' prior written notice of any
change in such Debtor's name, identity or corporate structure;
(c) give the Secured Party thirty (30) days' prior written notice of any
change in such Debtor's chief executive office;
(d) pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, its Collateral, except to the extent
the validity or amount thereof is being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of such Debtor; provided that such Debtor shall in any
event pay such taxes, assessments, governmental charges or levies not later than
5 days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment entered or filed against such Debtor as a result of the
failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of its Collateral, except as permitted by the Loan Agreement or
in accordance with the written consent of Secured Party;
(f) except for the Liens set forth on Schedule IV, Permitted Liens and the
security interest created by this Agreement, not create or suffer to exist any
Lien upon or with respect to any of its Collateral;
(g) other than Nalley's Canada Limited, comply, in all material respects,
with all existing and future FSA Notices during their periods of effectiveness
under the FSA including, without limitation, directions to make payments to the
Sellers by issuing payment instruments directly to the secured party or jointly
payable to the Seller and the secured party, as specified in the FSA Notice.
Within thirty (30) days after the end of each fiscal quarter, such Debtor shall
notify the Secured Party in writing of the aggregate amount of Liens contained
in FSA Notices received by such Debtor during such fiscal quarter. If, at any
time, any State in which farm products purchased by Debtor are produced has
implemented or implements the provisions of the FSA with respect to the creation
of a 'central filing system' (as defined in Section (c)(2) of the FSA, 7 U.S.A.
SS 1631(c)(2)), promptly register with the Secretary of State (or equivalent
official of each such State) prior to any further material purchases of farm
products produced in that State, pursuant to the registration requirements of
the FSA, and promptly notify Secured Party in writing of such registration with
the central filing system; and
(h) other than Nalley's Canada Limited, comply, in all material respects,
with all PACA Notices. In addition, such Debtor shall take all other steps as
may be reasonably required, if any, to comply with PACA. Within thirty (30) days
of the end of each fiscal quarter, such Debtor shall notify the Secured Party in
writing of the aggregate amount of perishable agricultural products subject to
statutory trusts as reflected in the PACA Notices received by such Debtor during
such fiscal quarter.
SECTION 6. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS.
(a) Each Debtor shall keep its chief place of business, chief executive
office and the office where it keeps its records concerning its Accounts at the
location(s) therefor specified in Schedule I hereof or, upon thirty (30) days'
prior written notice to the Secured Party, at such other locations as shall have
been specified in such notice. In connection therewith, each Debtor shall take
such action that the Secured Party may reasonably request, in order to perfect
and protect any security interest granted hereby or to enable the Secured Party
to exercise and enforce its rights and remedies hereunder with respect to the
Accounts. Each Debtor will hold and preserve such records and will permit
representatives of the Secured Party at any time during normal business hours
and with reasonable prior notice to inspect and make abstracts from such records
and such Debtor
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agrees to render to the Secured Party, at Debtor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto.
(b) Each Debtor shall duly fulfill all material obligations on its part to
be fulfilled under or in connection with its Accounts if and so long as the
Account Debtor with respect to such Account shall not be in default thereunder.
(c) Except as otherwise provided in this subsection (c) of this Section,
each Debtor shall continue to collect, at its own expense, all amounts due or to
become due such Debtor in respect of its Accounts in the ordinary course of
business, consistent with past practices. In connection with such collections,
each Debtor may take such action as such Debtor may deem necessary or advisable
to enforce collection of its Accounts consistent with past practices; provided,
however, that upon the occurrence and during the continuance of an Event of
Default, (i) the Secured Party shall have the right at any time, upon written
notice to such Debtor, to require that all amounts and proceeds (including
checks and other instruments) received by such Debtor in respect of the Accounts
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of such Debtor and shall be forthwith paid over or
delivered to the Secured Party in the same form as so received (with any
necessary endorsement) to be applied as provided by Section 15 hereof, (ii) such
Debtor shall not adjust, settle or compromise the amount or payment of any
Accounts, or release wholly or partly any Account Debtor or obligor thereof, or
allow any credit or discount thereon except in the ordinary course of business,
consistent with past practices, without the prior written consent of the Secured
Party, (iii) the Secured Party shall have the right at any time upon written
notice to such Debtor of its intention to do so, to notify the Account Debtors
or obligors in respect of Accounts of the assignment of any Accounts to the
Secured Party and to direct such Account Debtors or obligors to make payment of
all amounts due or to become due to such Debtor thereunder directly to the
Secured Party, to notify each Person maintaining a lockbox or similar
arrangement to which Account Debtors or obligors in respect of any Accounts have
been directed to make payment to remit all amounts representing collections on
checks or other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to the Secured Party to be applied as
provided by Section 15 hereof and, upon such notification and at the expense of
such Debtor, to enforce collection of the Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Debtor might have done, and (iv) upon written request by Secured
Party, each Debtor shall arrange for payment by Account Debtors to be made
directly to lock boxes and/or blocked accounts owned or controlled by Secured
Party, or in such other manner as Secured Party may direct.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND EQUIPMENT. Each
Debtor shall:
(a) keep its Inventory and Equipment at the places therefor specified on
Schedule III hereto or, upon thirty (30) days' prior written notice to the
Secured Party, at such other places in jurisdictions as shall have been
specified in such notice. In connection therewith, each Debtor shall take such
action that the Secured Party may reasonably request, in order to perfect and
protect any security interest granted hereby to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to such
Inventory and Equipment;
(b) keep correct and accurate records of its Inventory, itemizing and
describing in reasonable detail the type and quantity of such Inventory, such
Debtor's cost therefor and (where applicable) the current price list for such
Inventory;
(c) if any Inventory at any given location is at any time in the possession
or control of any Person other than such Debtor and if the aggregate book value
of such Inventory at any time exceeds Two Hundred Fifty Thousand Dollars
($250,000), use commercially reasonable efforts (without incurring any
out-of-pocket expense) to cause to be executed and delivered to the Secured
Party such consents, waivers, acknowledgements and other agreements, that may be
necessary, or that the Secured Party may reasonably request, in order to permit,
protect and perfect its security interest in and lien upon such Inventory or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to such Inventory, including without limitation,
consents, waivers, acknowledgements and other agreements from processors of such
Inventory, landlords of premises where such Inventory may be located or
warehousemen operating warehouses where such Inventory may be stored;
(d) upon the occurrence and during the continuance of an Event of Default,
if any Inventory at any given location is in possession or control of any of any
Person other than such Debtor, if the aggregate book value of all such Inventory
exceeds Twenty Five Thousand Dollars ($25,000) instruct such Person to hold all
such Inventory for the account of the Secured Party and subject to the
instructions of the Secured Party; and
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(e) cause the Equipment to be maintained and preserved in good repair,
working order and condition (ordinary wear and tear and obsolete equipment
excepted), in accordance with the applicable manufacturer's manual, if any, and
in accordance with such Debtor's past practices, and shall forthwith, or in the
case of any loss or damage to any of the Equipment as quickly as practicable
after the occurrence thereof, make or cause to be made all repairs,
replacements, and other improvements in connection therewith that are necessary
or desirable to such end. Each Debtor shall promptly furnish Secured Party a
statement respecting any loss or damage to any of its Equipment in excess of
Five Hundred Thousand Dollars ($500,000).
SECTION 8. FURTHER ASSURANCES.
(a) Each Debtor agrees that from time to time, at the expense of such
Debtor, such Debtor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary, or that the
Secured Party may reasonably request, in order to perfect and protect any
security interest granted hereby or to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to Collateral. Without
limiting the generality of the foregoing, each Debtor will: (i) at the request
of the Secured Party, upon the occurrence and during the continuance of an Event
of Default, mark conspicuously each of its records pertaining to its Collateral
with a legend, in form and substance satisfactory to the Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby; (ii) if any Account in excess of Twenty Five Thousand Dollars ($25,000)
owing from any Person shall be evidenced by a promissory note or other
instrument (excluding checks) or chattel paper, upon the occurrence and during
the continuance of an Event of Default, deliver and pledge to the Secured Party
hereunder such note or instrument or chattel paper duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Secured Party; (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Secured
Party may reasonably request, in order to perfect and preserve the security
interests granted hereby, (iv) at any reasonable time during business hours,
upon demand and with reasonable prior notice by the Secured Party, exhibit its
Collateral, where located, to and allow inspection of such Collateral by the
Secured Party and (v) at the Secured Party's request, appear in and defend any
action or proceeding that may affect such Debtor's title to or Secured Party's
security interest in such Collateral.
(b) Each Debtor authorizes the Secured Party to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of its Collateral with or without the signature of such Debtor. A carbon,
photographic or other reproduction of this Agreement or a financing statement
signed by such Debtor, or solely in the case of Nalley's Canada Limited by the
Secured Party or its agent pursuant to applicable law, shall be sufficient as a
financing statement. Nalley's Canada Limited waives the right to receive a copy
of any financing statement, financing change statement or verification statement
that may be filed or issued from time to time in connection with the security
interests granted by Nalley's Canada Limited to the Secured Party pursuant to
this Agreement.
(c) Each Debtor will furnish to Secured Party such other information with
respect to its Collateral as the Secured Party may reasonably request.
SECTION 9. INSURANCE.
(a) Each Debtor shall, at its own expense, at all times maintain with
financially sound insurers, insurance against loss or damage of the kind and in
amounts customarily insured against by corporations of established reputation
engaged in the same or similar business and similarly situated, including,
without limitation, insurance with respect to its Inventory and Equipment and
business interruption insurance. Each policy shall (i) name such Debtor and the
Secured Party as insured parties thereunder (without any representation or
warranty by or obligation upon the Secured Party) as their interests may appear,
(ii) contain an agreement by the insurer that any loss thereunder shall be
payable to the Secured Party notwithstanding any action, inaction or breach of
representation or warranty by such Debtor, (iii) have attached thereto the
Lender's Loss Payable Endorsement or its equivalent reasonably acceptable to the
Secured Party, or a Loss Payable clause reasonably acceptable to the Secured
Party, (iv) provide that there shall be no recourse against the Secured Party
for payment of premiums or other amounts with respect thereto and (v) provide
that at least 30 days' prior written notice of cancellation, material amendment,
reduction in scope or limits of coverage or of lapse shall be given to the
Secured Party, by the insurer. Each Debtor shall, if so requested by the Secured
Party, deliver to the Secured Party a certificate of such insurance and, as
often as the Secured Party may reasonably request, but not more often than once
every six months, a report of a reputable insurance broker with respect to such
insurance.
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(b) In case of any loss involving damage to such Inventory or Equipment
when subsection (c) of this Section 9 is not applicable, any proceeds of
insurance maintained by a Debtor pursuant to this Section 9 shall, at the option
of such Debtor, (i) be paid to such Debtor as reimbursement for the costs of
repairs or replacements to such Inventory or Equipment or (ii) paid to and
applied by Secured Party as specified in Section 15.
(c) Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Inventory or Equipment shall be paid
to and applied by Secured Party as specified in Section 15. Nalley's Canada
Limited waives any statutory right to request or require that any insurance
payments in respect of such Inventory and Equipment be applied in any particular
manner.
(d) No approval by the Secured Party of any insurer shall be construed to
be a representation, certification or warranty of its solvency and no approval
by the Secured Party as to the amount, type and/or form of any insurance shall
be construed to be a representation, certification or warranty of its
sufficiency.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Each Debtor hereby
irrevocably appoints, effective upon and during the continuance of an Event of
Default, the Secured Party as such Debtor's attorney-in-fact, with full
authority in the place and stead of such Debtor and in the name of such Debtor,
from time to time in the Secured Party's discretion to take any action and to
execute any instrument that the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by such Debtor
or paid to Secured Party pursuant to Section 9 hereof,
(b) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of such Debtor's Collateral,
(c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above,
(d) to file any claims or take any action or institute any proceedings that
the Secured Party may deem necessary or desirable for the collection of any of
such Debtor's Collateral or otherwise to enforce the rights of the Secured Party
with respect to any of such Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or threatened
against such Debtor's Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Secured Party in
its sole discretion, and such payments made by the Secured Party to become
Guaranteed Obligations of such Debtor to the Secured Party, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts, assignments, verifications and
notices in connection with Accounts and other documents relating to such
Debtor's Collateral, and
(g) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of such Debtor's Collateral as fully and completely
as though the Secured Party were the absolute owner thereof for all purposes,
and to do, at the Secured Party's option and such Debtor's expense, at any time,
or from time to time, all acts and things that the Secured Party deems necessary
to protect, preserve or realize upon such Collateral and Secured Party's
security interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as such Debtor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If any Debtor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by such Debtor under Section
16 hereof.
SECTION 12. SECURED PARTY'S DUTIES AND LIABILITIES.
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(a) The powers conferred on the Secured Party hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Secured Party shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Secured Party shall be deemed to exercise
reasonable care in the custody and preservation of such Collateral if such
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property, it being understood that the Secured Party shall
have no responsibility or liability for the collection of any proceeds of any
Collateral or by reason of any invalidity, lack of value or uncollectibility of
any of the payments received by it from obligors or otherwise.
(b) Secured Party shall not be liable to any Debtor (i) for loss or damage
sustained by it, or (ii) for any loss, damage, depreciation or other diminution
in the value of any of the Collateral, that may occur as a result of, in
connection with or that is in any way related to (x) any exercise by the Secured
Party of any right or remedy under this Agreement or (y) any other act of or
failure to act by Secured Party, except to the extent that the same shall be the
result of acts or omissions on the part of the Secured Party constituting gross
negligence or willful misconduct. The right of the Secured Party to perform any
discretionary act enumerated in or contemplated by this Agreement shall not be
construed as a duty.
SECTION 13. EVENTS OF DEFAULT. The occurrence of any 'Event of Default'
under and as defined in the Loan Agreement shall be an 'Event of Default' under
this Agreement.
SECTION 14. REMEDIES. If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral, (a) all
the rights and remedies of a secured party under the Uniform Commercial Code,
(b) all of the rights and remedies provided for in this Agreement, the Loan
Agreement, the Subsidiaries Guaranty and any other Loan Document and (c) such
other rights and remedies as may be provided by law or otherwise (such rights
and remedies of the Secured Party to be cumulative and non-exclusive). If any
Event of Default shall have occurred and be continuing, the Secured Party also
may (i) require each Debtor to, and each Debtor hereby agrees that it will at
its expense and upon request of the Secured Party forthwith, assemble all or
part of its Collateral as directed by the Secured Party and make it available to
the Secured Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of its Collateral, store, process,
repair or recondition its Collateral or otherwise prepare its Collateral for
disposition in any manner to the extent the Secured Party deems appropriate,
(iv) take possession of each Debtor's premises or place custodians in exclusive
control thereof, remain on such premises and use the same and any of such
Debtor's Equipment for the purpose of completing any work in process, taking any
actions described in the preceding clause (iii) and collecting any Guaranteed
Obligation and (v) without notice, except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at the Secured Party's office or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Secured
Party may deem commercially reasonable. Each Debtor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to such
Debtor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any sale
of any of the Collateral, if permitted by law, the Secured Party may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
for and purchase the Collateral or any portion thereof for the account of the
Secured Party. The Secured Party shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each purchaser at any such sale
shall hold the property sold absolutely, free from any claim or right on the
part of any Debtor. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all of the Guaranteed Obligations, each
Debtor shall be liable for the deficiency and the fees of any attorneys employed
by the Secured Party to collect such deficiency.
SECTION 15. APPLICATION OF PROCEEDS. All proceeds received by the Secured
Party in respect of any sale of, collection from or other realization upon all
or any part of the Collateral of any Debtor in accordance with this Agreement
shall be applied first, to the payment of expenses incurred in connection with
such Collateral, including the reasonable fees and disbursements of its counsel,
second, to payment of such of the other Guaranteed Obligations in such order as
Secured Party may elect, each Debtor remaining liable for any deficiency, and
third, after payment in full of all Obligations, any excess shall, subject to
any order of a court of competent jurisdiction, be remitted to such Debtor.
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SECTION 16. INDEMNITY . Each Debtor agrees to indemnify the Secured Party
from and against any and all claims, losses and liabilities arising out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct.
SECTION 17. SECURITY INTEREST ABSOLUTE.
(a) All rights of the Secured Party and security interests hereunder, and
all obligations of Debtor hereunder, shall be absolute and unconditional,
irrespective of:
(i) any lack of validity or enforceability of any of the other Loan
Documents;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
amendment or waiver of or consent to any departure from any of the terms of
any of the Loan Documents;
(iii) any exchange or release of or non-perfection of any Lien in any
other collateral or any release or amendment or waiver of a consent to any
departure from any Guaranty; or
(iv) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Debtor or a third party grantor of a
security interest.
Without limiting the generality of the foregoing, each Debtor hereby
consents to, and hereby agrees that the rights of the Secured Party and the
security interests granted hereunder, and the obligations of such Debtor
hereunder, shall not be affected by, any and all releases of any Guaranty or any
Collateral from the liens and security interests created by any Security
Documents, whether for purposes of sales or other dispositions of assets
pursuant to this Agreement or any of the other Loan Documents or for some other
purpose, except to the extent expressly provided in such releases.
SECTION 18. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until termination of the Commitments under the Loan Agreement,
the cancellation or expiration of all outstanding Letter of Credit
Accommodations and the payment in full of the Guaranteed Obligations, (b) be
binding upon each Debtor, its successors and assigns and (c) inure, together
with the rights and remedies of the Secured Party hereunder, to the benefit of
the Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), and subject to the applicable
provisions of the Loan Agreement, Secured Party may assign or otherwise transfer
the Guaranteed Obligations to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon the cancellation or termination of the
Commitments, cancellation or expiration of all outstanding Letter of Credit
Accommodations and the payment in full of all Guaranteed Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the respective Debtors. Upon any such termination,
the Secured Party will, at Debtor's expense, execute and deliver to such Debtor
such documents as Debtor shall reasonably request to evidence such termination.
SECTION 19. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by any Debtor herefrom, shall in any
event be effective unless the same shall be in writing, agreed to by the Secured
Party and the Debtors, and then such Amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 20. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be made and delivered in
accordance with Section 10.3 of the Loan Agreement, provided that notices,
requests and demands to or upon any Debtor shall be made to or upon such Debtor
c/o Curtice-Burns.
SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
9
<PAGE>
SECTION 22. CONSENT TO JURISDICTION. Each Debtor hereby irrevocably submits
and consents to the non-exclusive jurisdiction of the State and Federal Courts
in the State of New York, in connection with any action or proceeding arising
out of or relating to this Agreement or any matter arising therefrom or relating
thereto.
SECTION 23. WAIVER OF JURY TRIAL. EACH DEBTOR AND THE SECURED PARTY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT.
SECTION 24. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of the Agreement or be given any substantive effect.
SECTION 25. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 26. 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 constitute one and the same Agreement.
10
<PAGE>
IN WITNESS WHEREOF, each of the Debtors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
CURTICE-BURNS EXPRESS, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
CURTICE-BURNS MEAT SNACKS, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
FINGER LAKES PACKAGING COMPANY, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
HUSMAN SNACK FOODS COMPANY, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
KENNEDY ENDEAVORS, INCORPORATED
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
NALLEY'S CANADA LIMITED
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
11
<PAGE>
QUALITY SNAX OF MARYLAND, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
SEASONAL EMPLOYERS, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
PRO-FAC HOLDING COMPANY OF IOWA, INC.
By: /s/ William Rice
____________________________________
William Rice
Title: Vice President
___________________________________
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
____________________________________
C. Scott Herring
Title: Vice President
___________________________________
12
<PAGE>
This instrument was prepared by
and recorded counterparts should
be returned to:
Stephen B. Weissman, Esq.
Otterbourg, Steindler, Houston & Rosen, P.C.
230 Park Avenue
New York, New York 10169
Location: Tacoma, Washington
________________________________________________________________
________________________________________________________________
MORTGAGE, OPEN END MORTGAGE, DEED OF TRUST,
TRUST DEED, DEED TO SECURE DEBT, PURCHASE
MONEY MORTGAGE, ASSIGNMENT, SECURITY
AGREEMENT AND FINANCING STATEMENT
Dated November 3, 1994
PF ACQUISITION CORP.
AND
CURTICE-BURNS FOODS, INC., collectively as Grantor
TO
COMMONWEALTH TITLE COMPANY, Trustee
OR
SPRINGFIELD BANK FOR COOPERATIVES, Mortgagee
________________________________________________________________
________________________________________________________________
This instrument contains after-acquired property provisions and
secures obligations containing provisions for changes in interest
rates, extensions of time for payment and other modifications in
the terms of the obligations. THIS INSTRUMENT IS A FIXTURE
FILING UNDER RCW 62A.9-402.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . .1
Granting Clauses. . . . . . . . . . . . . . . . . . . . . . .4
Granting Clause First . . . . . . . . . . . . . . . . . . . .4
Granting Clause Second. . . . . . . . . . . . . . . . . . . .4
Granting Clause Third . . . . . . . . . . . . . . . . . . . .5
Granting Clause Fourth. . . . . . . . . . . . . . . . . . . .5
Granting Clause Fifth . . . . . . . . . . . . . . . . . . . .6
Granting Clause Sixth . . . . . . . . . . . . . . . . . . . .6
</TABLE>
<TABLE>
<S> <C> <C>
ARTICLE I Representations and Warranties
of Grantor. . . . . . . . . . . . . . . . . .7
Section 1.01 General Representations and Warranties. . . .7
Section 1.02 Performance of Mortgage
Documents, etc. . . . . . . . . . . . . . .7
Section 1.03 Warranty of Title . . . . . . . . . . . . . .7
Section 1.04 Existing Defaults . . . . . . . . . . . . . .8
Section 1.05 Certificates and Permits. . . . . . . . . . .8
Section 1.06 Flood Zone; Utilities; Roads; Damage. . . . .8
ARTICLE II Covenants of Grantor. . . . . . . . . . . . .9
Section 2.01 General Covenants . . . . . . . . . . . . . .9
(a) Further Assurances. . . . . . . . . . . .9
(b) Filing and Recording. . . . . . . . . . .9
(c) Protection of Lien; Defense of Action . 10
Section 2.02 Operation and Maintenance . . . . . . . . . 10
(a) Repair and Maintenance. . . . . . . . . 10
(b) Replacement of Equipment. . . . . . . . 11
(c) Inventory . . . . . . . . . . . . . . . 11
(d) Compliance with Laws. . . . . . . . . . 11
(e) Environmental Provisions. . . . . . . . 12
(f) Use . . . . . . . . . . . . . . . . . . 15
(g) Zoning; Title Matters . . . . . . . . . 15
Section 2.03 Insurance . . . . . . . . . . . . . . . . . 16
(a) Casualty Insurance. . . . . . . . . . . 16
(b) Form of Policy. . . . . . . . . . . . . 16
(c) Duplicate Originals . . . . . . . . . . 16
(d) No Separate Insurance . . . . . . . . . 16
(e) Transfer of Title . . . . . . . . . . . 17
Section 2.04 Damage and Destruction. . . . . . . . . . . 17
(a) Grantor's Obligations . . . . . . . . . 17
(b) Mortgagee's Rights; Application
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C> <C>
of Proceeds . . . . . . . . . . . . . . 17
Section 2.05 Condemnation. . . . . . . . . . . . . . . . 18
(a) Grantor's Obligations; Proceedings. . . 18
(b) Mortgagee's Rights to Proceeds. . . . . 18
(c) Application of Proceeds . . . . . . . . 19
(d) Effect on the Obligations . . . . . . . 19
Section 2.06 Liens and Liabilities . . . . . . . . . . . 19
(a) No Liens. . . . . . . . . . . . . . . . 19
(b) No Consent. . . . . . . . . . . . . . . 20
(c) Right to Contest. . . . . . . . . . . . 20
(d) Approved Encumbrance. . . . . . . . . . 20
Section 2.07 Taxes and Other Charges . . . . . . . . . . 21
(a) Taxes on the Premises . . . . . . . . . 21
(b) Receipts. . . . . . . . . . . . . . . . 21
(c) Brundage Clause . . . . . . . . . . . . 22
(d) Right to Contest. . . . . . . . . . . . 22
Section 2.08 Escrows . . . . . . . . . . . . . . . . . . 23
Section 2.09 Grantor's Certificates. . . . . . . . . . . 23
Section 2.10 Leases. . . . . . . . . . . . . . . . . . . 24
Section 2.11 Books and Records . . . . . . . . . . . . . 25
ARTICLE III Future Advances; Expenses; Indemnity. . . . 26
Section 3.01 Future Advances . . . . . . . . . . . . . . 26
Section 3.02 Advances by Trustee or Mortgagee
to pay Expenses . . . . . . . . . . . . . 26
Section 3.03 Grantor Obligated to pay
all Expenses. . . . . . . . . . . . . . . 27
Section 3.04 Indemnity . . . . . . . . . . . . . . . . . 27
Section 3.05 Interest after Loan Default . . . . . . . . 28
ARTICLE IV Sale or Transfer of the Premises. . . . . . 28
ARTICLE V Defaults and Remedies . . . . . . . . . . . 29
Section 5.01 Events of Defaults. . . . . . . . . . . . . 29
Section 5.02 Remedies. . . . . . . . . . . . . . . . . . 31
Section 5.03 Expenses. . . . . . . . . . . . . . . . . . 33
Section 5.04 Rights Pertaining to Sales. . . . . . . . . 34
Section 5.05 Application of Proceeds . . . . . . . . . . 36
Section 5.06 Waiver of Rights and Defenses . . . . . . . 37
Section 5.07 Exercise by Trustee . . . . . . . . . . . . 39
ARTICLE VI Defeasance. . . . . . . . . . . . . . . . . 39
</TABLE>
(iii)
<PAGE>
(iv)
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VII Additional Provisions. . . . . . . . . . . . . 40
Section 7.01 General . . . . . . . . . . . . . . . . . . 40
Section 7.02 Provisions as to Payments, Advances . . . . 40
Section 7.03 Usury Savings Clause. . . . . . . . . . . . 41
Section 7.04 Separability. . . . . . . . . . . . . . . . 42
Section 7.05 Notices . . . . . . . . . . . . . . . . . . 42
Section 7.06 Right to Deal . . . . . . . . . . . . . . . 43
Section 7.07 No Merger . . . . . . . . . . . . . . . . . 43
Section 7.08 Applicable Law. . . . . . . . . . . . . . . 43
Section 7.09 Sole Discretion of Trustee
and Mortgagee
Section 7.10 Provisions as to Covenants
and Agreements. . . . . . . . . . . . . . 44
Section 7.11 Matters to be in Writing. . . . . . . . . . 44
Section 7.12 Construction of Provisions. . . . . . . . . 44
Section 7.13 Successors and Assigns. . . . . . . . . . . 45
Section 7.14 Counterparts. . . . . . . . . . . . . . . . 45
Section 7.15 Use of Mortgagee's Name . . . . . . . . . . 45
Section 7.16 Management. . . . . . . . . . . . . . . . . 46
Section 7.17 Conflicts . . . . . . . . . . . . . . . . . 46
Section 7.18 Security Agreement; Fixture Filing. . . . . 46
Section 7.19 Relationship. . . . . . . . . . . . . . . . 46
Section 7.20 Nonagricultural Clause. . . . . . . . . . . 46
ARTICLE VIII Provisions as to Trustee and Mortgagee. . . 46
Section 8.01 Trustee's Appointment . . . . . . . . . . . 46
Section 8.02 Exculpation . . . . . . . . . . . . . . . . 47
Execution Page . . . . . . . . . . . . . . . . . . . . . . . 48
Rider. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . 60
Exhibit "A" Description of Land
Exhibit "B" Permitted Encumbrances
</TABLE>
(v)
<PAGE>
MORTGAGE, OPEN END MORTGAGE, DEED OF TRUST, TRUST DEED,
DEED TO SECURE DEBT, PURCHASE MONEY MORTGAGE, ASSIGNMENT, SECURI-
TY AGREEMENT AND FINANCING STATEMENT (as it may be amended,
modified or supplemented from time to time, this "Mortgage")
dated November 3, 1994, by PF Acquisition Corp., organized under
the laws of the State of New York, with its principal office at
90 Linden Place, Rochester, New York 14603, and Curtice-Burns
Foods, Inc., organized under the laws of the State of New York,
with its principal office at 90 Linden Place, Rochester, New York
14603, collectively the mortgagor and trustor hereunder (herein,
together with their respective permitted successors and assigns,
singularly, an "Individual Grantor", and collectively, the
"Grantor"), to Commonwealth Title Company, a Washington
corporation, with its principal office at 1120 Pacific Avenue,
Tacoma, Washington 98402, trustee hereunder to the extent that
this Mortgage operates as a deed of trust or trust deed
("Trustee"); and to Springfield Bank for Cooperatives, a
corporation established under the laws of the United States of
America and continuing as a Federally chartered instrumentality
of the United States under the Farm Credit Act of 1971, as
amended, having its principal place of business at 67 Hunt
Street, Agawam, Massachusetts 01001, the mortgagee hereunder to
the extent that this Mortgage operates as a mortgage or an open
end mortgage or a purchase money mortgage, the beneficiary
hereunder to the extent that this Mortgage operates as a deed of
trust or trust deed and the grantee hereunder to the extent that
this Mortgage operates as a deed to secure debt (herein, together
with its successors and assigns, "Mortgagee").
W I T N E S S E T H :
WHEREAS, Grantor has entered into a certain Term Loan,
Term Loan Facility and Seasonal Loan Agreement of even date
herewith, and other related agreements, documents and instruments
heretofore, now or hereafter executed and/or delivered by Grantor
or any other person to, with or in favor of Mortgagee in
connection with the foregoing agreement (said agreements, as the
same may be amended, modified and supplemented from time to time
being herein collectively called the "Loan Agreement"), pursuant
to which Mortgagee has extended and will extend certain loans,
advances and other financial accommodations to Grantor,
including, without limitation i) a term loan (the "Term Loan") in
the original principal amount of Eighty Million Dollars
($80,000,000), ii) a term loan facility (the "Term Loan
Facility") in the maximum principal amount of One Hundred Twenty
Million Dollars ($120,000,000), iii) Seasonal Loans from time to
time at the request of the Grantor in the maximum aggregate
principal amount of Eighty-Six Million Dollars ($86,000,000), and
iv) Letter or Credit Accommodations from time to time at the
1
<PAGE>
request of the Grantor in the maximum aggregate principal amount
of Ten Million Dollars ($10,000,000)(Terms used in this Mortgage
which are not otherwise defined herein are intended to have the
meaning ascribed to them under the Loan Agreement); and
WHEREAS, it would be an event of default under the Loan
Agreement were Grantor to fail to execute and deliver this
Mortgage;
WHEREAS, this Mortgage secures Grantor's obligation to
pay the Term Loan to Mortgagee (herein called "Obligations") not
to exceed a maximum principal amount of $25,000,000, which
Obligations include all obligations of Grantor under this
Mortgage (the Loan Agreement and this Mortgage and any other
document or instrument executed and delivered in connection
therewith and herewith, in each case as the same may be amended,
modified or supplemented from time to time, being herein
collectively called the "Mortgage Documents" and singularly
called a "Mortgage Document"), together with interest thereon as
provided in the Loan Agreement and costs and expenses (including
attorneys' fees and disbursements) incurred by Trustee or
Mortgagee in connection with the Mortgage Documents.
NOW THEREFORE, to secure the punctual payment and
performance by Grantor when due, whether by acceleration or
otherwise, of all Obligations not to exceed a maximum principal
amount of $25,000,000, together with interest thereon as provided
in the Loan Agreement and costs and expenses (including
attorneys' fees and disbursements) incurred by Trustee or
Mortgagee in connection with the Mortgage Documents, Grantor does
hereby grant, bargain, sell, mortgage, warrant, convey, alien,
remise, release, assign, transfer, grant a security interest
in, set over, deliver, confirm and convey unto Trustee in trust,
for the benefit of the Mortgagee, as beneficiary, with Power of
Sale, to the extent this Mortgage operates as a deed of trust or
trust deed or to the Mortgagee to the extent this Mortgage
operates as a mortgage, an open end mortgage, a purchase money
mortgage or a deed to secure debt, upon the terms and conditions
of this Mortgage, each and all of the real properties, and
further grants to the Trustee or the Mortgagee, as the case may
be, a security interest in and to all other property described in
Granting Clauses First through Sixth below (all of such property
being hereinafter collectively called the "Premises").
Notwithstanding anything to the contrary herein
contained,
(i) to the extent the Premises are located in any of
the following State(s), this Mortgage shall be deemed to be
and shall be enforceable as a mortgage, assignment, security
2
<PAGE>
agreement and financing statement: ARKANSAS, COLORADO,
DELAWARE, FLORIDA, HAWAII, IDAHO, ILLINOIS, INDIANA, KANSAS,
KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHI-
GAN, MINNESOTA, MONTANA, NEW HAMPSHIRE, NEW JERSEY, NEW
YORK, NORTH DAKOTA, OKLAHOMA, SOUTH CAROLINA, SOUTH DAKOTA
and/or WISCONSIN;
(ii) to the extent the Premises are located in any of
the following State(s), this Mortgage shall be deemed to be
and shall be enforceable as a deed of trust,
assignment,security agreement and financing statement:
ALASKA, CALIFORNIA, DISTRICT OF COLUMBIA, IOWA,
MISSISSIPPI, MISSOURI, NEVADA, NEW MEXICO, NORTH CAROLINA,
TEXAS, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA and/or
WYOMING;
(iii) to the extent the Premises are located in any of
the following State(s), this Mortgage shall be deemed to be
and shall be enforceable as an open end mortgage, assign-
ment, security agreement and financing statement: ALABAMA,
CONNECTICUT, OHIO and/or RHODE ISLAND;
(iv) to the extent the Premises are located in the
following State(s), this Mortgage shall be deemed to be and
shall be enforceable as a trust deed, assignment, security
agreement and financing statement: ARIZONA, NEBRASKA,
OREGON, TENNESSEE and/or UTAH;
(v) to the extent the Premises are located in the
State of GEORGIA, this Mortgage shall be deemed to be and
shall be enforceable as a deed to secure debt, assignment,
security agreement and financing statement; and
(vi) to the extent the Premises are located in the
State of PENNSYLVANIA, this Mortgage shall be deemed to be
and shall be enforceable as a purchase money mortgage,
assignment, security agreement and financing statement.
Wherever herein contained, the phrase "Trustee and
Mortgagee, as applicable" or any similar phrase shall be deemed
to refer to (a) Trustee for the benefit of Mortgagee, as benefi-
ciary, to the extent the Premises are located in any of the
States listed in subsections (ii) or (iv) above, (b) to Mortgagee
to the extent the Premises are located in any of the States
listed in subsections (i), (iii) or (vi), and (c) in the case of
Georgia, to Mortgagee, as grantee.
To the extent the Premises are located in any of the
States listed in subsections (i), (iii), (v) or (vi), Trustee
shall have no rights, power or obligations in these States. To
3
<PAGE>
the extent the Premises are located in any of the States listed
in subsections (ii) or (iv) above, references to Mortgagee shall,
if the context so requires, be deemed to be references to
Mortgagee, as beneficiary.
4
<PAGE>
GRANTING CLAUSES
All the estate, right, title and interest of Grantor
in, to and under, or derived from:
GRANTING CLAUSE FIRST
Land
All those certain lot(s), piece(s) or parcel(s) of land
more particularly described in Exhibit "A", as the description of
the same may be amended or supplemented from time to time, and
all reversions or remainders in and to said land and the
tenements, hereditaments, easements, rights-of-way or use, rights
(including alley, drainage, crop, timber and cutting,
agricultural, horticultural, mineral, water, oil and gas rights),
privileges, royalties and appurtenances to said land, now or
hereafter belonging or in any way appertaining thereto, including
any such right, title, interest in, to or under any agreement or
right granting, conveying or creating, for the benefit of said
land, any easement, right or license in any way affecting other
property and in, to or under any streets, ways, alleys, vaults,
gores or strips of land adjoining said land or any parcel there-
of, or in or to the air space over said land, all rights of
ingress and egress by motor vehicles to parking facilities on or
within said land, and all claims or demands of Grantor, either at
law or in equity, in possession or expectancy, of, in or to the
same (all of the foregoing being hereinafter collectively called
the "Land").
GRANTING CLAUSE SECOND
Improvements
All buildings, structures, facilities and other
improvements now or hereafter located on the Land, and all
building material, building equipment and fixtures of every kind
and nature now or hereafter located on the Land or attached to,
contained in, or used in connection with, any such buildings,
structures, facilities or other improvements, and all appurten-
ances and additions thereto and betterments, renewals, sub-
stitutions and replacements thereof and therefor, owned by
Grantor or in which Grantor has or shall acquire an interest (all
of the foregoing being hereinafter collectively called the
"Improvements").
5
<PAGE>
GRANTING CLAUSE THIRD
Fixtures and Equipment
All fixtures, equipment and other personal property, and
all appurtenances and additions thereto and betterments,
renewals, substitutions and replacements thereof and therefor,
owned by Grantor or in which Grantor now has or hereafter shall
acquire an interest, and now or hereafter located on, attached
to, contained in or used in connection with the properties
referred to in GRANTING CLAUSES FIRST, SECOND, FOURTH or FIFTH,
or placed on any part thereof, though not attached thereto,
including all partitions, screens, awnings, shades, blinds,
curtains, draperies, carpets, rugs, furniture and furnishings,
heating, lighting, plumbing, ventilating, air conditioning,
refrigerating, gas, steam, electrical, incinerating and/or
compacting plants, systems, fixtures and equipment, elevators,
escalators, ranges, vacuum and other cleaning systems, call
systems, switchboards, sprinkler systems and other fire pre-
vention and extinguishing apparatus and materials, motors,
machinery, pipes, ducts, conduits, dynamos, engines, compressors,
generators, boilers, stokers, furnaces, pumps, tanks, appliances,
equipment, utensils, tools, implements, fittings and fixtures
(all of the foregoing being hereinafter collectively called the
"Equipment"). If the lien of this Mortgage is subject to a
security interest covering any property described in this GRANT-
ING CLAUSE THIRD, then all of the right, title and interest of
Grantor in and to any and all such property is hereby assigned to
Trustee and Mortgagee, as applicable, together with the benefits
of all deposits and payments now or hereafter made thereon by or
on behalf of Grantor.
GRANTING CLAUSE FOURTH
Leasehold and Other Contractual Interests;
Permits; Licenses and Approvals
Unless the same may not be subjected to the lien hereof
or transferred by their terms, all the leases, lettings and
licenses of, all other contracts, agreements and contract rights
affecting, and all permits, licenses, franchises, certificates,
approvals and other rights, privileges and general intangibles
obtained or issued with respect to, the Land, the Improvements,
the Equipment and/or any other property or rights mortgaged or
otherwise conveyed or encumbered hereby or any part thereof, now
or hereafter entered into, or issued with respect thereto, and
all amendments, modifications, supplements, additions, extensions
and renewals thereof, and all right, title and interest of
Grantor thereunder, including cash and securities deposited
6
<PAGE>
thereunder and books and records which contain entries for pay-
ments made thereunder, the right to receive and collect the
rents, income, proceeds, issues and profits payable thereunder
and the rights to enforce, whether at law or in equity or by any
other means, all provisions and options thereof.
GRANTING CLAUSE FIFTH
Other and After Acquired Property
Any and all moneys and other property, of every kind and
nature, which may from time to time be subjected to the lien
hereof by Grantor and covered by GRANTING CLAUSES FIRST, SECOND,
THIRD, FOURTH OR SIXTH, through a supplement to this Mortgage or
otherwise, or by any other person or entity, or which may come
into the possession of or be subject to the control of Trustee or
Mortgagee, it being the intention and agreement of Grantor that
all property hereafter acquired or constructed by Grantor on such
property shall forthwith upon acquisition or construction thereof
by Grantor and without any act or deed by Grantor be subject to
the lien and security interest of this Mortgage as if such
property were now owned by Grantor and were specifically de-
scribed in this Mortgage and conveyed or encumbered hereby or
pursuant hereto, and Trustee and Mortgagee are hereby authorized
to receive any and all such property as and for additional
security hereunder.
GRANTING CLAUSE SIXTH
Proceeds and Awards
All unearned premiums, accrued, accruing or to accrue
under insurance policies now or hereafter obtained by Grantor,
all proceeds of any of the property described in these Granting
Clauses, including proceeds of hazard, title and other insurance,
and all judgments, damages, awards, settlements and compensation
(including interest thereon) heretofore or hereafter made to the
present and all subsequent owners of the Land, the Improvements,
the Equipment and/or any other property or rights encumbered or
conveyed hereby for any injury to or decrease in the value
thereof for any reason, or by any governmental or other lawful
authority for the taking by eminent domain, condemnation or
otherwise of all or any part thereof, including awards for any
change of grade of streets.
TO HAVE AND TO HOLD, subject to the matters described
in Exhibit "B" ("Permitted Encumbrances"), all and singular the
Premises, whether now owned or leased or hereafter acquired and
7
<PAGE>
whether now or hereafter existing, together with all the rights,
privileges and appurtenances thereunto belonging, unto Trustee
and Mortgagee, as applicable, forever, for the uses and purposes
herein set forth.
AND Grantor covenants and agrees with Trustee and
Mortgagee as follows:
ARTICLE I
Representations and Warranties of Grantor
Section 1.01 General Representations and Warranties.
Each Individual Grantor is a corporation in good standing under
the laws of the State of its incorporation and is duly qualified
and in good standing to do business and to own the Premises in
the State where the Premises are located. The making,
performance and recording of this Mortgage by Grantor are within
each Individual Grantor's corporate powers, have been duly
authorized by all appropriate corporate action and do not (i)
violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in
effect having applicability to each Individual Grantor or of the
charter or by-laws of each Individual Grantor; (ii) result in a
breach in any material respect of or constitute a default under
any indenture or loan or credit agreement or any other agreement,
lease or instrument to which each Individual Grantor is a party
or by which it or its properties may be bound or affected; (iii)
result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature (other than as is constituted
hereby) on the Premises; or (iv) require the consent of the
stockholders of each Individual Grantor or any lienholders prior
in rank to this Mortgage other than those consents which Grantor
has delivered to Mortgagee prior hereto or the authorization,
consent or approval of, or any license from, or any filing or
registration with, any governmental body, except recording of
this Mortgage in the appropriate real property records and the
appropriate Uniform Commercial Code filing records. This
Mortgage constitutes the legal, valid and binding obligation of
each Individual Grantor enforceable against each Individual
Grantor in accordance with its terms, except as the foregoing may
be limited by applicable bankruptcy, insolvency or other laws
affecting the rights of creditors generally.
Section 1.02 Performance of Mortgage Documents; Etc.
Grantor shall cause to be performed, observed and complied with
all provisions of every Mortgage Document, and will promptly pay
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to the Trustee or Mortgagee the principal with interest thereon
and all other sums required to be paid by Grantor pursuant to the
provisions of every Mortgage Document when payment shall become
due.
Section 1.03 Warranty of Title. (i) Grantor has and
will have good, marketable and insurable fee simple title to the
Premises, free and clear of all liens, charges and encumbrances
of every kind and character, subject only to Permitted
Encumbrances; (ii) Grantor has and will have full power and
lawful authority to encumber and convey the Premises as provided
herein; (iii) Grantor owns and will own all of the Equipment,
free and clear of all liens, charges and encumbrances of every
kind and character, subject only to Permitted Encumbrances; (iv)
this Mortgage is and will remain a valid and enforceable lien on,
and security interest in, the Premises, subject only to Permitted
Encumbrances; and (v) subject to Permitted Encumbrances, Grantor
hereby warrants and will forever warrant and defend such title
and the validity, enforceability and priority of the lien and
security interest hereof against the claims of all persons and
parties whomsoever. Grantor also represents and warrants that
(i) each Individual Grantor is now and, after giving effect to
this Mortgage, will be in a solvent condition, (ii) the execution
and delivery of this Mortgage by each Individual Grantor does not
constitute a "fraudulent conveyance" within the meaning of Title
11 of the United States Code as now constituted or under any
other applicable statute; and (iii) no bankruptcy or insolvency
proceedings are pending or contemplated by or against each
Individual Grantor.
Section 1.04 Existing Defaults. There is no existing
default by Grantor under any of the Permitted Encumbrances, and
no event has occurred which, with the giving of notice or the
passage of time, or both, would constitute or result in such a
default.
Section 1.05 Certificates and Permits. (i) Grantor
has and will maintain in effect all necessary certificates,
licenses, authorizations, registrations, permits and/or approvals
necessary for the operation of all or any part of the Premises,
the conduct of Grantor's business at the Premises, and the
commencement or continuation of construction on the Premises,
including, where appropriate, a Permanent Certificate of
Occupancy and Board of Fire Underwriters Certificate and all
required zoning ordinance, building code, land use, environmental
and other similar permits or approvals, all of which as of the
date hereof are in full force and effect and not subject to any
revocation, amendment, release, suspension or forfeiture, (ii)
the present and contemplated use and/or occupancy of the Premises
does not conflict with or violate any of the same and (iii)
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Grantor, promptly upon request by Trustee or Mortgagee, shall
deliver to Trustee and Mortgagee copies of all of the same.
Section 1.06 Flood Zone; Utilities; Roads; Damage.
(i) Except as has been otherwise disclosed to Mortgagee in
writing, the Premises are not located in an area identified by
the Secretary of Housing and Urban Development or a successor
thereto as an area having special flood hazards pursuant to the
terms of the National Flood Disaster Protection Act of 1973, as
amended; (ii) the Premises are served by all utilities required
for the present use thereof; (iii) all streets necessary to serve
the Premises for the use thereof as herein contemplated have been
completed and are serviceable and have been dedicated or accepted
by the appropriate governmental entities; and (iv) the Premises
are free from damage caused by fire or other casualty.
ARTICLE II
Covenants of Grantor
Section 2.01 General Covenants.
(a) Further Assurances. Grantor will, at the request
of Trustee or Mortgagee, (i) promptly correct any defect, error
or omission which may be discovered in the contents of any
Mortgage Document, or in the execution, acknowledgement or
recordation thereof or hereof, (ii) promptly do, execute,
acknowledge and deliver any and all such further acts, deeds,
conveyances, mortgages, deeds of trust, assignments, estoppel
certificates, financing statements and continuations thereof,
notices of assignment, transfers, certificates, assurances and
other instruments as Trustee or Mortgagee may require from time
to time in order to effectuate the purposes of this Mortgage, to
subject to the lien and security interest hereby created any of
Grantor's properties, rights or interests covered or now or
hereafter intended to be covered hereby, to perfect and maintain
said lien and security interest, and to convey, grant, assign,
transfer and confirm unto Trustee and Mortgagee the rights
granted or now or hereafter intended to be granted to Trustee or
Mortgagee hereunder or under any other instrument executed in
connection with this Mortgage or which Grantor may be or become
bound to convey, mortgage or assign to Trustee or Mortgagee in
order to carry out the intention or facilitate the performance of
the provisions of this Mortgage. If Grantor shall fail to
execute any of the foregoing documents, Mortgagee may execute
same on Grantor's behalf and Grantor hereby appoints Mortgagee as
its irrevocable attorney-in-fact, coupled with an interest for
such purpose.
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(b) Filing and Recording. Grantor will, at the
request of Trustee or Mortgagee, promptly record and re-record,
file and refile and register and re-register this Mortgage, any
financing or continuation statements and every other instrument
in addition or supplemental to any thereof that shall be required
by law in order to perfect and maintain the validity,
effectiveness and priority of this Mortgage and the lien and
security interest intended to be created hereby, or to subject
after-acquired property of Grantor or proceeds to such lien and
security interest, in such manner and places and within such
times as may be necessary to accomplish such purposes and to
preserve and protect the rights and remedies of Trustee or
Mortgagee. Grantor will furnish to Trustee and Mortgagee
evidence satisfactory to them of every such recording, filing or
registration. Grantor hereby appoints Mortgagee or Mortgagee's
designee its attorney-in-fact, which appointment is irrevocable
and shall be deemed to be coupled with an interest, to file, in
accordance with the laws of the state where the Premises are
located, a duplicate original of this Mortgage or any supplement
hereto and to execute alone and file any and all Uniform
Commercial Code financing and continuation statements which
Trustee or Mortgagee may deem necessary or appropriate to
perfect, protect or enforce any right or security interest
hereunder, and to sign Grantor's name on the same. Grantor
hereby ratifies and approves all acts of the attorney-in-fact.
(c) Protection of Lien; Defense of Action. If the
lien, security interest, validity or priority of this Mortgage,
or if title or any of the rights of Grantor, Trustee or Mortgagee
in or to the Premises, shall be endangered or questioned, or
shall be attacked directly or indirectly, or if any action or
proceeding shall be instituted against Grantor, Trustee or
Mortgagee with respect thereto, Grantor will promptly notify
Trustee and Mortgagee thereof and will diligently endeavor to
cure any defect which may be claimed, and will take all necessary
and proper steps for the defense of such action or proceeding,
including the employment of counsel, the prosecution or defense
of litigation and, subject to Mortgagee's approval, the
compromise, release or discharge of any and all adverse claims.
Trustee and Mortgagee, or either of them (whether or not named as
a party to such actions or proceedings), are hereby authorized
and empowered (but shall not be obligated) to take such
additional steps as they may deem necessary or proper for the
defense of any such action or proceeding or the protection of the
lien, security interest, validity or priority of this Mortgage or
of such title or rights, including the employment of counsel, the
prosecution or defense of litigation, the compromise, release or
discharge of such adverse claims, the purchase of any tax title
and the removal of prior liens and security interests. Grantor
shall, on demand, reimburse Trustee and Mortgagee for all
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expenses (including attorneys' fees and disbursements) incurred
by either of them in connection with the foregoing matters, and
the party incurring such expenses shall be subrogated to all
rights of the person receiving such payment. All such costs and
expenses of Mortgagee, until reimbursement by Grantor, shall be
part of the Obligations and shall be deemed to be secured by this
Mortgage.
Section 2.02 Operation and Maintenance.
(a) Repair and Maintenance. Grantor will operate and
maintain the Premises in good order, repair and operating condi-
tion, will promptly make all necessary repairs, renewals, re-
placements, additions and improvements thereto, interior and
exterior, structural and nonstructural, foreseen and unforeseen,
or otherwise necessary to insure that the same as part of the
security under this Mortgage shall not in any way be diminished
or impaired, and will not cause or allow any of the Premises to
be misused or wasted or to deteriorate. Trustee or Mortgagee may
enter upon and inspect the Premises at any reasonable time during
the term of this Mortgage and as often as Mortgagee may require.
(b) Replacement of Equipment. Subject to any
limitation on Grantor's capital expenditures in effect from time
to time under the Loan Agreement, Grantor will keep the Premises
fully equipped and will replace all worn-out or obsolete fixtures
or personal property which form a part of the Premises with
fixtures or personal property comparable to the value thereof as
of the date hereof, and will not, without Mortgagee's consent,
remove from the Premises any fixtures or personalty covered by
this Mortgage unless the same is replaced by Grantor with an
article of equal suitability and value when new, owned by Grantor
free and clear of any lien or security interest (other than
Permitted Encumbrances and the lien and security interest created
by this Mortgage). No part of the Improvements shall be removed,
demolished or structurally or materially altered (including an
alteration which impairs the value thereof), nor shall any new
building, structure, facility or other improvement be constructed
on the Land without Mortgagee's consent, unless such alteration
or improvement is in an amount not in excess of $25,000.
(c) Inventory. Purposely omitted.
(d) Compliance with Laws. Grantor will perform and
comply promptly with, and cause the Premises to be maintained,
used and operated in accordance with, any and all (i) present and
future laws, ordinances, rules, regulations and requirements of
every duly constituted governmental or quasi-governmental
authority or agency applicable to Grantor or the Premises,
(ii) similarly applicable orders, rules and regulations of any
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regulatory, licensing, accrediting, insurance underwriting or
rating organization or other body exercising similar functions,
(iii) similarly applicable duties or obligations of any kind
imposed under any Permitted Encumbrance or otherwise by law,
covenant, condition, agreement or easement, public or private,
and (iv) all policies of insurance at any time in force with
respect to the Premises. Notwithstanding the foregoing, Grantor
shall have the right to contest in good faith the validity or
applicability of any such duty or obligation, provided that and
so long as (1) the same is done by Grantor upon prior written
notice to Mortgagee, at Grantor's sole cost and expense and with
due diligence and continuity so as to resolve as promptly as
possible such question of validity or applicability; (2) neither
the Premises nor any part thereof will be in immediate danger of
being forfeited or lost by reason of such contest; (3) such
contest shall not subject Mortgagee to prosecution for a criminal
offense or a claim for civil liability; (4) Grantor shall
establish a reserve or other security with Mortgagee in an amount
and in form and substance satisfactory to Mortgagee for
application towards the cost of such performance and compliance
and to secure Mortgagee against any loss or damage arising out of
said contests or the deferral of Grantor's performance or
compliance; (5) Grantor shall thereafter diligently proceed to
cure, comply or perform as required prior to the date the
Premises is listed for an in rem action with respect to such
non-compliance or nonperformance or any writ or order is issued
under which the Premises may be sold pursuant to a final
judgment; (6) Grantor indemnifies and holds harmless Mortgagee
from and against any and all expenses, claims, demands,
obligations, liabilities, suits, actions and penalties upon or
arising out of such contest; and (7) Grantor is not in default
under any Mortgage Document and no event has occurred which, with
the giving of notice or the passage of time, or both, might
constitute an event of default under any Mortgage Document. If
Grantor receives any notice that Grantor or the Premises is in
default under or is not in compliance with (i), (ii), (iii) or
(iv) above, or notice of any proceeding initiated under or with
respect to any of the foregoing, Grantor will promptly furnish a
copy of such notice to Mortgagee.
(e) Environmental Provisions. For the purposes of
this paragraph, the following terms shall have the following
meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is
subject to regulation under any Environmental Requirement, (ii)
the term "Environmental Requirements" shall collectively mean the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. SS 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. SS 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. SS 6901 et seq.), the
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Toxic Substances Control Act (15 U.S.C. SS 2601 et seq.), the
Clean Air Act (42 U.S.C. SS 7401 et seq.) and the Federal Water
Pollution Control Act (33 U.S.C. SS 1251 et seq.), all as
presently in effect and as the same may hereafter be amended, any
regulation pursuant thereto, or any other present or future law,
ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental
Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision
thereof, or any agency, court or body of the Federal government,
any state or other political subdivision thereof, exercising
executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to any environmental site
assessment of the Premises conducted in accordance with
Mortgagee's environmental policies and procedures. Grantor
hereby represents and warrants to Mortgagee that, to the best of
Grantor's knowledge, after diligent inquiry (i) no Hazardous
Material is currently located at, on, in, under or about the
Premises, (ii) no Hazardous Material has been or is currently
located at, in, on, under or about the Premises in a manner which
violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental
Requirement, (iii) no releasing, emitting, discharging, leaching,
dumping or disposing of any Hazardous Material from the Premises
onto or into any other property or from any other property onto
or into the Premises has occurred or is occurring in violation of
any Environmental Requirement, and (iv) no notice of violation,
lien, complaint, suit, order or other notice with respect to the
environmental condition of the Premises is outstanding, nor has
any such notice been issued which has not been fully satisfied
and complied with in a timely fashion so as to bring the Premises
into full compliance with all Environmental Requirements.
Grantor shall comply, and shall cause all tenants or other
occupants of the Premises to comply, in all respects with all
Environmental Requirements, and will not generate, store, handle,
process, dispose of or otherwise use, and will not permit any
tenant or other occupant of the Premises to generate, store,
handle, process, dispose of or otherwise use, Hazardous Materials
at, in, on, under or about the Premises in a manner that could
lead or potentially lead to the imposition on Grantor, Mortgagee
or the Premises of any liability or lien of any nature whatsoever
under any Environmental Requirement. Grantor shall notify
Mortgagee promptly in the event of any spill or other release of
any Hazardous Material at, in, on, under or about the Premises
which is required to be reported to a Governmental Authority
under any Environmental Requirement, will promptly forward to
Mortgagee copies of any notices received by Grantor relating to
alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against Mortgagee,
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Grantor or the Premises relating to any Environmental
Requirement. If at any time it is determined that the operation
or use of the Premises violates any applicable Environmental
Requirement or that there are Hazardous Materials located at, in,
on, under or about the Premises which, under any Environmental
Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective
action, Grantor shall, within thirty (30) days after receipt of
notice thereof from any Governmental Authority or from Mortgagee,
take, at its sole cost and expense, such actions as may be
necessary to full comply in all respects with all Environmental
Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period,
Grantor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously
proceed to fully comply in all respects and in a timely fashion
with all Environmental Requirements. If Grantor fails to timely
take, or to diligently and expeditiously proceed to complete in a
timely fashion, any such action, Mortgagee may, in its sole and
absolute discretion, make advances or payments towards the
performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by
Mortgagee (including, without limitation, counsel and consultant
fees and expenses, investigation and laboratory fees and
expenses, and fines or other penalty payments) and all sums
advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Grantor and
shall bear interest at the rate payable on Prime Loans under the
Loan Agreement from the date any such sums are so advanced or
paid by Mortgagee until the date any such sums are repaid by
Grantor to Mortgagee. Grantor will execute and deliver, promptly
upon request, such instruments as Mortgagee may deem useful or
necessary to permit Mortgagee to take any such action, and such
additional notes and mortgages as Mortgagee may require to secure
all sums so advanced or paid by Mortgagee. If a lien is filed
against the Premises by any Governmental Authority resulting from
the need to expend or the actual expending of monies arising from
an action or omission, whether intentional or unintentional, of
Grantor or for which Grantor is responsible resulting in the
releasing, spilling, leaking, leaching, pumping, emitting,
pouring, emptying or dumping of any Hazardous Material into the
waters or onto land located within or without the State where the
Premises is located, then Grantor will, within thirty (30) days
from the date that Grantor is first given notice that such lien
has been placed against the Premises (or within such shorter
period of time as may be specified by Mortgagee if such
Governmental Authority has commenced steps to cause the Premises
to be sold pursuant to such lien) either (a) pay the claim and
remove the lien, or (b) furnish a cash deposit, bond or such
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other security with respect thereto as is satisfactory in all
respects to Mortgagee and is sufficient to effect a complete
discharge of such lien on the Premises. Mortgagee may, at its
option, at intervals of not less than one year or, more
frequently, if Mortgagee reasonably believes that a Hazardous
Material or other environmental condition violates or threatens
to violate any Environmental Requirement, cause an environmental
audit of the Premises or portions thereof to be conducted to
confirm Grantor's compliance with the provisions of this
paragraph, and Grantor shall cooperate in all reasonable ways
with Mortgagee in connection with any such audit and shall pay
all costs and expenses incurred in connection therewith. Grantor
will defend, indemnify and hold harmless Mortgagee, its
employees, agents, officers and directors from and against any
and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs or expenses of whatever
kind or nature, known or unknown, foreseen or unforeseen,
contingent or otherwise (including, without limitation, counsel
and consultant fees and expenses, investigation and laboratory
fees and expenses, court costs and litigation expenses) arising
out of, or in any way related to, (i) any breach by Grantor of
any of the provisions of this paragraph, (ii) the presence,
disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on,
under, about, from or affecting the Premises including, without
limitation, any damage or injury resulting from any such
Hazardous Material to or affecting the Premises or the soil,
water, air, vegetation, buildings, personal property, persons or
animals located on the Premises or on any other property or
otherwise, (iii) any personal injury (including wrongful death)
or property damage (real or personal) arising out of or related
to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by
any Governmental Authority relating to such Hazardous Material,
or (v) any violation of any Environmental Requirement or any
policy or requirement of Mortgagee hereunder. This
indemnification shall, notwithstanding any exculpatory or other
provision of any nature whatsoever to the contrary set forth in
the Mortgage Documents, constitute the personal recourse
undertakings, obligations and liabilities of Grantor. If this
Mortgage is foreclosed or Grantor tenders a deed or assignment in
lieu of foreclosure, Grantor shall deliver the Premises to the
purchaser at foreclosure or to Mortgagee, its nominee or wholly
owned subsidiary, as the case may be, in a condition that
complies in all respects with all Environmental Requirements.
The obligations and liabilities of Grantor under this paragraph
shall survive and continue in full force and effect and shall not
be terminated, discharged or released, in whole or in part,
irrespective of whether the Obligations have been paid in full
and irrespective of any foreclosure of this Mortgage or
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acceptance by Mortgagee, its nominee or wholly owned subsidiary
of a deed or assignment in lieu of foreclosure and irrespective
of any other fact or circumstance of any nature whatsoever.
(f) Use. Unless required by applicable law, or unless
the Mortgagee has otherwise first consented in writing, the
Grantor shall not make or allow any changes to be made in the
nature of the occupancy or use of the Premises or any portion
thereof for which the Premises or such portion was intended at
the time this Mortgage was delivered. Grantor will not at any
time use or occupy, or permit the Premises to be used or
occupied, in any manner which violates any applicable law, rule,
regulation or order, or which constitutes a public or private
nuisance or which makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with
respect thereto.
(g) Zoning; Title Matters. Grantor will not, without
Mortgagee's consent, (i) initiate or support any zoning reclassi-
fication of the Premises, seek any variance under existing zoning
ordinances applicable to the Premises or use or permit the use of
the Premises in a manner which would result in such use becoming
a non-conforming use under applicable zoning ordinances, (ii)
modify, amend or supplement any Permitted Encumbrances, (iii)
impose any restrictive covenants or encumbrances upon the Premis-
es or consent to the annexation of the Premises to any municipal-
ity or (iv) permit or suffer the Premises to be used by the
public or any person in such manner as might make possible a
claim of adverse usage or possession or of any implied dedication
or easement. Grantor will not permit any right of way, easement
or privilege necessary or appropriate to the use or operation of
the Premises to be canceled or forfeited.
Section 2.03 Insurance.
(a) Casualty Insurance. Grantor will keep the
Improvements and the Equipment insured for the benefit of
Trustee, Mortgagee and the holders of the Obligations against
such liabilities, casualties, risks and contingencies as
Mortgagee in its sole and absolute discretion shall require.
(b) Form of Policy. All insurance required under this
Section shall be fully paid for, nonassessable and shall contain
such provisions, endorsements and expiration dates, as Mortgagee
shall from time to time request, and shall be in such form and
amounts, and be issued by such insurance companies (which must be
licensed to do business in the State of New York as well as in
the State where the Premises are located) as shall be approved by
Mortgagee. Without limiting the foregoing, all such policies
shall contain endorsements in form acceptable to Mortgagee,
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naming Trustee and Mortgagee as insured parties as their inter-
ests may appear, and a waiver of subrogation endorsement. All
such policies shall provide that the same will not be canceled,
amended or materially altered (including by reduction in the
scope or limits of coverage) without at least ten (10) days'
notice to Mortgagee. Such policies shall provide that they shall
not be invalidated by any foreclosure or other proceeding or
notice of sale relating to the Premises, or by a change in the
title or ownership of the Premises, nor by the occupation of the
Premises for purposes more hazardous than are permitted by such
policies.
(c) Duplicate Originals. Duplicate original
policies evidencing the insurance required under this Section and
any additional insurance which shall be taken out on the Premises
by or on behalf of Grantor shall be deposited with and held by
Mortgagee and, in addition, Grantor will deliver to Mortgagee (i)
receipts evidencing payment of all premiums thereon and (ii)
duplicate original renewal policies with evidence satisfactory to
Mortgagee of payment of all premiums thereon, at least thirty
(30) days prior to the expiration of each such policy. In lieu
of the duplicate original policies provided herein to be deliv-
ered to Mortgagee, Grantor may deliver original certificates from
the issuing insurance company, evidencing that such policies are
in full force and effect and containing information which, in
Mortgagee's judgment, is sufficient to allow Mortgagee to deter-
mine whether such policies comply with the requirements of this
Section.
(d) No Separate Insurance. Grantor shall not carry
separate or additional insurance concurrent in form or
contributing in the event of loss with that required under this
Section unless endorsed in favor of Trustee, Mortgagee and the
holders of the Obligations in accordance with the requirements of
this Section and otherwise approved by Mortgagee in all respects.
(e) Transfer of Title. In the event of foreclosure of
this Mortgage or other transfer of title or assignment of the
Premises in extinguishment, in whole or in part, of the
Obligations, all right, title and interest of Grantor in and to
all policies of insurance required under this Section or
otherwise then in force with respect to the Premises and all
proceeds payable thereunder and unearned premiums thereon shall
immediately vest in the purchaser or other transferee of the
Premises.
Section 2.04 Damage and Destruction.
(a) Grantor's Obligations. In the event of any damage
to or loss or destruction of the Premises, Grantor shall (i)
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promptly notify Mortgagee of such event and take such steps as
shall be necessary to preserve any undamaged portion of the
Premises and (ii) unless otherwise instructed by Mortgagee, or
unless such damage, loss or destruction is total, shall promptly,
regardless of whether the insurance proceeds, if any, shall be
sufficient for the purpose or shall be otherwise applied by
Mortgagee as provided herein, commence and diligently pursue to
completion the restoration, replacement, rebuilding or
reforestation of the Premises as nearly as possible to their
value, condition and character immediately prior to such damage,
loss or destruction.
(b) Mortgagee's Rights; Application of Proceeds. In
the event that any portion of the Premises is so damaged,
destroyed or lost, and such damage, destruction or loss is
covered, in whole or in part, by insurance described in Section
2.03, then (i) Grantor shall not settle, adjust or compromise any
claims for damage, destruction or loss thereunder without
Mortgagee's prior written consent, (ii) Mortgagee may, but shall
not be obligated to, make proof of loss if not made promptly by
Grantor and is hereby authorized and empowered by Grantor to
settle, adjust or compromise any claims for damage, destruction
or loss thereunder without Grantor's consent, (iii) each
insurance company concerned is hereby authorized and directed to
make payment therefor directly to Mortgagee, and (iv) Mortgagee
shall have the right to apply the insurance proceeds, first, to
reimburse Trustee, Mortgagee and the holders of the Obligations
for all costs and expenses, including attorneys' fees and
disbursements, incurred in connection with the collection of such
proceeds, and, second, the remainder of such proceeds shall be
applied, at Mortgagee's option, in payment of all or any part of
the Obligations, in the order and manner determined by Mortgagee
in its sole discretion (provided that the remainder of the
Obligations shall continue in full force and effect and Grantor
shall not be excused in the payment thereof), or to the cure of
any then current default hereunder, or to the repair, restora-
tion, replacement or reforestation, in whole or in part, of the
portion of the Premises so damaged, destroyed or lost, provided
that any insurance proceeds held by Mortgagee to be applied to
the Premises shall be paid out from time to time upon compliance
by Grantor with such conditions as may be imposed by Mortgagee.
Notwithstanding anything herein or at law or in equity to the
contrary, none of the insurance proceeds paid to Mortgagee as
herein provided shall be deemed trust funds and Mortgagee shall
be entitled to dispose of such proceeds as provided in this
Section and Section 2.03. Grantor expressly assumes all risk of
loss, including a decrease in the use, enjoyment or value, of the
Premises from any casualty whatsoever, whether or not insurable
or insured against.
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Section 2.05 Condemnation.
(a) Grantor's Obligations; Proceedings. Grantor,
promptly upon obtaining knowledge of any pending or threatened
institution of any proceedings for the condemnation of the
Premises or of any right of eminent domain, or of any other
proceedings arising out of injury or damage to the Premises
(including change in grade of any street), or any part thereof or
interest therein, will notify Mortgagee of the threat or pendency
thereof. Mortgagee may participate in any such proceedings, and
Grantor from time to time will execute and deliver to Mortgagee
all instruments requested by Mortgagee to permit such
participation. Grantor shall, at its expense, diligently
prosecute any such proceedings, deliver to Mortgagee copies of
all papers served in connection therewith and consult and
cooperate with Mortgagee, its attorneys and agents, in the
carrying on and defense of any such proceedings, provided that no
settlement of any such proceeding shall be made by Grantor
without Mortgagee's prior written consent. Unless otherwise
instructed by Mortgagee or unless the Premises cannot be restored
to a viable economic unit, Grantor shall promptly, regardless of
whether the proceeds of the condemnation award or the proceeds of
the sale in lieu of condemnation shall be otherwise applied by
Mortgagee as provided herein, commence and diligently pursue to
completion the restoration, replacement, rebuilding or
reforestation of the Premises as nearly as possible to their
value, condition and character immediately prior to the date of
award or sale giving due effect to the constraints imposed by
such condemnation.
(b) Mortgagee's Rights to Proceeds. The proceeds of
condemnation awards or proceeds of sale in lieu of condemnation,
together with all judgments, decrees and awards for injury or
damage to the Premises, are hereby assigned and shall be paid to
Mortgagee. Grantor agrees to execute and deliver such further
assignments thereof as Mortgagee may request and authorizes
Mortgagee to collect and receive the same, to give receipts and
acquittances therefor, and to appeal from any such judgment,
decree or award. Mortgagee shall in no event be liable or
responsible for failure to collect, or exercise diligence in the
collection of, any of the same. If Mortgagee shall elect by
written notice to Grantor not to apply for any such condemnation
award, Grantor is hereby authorized to pursue such award in its
own name, provided any proceeds received thereby shall be applied
against payment of the Obligations.
(c) Application of Proceeds. Mortgagee shall have the
right to apply any proceeds, judgments, decrees or awards re-
ferred to in subsection (b) of this Section, first, to reimburse
Trustee and Mortgagee for all costs and expenses, including
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attorneys' fees, incurred in connection with the proceeding in
question or the collection of such amounts, and, second, the
remainder thereof as provided in Section 2.04(b) for insurance
proceeds held by Mortgagee. Notwithstanding anything herein or
at law or in equity to the contrary, none of the proceeds,
judgments, decrees or awards or payments in lieu thereof paid to
Mortgagee as herein provided shall be deemed trust funds and
Mortgagee shall be entitled to dispose of such proceeds as
provided in this Section.
(d) Effect on the Obligations. Notwithstanding any
condemnation, taking or other proceeding referred to in this
Section causing injury to or decrease in value of the Premises
(including a change in grade of any street), Grantor shall
continue to pay the Obligations as provided herein. Any
reduction in the Obligations resulting from such application
shall be deemed to take effect only on the date of such receipt
by Mortgagee or Trustee of such proceeds, judgments, decrees or
awards and applications against the Obligations, provided that,
if prior to the receipt by Trustee or Mortgagee of such proceeds,
judgment, decree or award the Premises shall have been sold on
foreclosure of this Mortgage or otherwise (unless Mortgagee has
consented in writing thereto), Mortgagee shall have the right to
receive the same to the extent of any deficiency found to be due
upon such sale, with interest thereon at the rate payable on
Prime Loans under the Loan Agreement, whether or not a deficiency
judgment on this Mortgage shall have been sought, recovered or
denied, together with attorneys' fees and disbursements incurred
by Trustee or Mortgagee in connection with the collection
thereof.
Section 2.06 Liens and Liabilities.
(a) No Liens. Grantor will not, without Mortgagee's
consent, create, place or permit to be created or placed, or
through any act or failure to act acquiesce in the placing of, or
allow to remain, any deed of trust, mortgage, trust deed, deed to
secure debt, or other mortgage instrument securing repayment of a
loan or debt, security interest or conditional sale or other
title retention document, against or covering the Premises prior
to, on a parity with or subordinate to the lien of this Mortgage,
other than the Permitted Encumbrances, and will pay, bond or
otherwise discharge, from time to time, when the same shall
become due, all lawful claims and demands of mechanics,
materialmen, laborers and others which, if unpaid, might result
in, or permit the creation of, a lien on the Premises, or on the
revenues, rents, issues, income or profits arising therefrom,
and, in general, Grantor shall do, or cause to be done, at
Grantor's sole cost and expense, everything necessary to fully
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preserve the lien, security interest and priority of this Mort-
gage.
(b) No Consent. Nothing in the Mortgage Documents
shall be deemed or construed in any way as constituting the
consent or request by Trustee or Mortgagee, express or implied,
to any contractor, subcontractor, laborer, mechanic or
materialmen for the performance of any labor or the furnishing of
any material for any improvement, construction, alteration or
repair of the Premises. Grantor further acknowledges and agrees
that neither Trustee nor Mortgagee stand in any fiduciary
relationship to Grantor.
(c) Right to Contest. Notwithstanding anything to the
contrary contained in this Section 2.06, Grantor shall have the
right to contest in good faith the validity of any lien referred
to in subparagraph (a) of this Section, encumbrance, charge or
security interests, provided that and so long as (1) the same is
done by Grantor upon prior written notice to Mortgagee and at
Grantor's sole cost and expense and with due diligence and
continuity so as to resolve as promptly as possible such question
of validity; (2) neither the Premises nor any part thereof will
be in immediate danger of being forfeited or lost by reason of
such contest; (3) such contest shall not subject Mortgagee to
prosecution for a criminal offense or a claim for civil liabili-
ty; (4) Grantor shall either bond such lien, encumbrance, or
charge or deposit security with Mortgagee in an amount and in
form and substance satisfactory to Mortgagee for application
towards the cost of curing or removing the same from record
pursuant to clause (5) below; (5) Grantor shall thereafter
diligently proceed to cause such lien, encumbrance or charge to
be removed and discharged prior to the date the Premises is
listed for an in rem action with respect to such lien,
encumbrance or charge or any writ or order is issued under which
the Premises may be sold pursuant to a final judgment; (6)
Grantor indemnifies and holds harmless Mortgagee from and against
any and all expenses, claims, demands, obligations, liabilities,
suits, actions and penalties upon or arising out of such contest,
and (7) Grantor is not in default under any Mortgage Document and
no event has occurred which, with the giving of notice or the
passage of time, or both, might constitute an event of default
under any Mortgage Document.
(d) Approved Encumbrance. In the event the Premises
or any part thereof is now or hereafter subject to an approved
prior deed of trust, mortgage or lien ("Approved Encumbrance"),
Grantor shall: (i) pay the principal, interest and all other
sums secured thereby no later than five (5) days prior to their
due date either directly to the holder of the Approved
Encumbrance or, at the election of Mortgagee, to Mortgagee for
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remittance in a timely manner to the holder of the Approved
Encumbrance; and will comply with all other terms, covenants and
conditions thereof; (ii) if requested hereafter by Mortgagee,
produce to Mortgagee from time to time no less than three (3)
days prior to the due date of the installments of principal,
interest and other sums payable thereof, receipts or other
evidence of payment thereof satisfactory to Mortgagee, unless
Mortgagee shall have required that such payments be made to
Mortgagee, in accordance with subparagraph (i) hereof; (iii) not
enter into any modification, amendment, agreement or arrangement
with respect thereto and will not obtain any additional advances
thereunder, without the prior written consent of Mortgagee,
expressly including, but not in limitation of the foregoing, any
such modification, amendment, agreement or arrangement pursuant
to which Grantor is granted any forbearance or indulgence (as to
time or amount) in the payment of any principal, interest or
other sums due in accordance with the terms and provisions of the
Approved Encumbrance; and (iv) notify Mortgagee promptly of the
receipt of any notice given by the holder of any Approved
Encumbrance.
Section 2.07 Taxes and Other Charges.
(a) Taxes on the Premises. Grantor will pay not later
than fifteen (15) days before the same are delinquent, and, in
any event, before any penalty, interest or cost for non-payment
thereof may be added thereto, all taxes, assessments, vault,
water and sewer rents, rates, charges and assessments, levies,
permits, inspection and license fees and other governmental and
quasi-governmental charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, heretofore or hereafter
assessed, levied or otherwise imposed against or upon, or which
may become a lien upon, the Premises or any part thereof or any
appurtenance thereto, or the revenues, rents, issues, income and
profits of the Premises or arising in respect of the occupancy,
use or possession thereof (collectively, "Impositions"). Grantor
will also pay any penalty, interest or cost for non-payment of
Impositions which may become due and payable, and such penalties,
interest or cost shall be included within the term Impositions.
Mortgagor shall not claim, demand or be entitled to receive any
credit against the Obligations for so much of the Impositions
assessed against the Premises or any part thereof or that are
applicable to the Obligations or to Mortgagee's interest in the
Premises. No deduction shall be claimed from the taxable value
of the Premises or any part thereof by reason of the Obligations,
this Mortgage or any other instrument securing the Obligations.
(b) Receipts. Unless Grantor is making monthly
deposits with Mortgagee pursuant to Section 2.08, or unless
Mortgagee otherwise directs, Grantor will furnish to Mortgagee,
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upon Mortgagee's request, proof of payment at the time same is
made, and thereafter, upon receipt, validated receipts showing
payment in full of all Impositions.
(c) Brundage Clause. In the event of the enactment
after the date hereof of any law in the State in which the
Premises are located or any other governmental entity deducting
from the value of the Premises for the purpose of taxation any
lien or security interest thereon, or changing in any way the
laws for the taxation of mortgages, deeds of trust or other liens
or debts secured thereby, or the manner of collection of such
taxes, so as to affect this Mortgage, the Obligations, Mortgagee
or the holders of the Obligations, then, and in such event,
Grantor shall, on demand, pay to Mortgagee or such holder, or
reimburse Mortgagee or such holder for payment of, all taxes,
assessments, charges or liens for which Mortgagee or such holder
is or may be liable as a result thereof, provided that if any
such payment or reimbursement shall be unlawful or would
constitute usury or render the Obligations wholly or partially
usurious under applicable law, then Mortgagee may, at its option,
declare the Obligations immediately due and payable or require
Grantor to pay or reimburse Mortgagee for payment of the lawful
and non-usurious portion thereof.
(d) Right to Contest. Notwithstanding anything to the
contrary contained in this Section 2.07, Grantor shall have the
right to protest and/or contest any Imposition imposed upon the
Premises or any part thereof, provided that and so long as (1)
the same is done by Grantor upon prior written notice to
Mortgagee and at Grantor's sole cost and expense and with due
diligence and continuity so as to resolve such protest and/or
contest as promptly as possible; (2) neither the Premises nor any
part thereof is or will be in immediate danger of being forfeited
or lost by reason of such protest or contest; (3) Grantor shall
establish a reserve or other security with Grantor in an appro-
priate amount and in form and substance satisfactory to Mortgagee
for application to the cost of curing or removing the same from
record pursuant to clause (4) below; (4) in any event, each such
contest shall be concluded and the tax assessment, penalties,
interest and costs shall be paid prior to the date such judgment
becomes final or any writ or order is issued under which the
Premises may be sold pursuant to such judgment; and (5) Grantor
indemnifies and holds harmless Mortgagee from and against any and
all expenses, claims, demands, obligations, liabilities, suits,
actions and penalties upon or arising out of such protest and/or
contest. Pending the determination of any such protest or
contest, Grantor shall not be obligated to pay any such Imposi-
tion unless nonpayment of such Imposition will subject the
Premises or any part thereof to sale or other liability or
forfeit by reason of non-payment. In addition, to the extent
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that the same may be permitted by law, Grantor shall have the
right to apply for the conversion of any Imposition to make the
same payable in annual installments over a period of years, and
upon such conversion Grantor shall be obligated only to pay and
discharge said periodic installments as required by this Section
2.07.
Section 2.08 Escrows. Grantor will, at the option of
Mortgagee, pay to Mortgagee, simultaneously with each monthly
installment of interest hereunder one-twelfth of an amount
(hereinafter referred to as the "Escrow Fund") which would be
sufficient to pay the Impositions payable, or estimated by
Mortgagee to be payable, during the ensuing twelve (12) months.
Mortgagee will apply the Escrow Fund to the payment of the
Impositions which are required to be paid by Grantor pursuant to
the provisions of this Mortgage. If the amount of the Escrow
Fund shall exceed the amount of the Impositions payable by
Grantor pursuant to the provisions of this Mortgage, Mortgagee
shall, in its discretion, (a) return any excess to Grantor or (b)
credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Mortgagee may deal with
the person shown on the records of Mortgagee to be the owner of
the Premises. If the Escrow Fund is not sufficient to pay the
Impositions, as the same become payable, Grantor shall pay to
Mortgagee, upon request, an amount which Mortgagee shall estimate
as sufficient to make up the deficiency. Until expended or
applied, as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of Mortgagee and shall not bear
interest and, upon an event of default hereunder, may be "used"
by Mortgagee to reduce the Obligations.
Section 2.09 Grantor's Certificates.
(a) If requested by Mortgagee, Grantor shall cause to
be submitted to Mortgagee, within thirty (30) days after the end
of each fiscal year of Grantor, a certification given by an
authorized representative of Grantor, after consultation with
Grantor's general counsel, to the effect that Grantor has not
taken any action and that there has occurred no change in
circumstances for which any further recording or re-recording,
filing or refiling, or registration or re-registration referred
to in Section 2.01(b) is required in order to effect the purposes
described in Section 2.01(a).
(b) Grantor, within twenty (20) days after Mortgagee's
request, shall furnish to Mortgagee a written statement, duly
acknowledged, certifying to Mortgagee and/or any proposed assign-
ee of this Mortgage as to (a) the amount of the Obligations then
due and owing to Mortgagee, (b) the terms of payment of the
Obligations, (c) the date to which interest has been paid under
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the Mortgage Documents and (d) whether any offsets or defenses
exist against the Obligations and, if any are alleged to exist, a
detailed description thereof.
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Section 2.10 Leases.
(a) Leases; Subordination; Attornment. Any and all
future leases for all or part of the Premises to which Grantor is
a party as lessor ('Lease' or 'Leases') shall be subject and
subordinate to this Mortgage, and shall contain provisions
obligating the tenants thereunder, at Mortgagee's option, to
attorn to Mortgagee in the event Mortgagee succeeds to the
interest of Grantor under any such Lease.
(b) Enforcement. Grantor will faithfully keep and
perform all of the obligations of the lessor under any Lease in
accordance with its terms. Grantor will maintain the Leases in
full force and effect and will not, without the prior consent of
Mortgagee, (i) terminate or cancel any Lease or consent to or
accept any termination, cancellation or surrender thereof, or
permit any condition or event to exist or to occur that would, or
would entitle the tenant thereunder to, terminate or cancel the
same, (ii) amend, modify or otherwise change the terms of any
Lease, except as required by law, or to decrease the rent or
other charges or assessment payable by tenants thereunder upon
any renewal or extension of any Lease, (iii) waive any default
under or breach of any Lease, (iv) consent to or permit any
prepayment or discount of rent or payment of advance rent under
any Lease (other than the usual prepayment of rent as would
result from the acceptance on a first day of each month of the
rent for the ensuing month and a reasonable and customary
security deposit of not more than two months' rent in accordance
with the terms of any such Lease), (v) enter into any Lease not
in effect on the date hereof without the prior written consent of
Mortgagee, (vi) give any waiver, consent or approval under any
Lease, or (vii) take any other action in connection with any
Lease that would or might impair the value of Grantor's interest
thereunder or of the Premises subject thereto, or impair the
interest of Mortgagee therein.
(c) Assignment of Leases. Grantor hereby assigns to
Mortgagee all of its right, title and interest as landlord under
Leases now existing or hereafter entered into, and all rents and
other sums payable to Grantor under each such Lease, together
with the right to collect and receive the same. Such assignment
shall be fully operative without any further action on the part
of either party and Mortgagee shall be entitled to all rents,
income and other benefits from the Premises. Grantor hereby
further grants to Mortgagee the right, at Mortgagee's option, to
(i) enter upon and take possession of the Premises for the
purpose of collecting the said rents, income and other benefits,
(ii) dispossess by the usual summary proceedings any tenant
defaulting in the payment thereof to Mortgagee, (iii) let the
Premises or any part thereof, and (iv) apply such rents, income
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and other benefits, after payment of all necessary charges and
expenses, on account of the Obligations and other sums secured
hereby. Such assignment and grant shall continue in effect until
the Obligations and other sums secured hereby are paid, the
execution of this Mortgage constituting and evidencing the
irrevocable consent of Grantor to the entry upon and taking
possession of the Premises by Mortgagee pursuant to such grant,
whether or not foreclosure has been instituted.
(d) Rent Roll. Grantor shall furnish to Mortgagee,
within twenty (20) days after a request by Mortgagee to do so, a
certified statement containing the names of all tenants of the
Premises or any part thereof, the term of their respective
leases, the space occupied, the rents payable and the securities
deposited thereunder, together with true copies of each Lease and
any amendments and supplements thereto.
(e) No Commingling. All securities deposited by
tenants of the Premises shall be treated as trusts funds not to
be commingled with any other funds of Grantor and Grantor shall,
upon demand, furnish to Mortgagee satisfactory evidence of
compliance with this provision, together with a verified
statement of all securities deposited by the tenants.
(f) Successor Not Bound. To the extent not so
provided by applicable law, each Lease of the Premises, or of any
part thereof, entered into after the date hereof, shall provide
that, in the event of the enforcement by Mortgagee of the
remedies provided for by law or by this Mortgage, any person
succeeding to the interest of Grantor as a result of such
enforcement shall not be bound by any payment of rent or
additional rent for more than one month in advance.
(g) License to Grantor. Grantor shall have a license
to collect, receive and retain all rents and other amounts, which
license may be terminated at the sole option of the Mortgagee by
notice to Grantor at any time upon the occurrence and during the
continuance of an Event of Default, without regard to the
adequacy of the Mortgagee's security hereunder.
Section 2.11 Books and Records. Grantor will keep
and maintain or will cause to be kept and maintained on a fiscal
year basis in accordance with generally accepted accounting
practices consistently applied proper and accurate books, records
and accounts reflecting all of the financial affairs of Grantor
and all items of income and expense in connection with the
operation of the Premises or in connection with any services,
equipment or furnishings provided in connection with the
operation of the Premises, whether such income or expense are
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realized by Grantor or by any other person whatsoever, excepting
lessees unrelated to and unaffiliated with Grantor who have
leased from Grantor portions of the Premises for the purpose of
occupying the same. Mortgagee shall have the right from time to
time at all times during normal business hours to examine such
books, records and accounts at the office of Grantor or other
person maintaining such books, records and accounts, and to make
copies or extracts thereof as Mortgagee shall desire. At
Mortgagee's request, Grantor shall furnish Mortgagee with a
complete executed copy of an audited financial statement prepared
by a certified public accountant acceptable to Mortgagee, and
certified to by Grantor as being true, complete and accurate,
covering the operation of the Premises and containing a fully
itemized statement of profit and loss and of surplus and a
balance sheet, and otherwise in form and substance satisfactory
to Mortgagee. Grantor shall furnish to Mortgagee, within ten
(10) days after request, such further detailed information
covering the operation of the Premises, as may be requested by
Mortgagee.
ARTICLE III
Future Advances; Expenses; Indemnity
Section 3.01 Future Advances.
Purposely deleted.
Section 3.02 Advances by Trustee or Mortgagee to pay
Expenses.
Grantor agrees that, if Grantor shall default in any of
its obligations hereunder to pay any amount or to perform any
action, including its obligation under Section 2.07 to pay
Impositions and under Section 2.03 to procure, maintain and pay
premiums on the insurance policies referred to therein, then
Trustee or Mortgagee shall have the right, but not the
obligation, in Grantor's name or in its own name, and without
notice to Grantor, to advance all or any part of such amounts or
to perform any or all such acts, and, for such purpose, Grantor
expressly grants to Trustee and Mortgagee, in addition and
without prejudice to any other rights and remedies hereunder, the
right to enter upon and to take possession of the Premises to
such extent and as often as either of them may deem necessary or
desirable to prevent or remedy any such default, provided that no
exercise by the Trustee or Mortgagee of such right of entry and
possession shall effect, or shall be deemed, an eviction of any
lessee of Grantor pursuant to a Permitted Encumbrance. No such
advance or performance shall be deemed to have cured such default
by Grantor. All sums so advanced and all expenses incurred by
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Trustee or Mortgagee hereunder or under applicable law shall be
deemed Obligations owing by Grantor to Trustee or Mortgagee and
shall bear interest, from the date paid or incurred until paid,
at the rate payable on Prime Loans under the Loan Agreement or at
the maximum rate of interest permitted by law from time to time,
whichever shall be less. All such amounts advanced or incurred,
and all such interest thereon, shall be part of the Obligations
and shall be secured by this Mortgage. Trustee or Mortgagee,
upon making any such advance, shall be subrogated to all of the
rights of the person receiving such advance.
Section 3.03 Grantor Obligated to Pay all Expenses.
(a) Grantor will pay or, on demand, reimburse Trustee,
Mortgagee or any holder of the Obligations for the payment of,
all appraisal fees, recording or filing fees, title insurance
search fees and premiums, Uniform Commercial Code search fees,
escrow fees, trustee's fees, attorneys' fees and disbursements
and all other costs and expenses of every character incurred by
Grantor, Trustee, Mortgagee or any holder of the Obligations in
connection with the closing of the transactions contemplated
under the Loan Agreement, otherwise attributable or chargeable to
Grantor as owner of the Premises.
(b) Grantor will pay or, on demand, reimburse Trustee,
Mortgagee or any holder of the Obligations for the payment of any
costs or expenses (including attorneys' fees and disbursements)
incurred or expended in connection with or incidental to (i) any
default by Grantor under any Mortgage Document or (ii) the
exercise or enforcement by or on behalf of Trustee, Mortgagee or
any holder of the Obligations of any of its rights or remedies
concerning Grantor's obligations under any Mortgage Document,
including the enforcement, compromise or settlement of this
Mortgage or the Obligations or the defense or assertion of the
rights and claims of Trustee, Mortgagee or any holder of the
Obligations hereunder in respect thereof, by litigation or
otherwise.
Section 3.04 Indemnity.
(a) Grantor agrees to indemnify and to hold harmless
Trustee, Mortgagee and the holders of the Obligations from and
against any and all losses, liabilities, suits, obligations,
fines, damages, judgments, penalties, claims, charges, costs and
expenses (including attorney's fees and disbursements) which may
be imposed on, incurred or paid by or asserted against Trustee,
Mortgagee or any holder of the Obligations by reason or on
account of, or in connection with, (i) any default by Grantor
under any Mortgage Document or (ii) Trustee's, Mortgagee's or any
such holder's exercise of any of its rights and remedies, or the
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performance of any of its duties under any Mortgage Document; but
in no event shall Grantor be obligated to indemnify and hold
harmless the Trustee, Mortgagee and the other holders of the
Obligations for any gross negligence or willful misconduct by any
of the aforesaid parties or any of their agents, contractors,
subcontractors, employees, licensees or invitees, (iii) the
construction, reconstruction or alteration of the Improvements,
(iv) any negligence or willful misconduct of Grantor, any lessee
of the Premises, or any of their respective agents, contractors,
subcontractors, servants, employees, licensees or invitees, (v)
any accident, injury, death or damage to any person or property
occurring in, on or about the Premises or any street, drive,
sidewalk, curb or passageway adjacent thereto or (vi) any other
matter arising out of or in any way connected with the Premises
or any Mortgage Document. Any amount payable to Trustee,
Mortgagee or such holder under this Section shall be deemed a
demand obligation, shall be part of the Obligations, and shall be
secured by this Mortgage.
(b) Grantor's obligations under this Section shall not
be affected by the absence or unavailability of insurance
covering the same or by the failure or refusal by any insurance
carrier to perform any obligation on its part under any such
policy of covering insurance. If any claim, action or proceeding
is made or brought against Trustee, Mortgagee or any holder of
the Obligations which is subject to the indemnity set forth in
this Section, Grantor shall, upon notice thereof by Mortgagee,
resist or defend against the same, if necessary in the name of
Trustee, Mortgagee or such holder, by attorneys for Grantor's
insurance carrier (if the same is covered by insurance) or
otherwise by attorneys approved by Mortgagee. Notwithstanding
the foregoing, Trustee, Mortgagee and such holder, in their
discretion, may engage their own attorneys to resist or defend,
or assist therein, and Grantor shall pay, or, on demand, shall
reimburse Trustee, Mortgagee or such holder for the payment of,
the fees and disbursements of said attorneys.
Section 3.05 Interest After Loan Default. If any
payment due under any Mortgage Document is not paid in full when
due, whether on any accelerated due date or on demand or at any
other time specified under any of the provisions thereof, then
the same shall bear interest hereunder at the rate payable on
Prime Loans under the Loan Agreement plus two (2%) percent or the
maximum rate of interest permitted by applicable law from the due
date until paid, whichever is less, and such interest shall be
added to and become a part of the Obligations and shall be
secured hereby.
ARTICLE IV
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Sale or Transfer of the Premises
Grantor acknowledges that the continuous ownership of
the Premises by Grantor is of a material nature to the
transaction and Mortgagee's agreement to create the Obligations.
Grantor agrees that Grantor will not, directly or indirectly,
sell, grant, convey, assign or otherwise transfer without
Mortgagee's consent (collectively, 'Transfer'), or permit to be
the subject of a Transfer, the Premises as an entirety or any
material portion thereof or interest therein or any legal or
beneficial interest therein, by operation of law or otherwise.
For the purposes of this Mortgage, but without limiting the
foregoing, a Transfer of the legal or beneficial ownership,
directly or indirectly, by sale of stock, merger, liquidation or
otherwise, in substantially all of the assets of Grantor shall be
deemed a Transfer of the Premises or an interest therein. The
provisions of this Section shall apply to each and every such
Transfer of all or any portion of the Premises or any legal or
equitable interest therein, regardless of whether or not
Mortgagee has consented to, or waived, by its action or inaction,
its rights hereunder with respect to any previous Transfer of all
or any portion of the Premises or any legal or equitable interest
therein. In the event that Grantor shall Transfer the Premises,
or any portion thereof, or any legal, beneficial or equitable
interest therein, without Mortgagee's prior written consent,
Mortgagee may elect to declare the Obligations, together with any
other sums secured hereby, immediately due and payable.
Mortgagee may withhold its consent to any proposed Transfer for
any reason whatsoever. Any Transfer or attempted Transfer
contrary to the provisions of this Article IV shall be void. No
permitted Transfer of the Premises or any interest therein shall
operate to release, discharge, modify, change or affect the
liability of Grantor, either in whole or in part, unless
Mortgagee specifically agrees in writing to the contrary.
ARTICLE V
Defaults and Remedies
Section 5.01 Events of Default. The term 'Event of
Default', as used in this Mortgage, shall mean the occurrence of
any of the following events:
(a) Grantor shall be in default in the payment of any
of the Obligations when due; or
(b) any Individual Grantor or any party liable on or
in respect of the Obligations ('Responsible Party') shall fail to
observe or perform any covenants or agreements contained in this
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Mortgage or in the other Mortgage Documents or if any event has
occurred which, with the giving of notice or the passage of time,
or both, might constitute a default under this Mortgage or any
Mortgage Document; or
(c) any present or future representation, warranty or
statement of fact when made by or on behalf of an Individual
Grantor or Responsible Party to Mortgagee or Trustee is false or
misleading in any material respect; or
(d) if the Premises shall be taken, attached or
sequestered on execution or other process of law in any action
against any Individual Grantor; or
(e) any Individual Grantor or a Responsible Party
shall be generally unable to pay its debts as they mature,
suspend or discontinue doing business for any reason, become
insolvent, call a meeting of creditors or have a creditors'
committee appointed, make a general assignment for the benefit of
creditors, shall admit in writing its inability to pay its debts
as they become due or shall commence any action or proceeding for
the appointment of an trustee, receiver, custodian or liquidator
of any Individual Grantor or such Responsible Party of all or any
part of their respective properties or assets; or
(f) any Individual Grantor or a Responsible Party
shall commence any action or proceeding for relief under the
Bankruptcy Code or any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
the Bankruptcy Code or any other present or future statute, law
or regulation or shall take any action to authorize any of such
actions or proceedings; or
(g) any Individual Grantor or a Responsible Party
shall have commenced against it any action or proceeding for
relief under the Bankruptcy Code or any reorganization,
arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Bankruptcy Code or any other present
or future statute, law or regulation, or any action or proceeding
for the appointment of any trustee, receiver, custodian or
liquidator of such Individual Grantor or such Responsible Party
or of all or any part of their respective properties or assets
which is not dismissed within thirty (30) days of its
commencement, or such Individual Grantor or such Responsible
Party shall file an answer admitting or not contesting the
allegations of a petition filed against it in any such proceeding
or by any act or omission indicates its consent to, acquiescence
in or approval of, any such action or proceeding or if the relief
requested is granted sooner;
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(h) any guarantee of the Obligations shall at any time
cease to be in full force and effect, or shall be declared void
or invalid or the validity or enforceability thereof shall be
contested by a guarantor or a guarantor shall deny it has any
further liability or obligation, or shall fail to perform its
obligations under the guarantee;
(i) if any claim of priority (except a claim based
upon a Permitted Encumbrance) to this Mortgage or any Mortgage
Document by title, lien or otherwise shall be upheld by a court
of competent jurisdiction or shall be consented to by any
Individual Grantor; or
(j) if any Individual Grantor shall be in default
under the terms of any Approved Encumbrance or if any event has
occurred which, with the giving of notice or the passage of time,
or both, might constitute a default under any Approved
Encumbrance.
Section 5.02 Remedies. Upon the occurrence of any
one or more Events of Default, Trustee or Mortgagee, as the case
may be, may (but shall not be obligated to), in addition to any
rights or remedies available to it under any Mortgage Document,
take such action personally or by its agents or attorneys, with
or without entry, and without notice, demand, presentment or
protest (each and all of which are hereby waived), as it deems
necessary or advisable to protect and enforce its rights and
remedies against Grantor and in and to the Premises, including
the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such order as Trustee or
Mortgagee may determine, in its sole discretion, without
impairing or otherwise affecting its or their other rights or
remedies:
(a) Declare the entire balance of the Obligations
(including the entire principal balance thereof, all accrued and
unpaid interest and any premium thereon and all other such sums
secured hereby) to be immediately due and payable, and upon such
declaration, the entire unpaid balance of the Obligations shall
become and be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are
hereby expressly waived by Grantor, anything in any Mortgage
Document to the contrary notwithstanding; or
(b) Institute a proceeding or proceedings for the
complete foreclosure of this Mortgage under any applicable
provision of law; or
(c) To the extent permitted and in the manner
prescribed by applicable law, sell the Premises, and all estate,
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right, title, interest, claim and demand of Grantor therein, and
all rights of redemption thereof, at one or more private sales,
as an entirety or in parcels, with such elements of real and/or
personal property (and, to the extent permitted by applicable
law, Trustee or Mortgagee may elect to deem all of the Premises
to be real property for purposes thereof), and at such time and
place and upon such terms as it may deem expedient, or as may be
required by applicable law, and in the event of a sale of less
than all of the Premises, this Mortgage shall continue as a lien
and security interest on the remaining portion of the Premises;
or
(d) Institute an action, suit or proceeding in equity
for the specific performance of any of the provisions contained
in any Mortgage Document; or
(e) Sue and recover a judgment on the Obligations, as
the same become due and payable, or in their entirety on account
of any default or defaults by any Individual Grantor under any
Mortgage Document; or
(f) Apply for the appointment of a receiver,
custodian, trustee, liquidator or conservator of the Premises, to
be vested with the fullest powers permitted under applicable law,
as a matter of right and without regard to or the necessity to
disprove the adequacy of the security for the Obligations or the
solvency of any Individual Grantor or any Responsible Party, and
Grantor and each such Responsible Party waives or shall be deemed
to have waived such necessity and consents or shall be deemed to
have consented to such appointment; or
(g) Enter upon the Premises, and exclude Grantor and
its agents and servants wholly therefrom, without liability for
trespass, damages or otherwise, and take possession of all books,
records and accounts relating thereto, and Grantor agrees to
surrender possession of the Premises and of such books, records
and accounts to Trustee or Mortgagee on demand after the happen-
ing of any Event of Default and, in default thereof, Grantor will
pay monthly in advance to Trustee or Mortgagee, as the case may
be, on its entry into possession, the fair and reasonable rental
value for the use and occupation of such part of the Premises as
may be in possession of Grantor; and having and holding the same,
Trustee or Mortgagee may use, operate, manage, preserve, control
and otherwise deal therewith and conduct the business thereof,
either personally or by its superintendents, managers, agents,
servants, attorneys or receivers, without interference from
Grantor; and upon each such entry and from time to time thereaf-
ter, at the expense of Grantor and without interference by
Grantor and as Mortgagee may deem advisable, (i) either by
purchase, repair or construction, may maintain and restore the
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Premises, (ii) may insure or reinsure the same, (iii) may make
all repairs, renewals, replacements, alterations, additions,
betterments and improvements thereto and thereon as Mortgagee may
deem proper, and remodel the Premises so as to make same more
readily rentable, (iv) may complete the construction of the
Improvements and, in the course of such completion, may make such
changes in the contemplated or completed Improvements as it may
deem advisable, or (v) may in every such case in connection with
the foregoing have the right to exercise all rights and powers of
Grantor with respect to the Premises, either in Grantor's name or
otherwise, including the right to make, cancel, enforce or modify
leases and subleases, obtain and evict tenants and subtenants on
such terms as it shall deem advisable; or
(h) With or without the entrance upon or taking
possession of the Premises, collect and receive all earnings,
revenues, rents, issues, profits, income and cash collateral
derived from the Premises, and after deducting therefrom all
costs and expenses of every character incurred by Trustee or
Mortgagee in collecting the same and in using, operating,
managing, preserving and controlling the Premises, and otherwise
in exercising Trustee's or Mortgagee's rights under subsection
(g) of this Section, including all amounts necessary to pay
Impositions, insurance premiums and other charges in connection
with the Premises, as well as compensation for the services of
Trustee, Mortgagee and their respective attorneys, agents and
employees, apply the remainder as provided in Section 5.05; or
(i) Release any portion of the Premises for such
consideration as Trustee or Mortgagee may require without, as to
the remainder of the Premises, in any way impairing or affecting
the lien or priority of this Mortgage, or improving the position
of any subordinate lienholder with respect thereto, except to the
extent that the obligations shall have been reduced by the actual
monetary consideration, if any, received by Trustee or Mortgagee
for such release, and may accept by assignment, pledge or other-
wise any other property in place thereof as Trustee or Mortgagee
may require without being accountable for so doing to any other
lienor; or
(j) Take all action permitted under the Uniform
Commercial Code of the State in which the Premises are located,
Mortgagee having, in addition to all of its other rights under
any Mortgage Document or otherwise (all of which rights shall be
cumulative), all of the rights and remedies of a secured party
under such Uniform Commercial Code; or
(k) Take any other action, or pursue any other right
or remedy, as Trustee or Mortgagee may have under applicable law.
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In the event that Trustee or Mortgagee shall exercise
any of the rights or remedies set forth in subsections (g) and
(h) of this Section, neither such party shall be deemed to have
entered upon or taken possession of the Premises except upon the
exercise of its option to do so, evidenced by its demand and
overt act for such purpose, nor shall either be deemed a
mortgagee in possession by reason of such entry or taking
possession. Neither Trustee nor Mortgagee will be liable to
account for any action taken pursuant to any such exercise other
than for rents actually received by such party, nor shall Trustee
or Mortgagee be liable for any loss sustained by Grantor
resulting from any failure to let the Premises, or from any other
act or omission of Trustee or Mortgagee. Grantor hereby consents
to, ratifies and confirms the exercise by either Trustee or
Mortgagee of said rights and remedies, and appoints each of
Trustee and Mortgagee as its attorney-in-fact, which appointment
shall be deemed to be coupled with an interest and is
irrevocable, for such purposes.
Section 5.03 Expenses. In any suit to foreclose this
Mortgage or enforce any other remedy of Trustee or Mortgagee, as
the case may be, under any Mortgage Document, there shall be
allowed and included as an addition to and a part of the
Obligations in the decree for sale or other judgment or decree
all expenditures and expenses which may be paid or incurred in
connection with the exercise by Trustee or Mortgagee of any of
its rights and remedies provided or referred to in Section 5.02
including fees and disbursements of counsel, and the same shall
be secured by this Mortgage.
Section 5.04 Rights Pertaining to Sales. The
following provisions shall apply to any sale or sales of all or
any portion of the Premises under or by virtue of this Article V,
whether made under the power of sale herein granted or by virtue
of judicial proceedings which result in a judgment or decree of
foreclosure and sale:
(a) Mortgagee or Trustee may conduct any number of
sales from time to time. The power of sale set forth in Section
5.02(c) hereof shall not be exhausted by any one or more such
sales as to any part of the Premises which shall not have been
sold, nor by any sale which is not completed or is defective in
Trustee's or Mortgagee's opinion, until the Obligations shall
have been paid in full.
(b) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for
such postponed or adjourned sale without further notice.
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(c) After each sale, Mortgagee, Trustee or an officer
of any court empowered to do so, shall execute and deliver to the
purchaser or purchasers at such sale a good and sufficient
instrument or instruments granting, conveying, assigning and
transferring all right, title and interest of Grantor in and to
the property and rights sold and shall receive the proceeds of
said sale or sales and apply the same as herein provided. Each
of Mortgagee and Trustee is hereby appointed the true and lawful
attorney-in-fact of Grantor, which appointment is irrevocable and
shall be deemed to be coupled with an interest, in Grantor's name
and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the property and rights so sold, and
for that purpose Mortgagee or Trustee may execute all necessary
instruments of conveyance, assignment, transfer and delivery, and
may substitute one or more persons with like power, Grantor
hereby ratifying and confirming all that said attorney or such
substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, Grantor, if requested by Trustee or Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to Trustee or such purchaser or purchasers all such
instruments as may be advisable, in Trustee's or Mortgagee's
judgment, for the purposes designated in such request.
(d) Any and all statements of fact or other recitals
made in any of the instruments referred to in subsection (c) of
this Section given by Mortgagee or Trustee as to nonpayment of
the Obligations, or as to the occurrence of any Event of Default,
or as to the request to sell, or as to notice of time, place and
terms of sale and of the property or rights to be sold having
been duly given, or as to the refusal, failure or inability to
act of Trustee, or as to the appointment of any substitute or
successor Trustee, or as to any other act or thing having been
duly done by Mortgagee or by such Trustee, shall be taken as
prima facie evidence of the truth of the facts so stated and
recited. Mortgagee or Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale so held, including the posting of notices
and the conduct of the sale, but in the name and on behalf of
Mortgagee or Trustee.
(e) The receipt of Mortgagee or Trustee for the
purchase money paid at any such sale, or the receipt of any other
person authorized to give same, shall be sufficient discharge
therefor to any purchaser of any property or rights sold as
aforesaid, and no such purchaser, or its representatives,
grantees or assigns, after paying such purchase price and
receiving such receipt, shall be bound to see to the application
of such purchase price or any part thereof upon or for any trust
or purpose of this Mortgage or, in any manner whatsoever, be
answerable for any loss, misapplication or nonapplication of any
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such purchase money, or part thereof, or be bound to inquire as
to the authorization, necessity, expediency or regularity of any
such sale.
(f) Any such sale or sales shall operate to divest all
of the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Grantor in and to the
properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Grantor and any and all persons
claiming or who may claim the same, or any part thereof, by,
through or under Grantor to the fullest extent permitted by
applicable law.
(g) Upon any such sale or sales, Mortgagee or any
holder of the Obligations may bid for and acquire the Premises
and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting against the Obligations the amount of
the bid made therefor, after deducting therefrom the expenses of
the sale, the cost of any enforcement proceeding hereunder and
any other sums which Trustee or Mortgagee is authorized to deduct
under the terms hereof, to the extent necessary to satisfy such
bid.
(h) In the event that Grantor, or any person claiming
by, through or under Grantor, shall transfer or refuse or fail to
surrender possession of the Premises after any sale thereof, then
Grantor or such person shall be deemed a tenant at sufferance of
the purchaser at such sale, subject to eviction by means of
forcible entry and detainer proceedings, or subject to any other
right or remedy available hereunder or under applicable law.
(i) Upon any such sale, it shall not be necessary for
Trustee, Mortgagee or any public officer acting under execution
or order of court to have present or constructively in its
possession any or all of the Premises.
(j) In case of a sale of all or any part of the
Premises and of the application of the proceeds of sale to the
payment of the Obligations, the Trustee or Mortgagee shall be
entitled to enforce payment from the Grantor of all amounts then
remaining due and unpaid and to recover judgment against the
Grantor for any portion thereof remaining unpaid, with interest
as hereinbefore set forth.
(k) In the event a foreclosure hereunder shall be
commenced by Trustee or Mortgagee, Trustee or Mortgagee may, at
any time before the sale of the Premises, abandon or direct the
appropriate party to abandon the sale, and may institute suit for
the collection of the Obligations and for the foreclosure of this
Mortgage, or in the event that Trustee or Mortgagee should
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institute a suit for collection of the Obligations, and for the
foreclosure of this Mortgage, Mortgagee may at any time before
the entry of final judgment in said suit dismiss the same and
require the appropriate party to sell the Premises in accordance
with the provisions of this Mortgage.
Section 5.05 Application of Proceeds. The purchase
money, proceeds or avails of any sale referred to in Section
5.04, together with any other sums which may be held by Trustee
or Mortgagee hereunder, whether under the provisions of this
Article V or otherwise, shall, except as herein expressly
provided to the contrary, be applied as follows:
First: To the payment of the costs and expenses of any
such sale, including compensation to Trustee, Mortgagee,
their agents and counsel, and of any judicial proceeding
wherein the same may be made, and of all expenses, liabili-
ties and advances made or incurred by Trustee or Mortgagee
hereunder, together with interest thereon as provided
herein, and all taxes, assessments and other charges, except
any taxes, assessments or other charges subject to which the
Premises shall have been sold.
Second: To the payment in full of the Obligations
(including principal, interest, premium and fees in such
order as Mortgagee may elect).
Third: To the payment of any other sums secured
hereunder or required to be paid by Grantor pursuant to any
provision of any Mortgage Document.
Fourth: To the extent permitted by applicable law, to
be set aside by Trustee or Mortgagee as adequate security in
its judgment for the payment of sums which would have been
paid by application under clauses First through Third above
to Trustee or Mortgagee, arising out of an obligation or
liability with respect to which Grantor has agreed to
indemnify it, but which sums are not yet due and payable or
liquidated.
Fifth: To the payment of the surplus, if any, to the
Grantor, unless a court of competent jurisdiction shall
otherwise direct.
Section 5.06 Waiver of Rights and Defenses. To the
full extent Grantor may do so under applicable law, Grantor
agrees with Mortgagee as follows:
(a) Grantor will not at any time insist on, plead,
claim or take the benefit or advantage of any statute or rule of
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law now or hereafter in force providing for any appraisement,
valuation, stay, marshaling, extension, moratorium or redemption,
or of any statute of limitations, and Grantor, for itself and its
heirs, devises, representatives, successors and assigns, and for
any and all persons ever claiming an interest in the Premises,
hereby waives and releases all rights of redemption, valuation,
appraisement, notice of intention to mature or declare due the
whole of the Obligations, and all rights to a marshaling of the
assets of Grantor, including the Premises, or to a sale in
inverse order of alienation, in the event of foreclosure of the
liens and security interests created hereunder.
(b) Grantor shall not have or assert any right under
any statute or rule of law pertaining to any of the matters set
forth in subsection (a) of this Section, to the administration of
estates of decedents or to any other matters whatsoever to
defeat, reduce or affect any of the rights or remedies of Trustee
or Mortgagee hereunder, including the rights of Trustee or
Mortgagee hereunder to a sale of the Premises for the collection
of the Obligations without any prior or different resort for
collection, or to the payment of the Obligations out of the
proceeds of sale of the Premises in preference to any other
person.
(c) If any statute or rule of law referred to in this
Section and now in force, of which Grantor or any of its heirs,
devisees, representatives, successors or assigns and such other
persons claiming any interest in the Premises might take advan-
tage despite this Section, shall hereafter be repealed or cease
to be in force, such statute or rule of law shall not hereafter
be deemed to preclude the application of this Section.
(d) In any litigation with Trustee or Mortgagee
(whether or not arising out of or relating to this Mortgage),
Grantor waives trial by jury and the right to interpose any
defense, set off or counterclaim of any nature or description.
(e) Grantor shall not be relieved of its obligation to
pay the Obligations at the time and in the manner provided in any
Mortgage Document, nor shall the lien, security interest or
priority of this Mortgage or any Mortgage Document be impaired by
any of the following actions, non-actions or indulgences by
Trustee or Mortgagee, each of which actions, non-actions or
indulgences Trustee or Mortgagee may, in its discretion, take or
refrain from taking:
(i) any failure or refusal by Trustee or Mortgagee to
comply with any request by Grantor (A) to consent to any
action by Grantor, or (B) to take any action to foreclose
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this Mortgage or otherwise enforce any of the provisions of
any Mortgage Document;
(ii) any release, regardless of consideration or the
absence thereof, of the whole or any part of the Premises or
any other security for the Obligations, or any Responsible
Party;
(iii) Trustee's or Mortgagee's failure to perfect or
to keep perfected any lien, security interest, conveyance or
assignment granted under any Mortgage Document;
(iv) any waiver by Mortgagee of compliance by Grantor
with any provision of any Mortgage Document, or consent by
Mortgagee to the performance by Grantor of any action which
would otherwise be prohibited thereunder, or to the failure
by Grantor to take any action which would otherwise be
required thereunder; and
(v) any agreement or stipulation between Trustee or
Mortgagee and any Individual Grantor, or, with or without
Grantor's consent, between Trustee or Mortgagee and any
subsequent owner or owners of the Premises or any other
security for the obligations, renewing, extending or
modifying the time of payment or the terms of any Mortgage
Document (including a modification of any interest rate),
and, in any such event, Grantor shall continue to be
obligated to pay the Obligations at the time and in the
manner provided in the Mortgage Documents, as so renewed,
extended or modified, unless expressly released and
discharged by Mortgagee.
(f) Regardless of consideration or the absence
thereof, and without the necessity for any notice to or consent
by the holder of any subordinate lien, encumbrance, right, title
or interest in or to the Premises, Mortgagee may release any
person at any time liable for the payment of the Obligations or
any portion thereof or any part of the security held for the
Obligations and may extend the time of payment or otherwise
modify the terms of any Mortgage Document, including a
modification of the interest rate payable on the principal
balance of the Obligations without in any manner impairing or
affecting this Mortgage or the lien thereof or the priority of
this Mortgage, as so extended and modified, as security for the
Obligations over any such subordinate lien, encumbrance, right,
title or interest. Mortgagee may resort for the payment of the
Obligations to any other security held by Mortgagee in such order
and manner as Mortgagee, in its discretion, may elect. Mortgagee
may take action to recover the Obligations, or any portion
thereof, or to enforce any covenant of any Mortgage Document
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without prejudice to the right of Mortgagee thereafter to
foreclose this Mortgage. Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but shall be
entitled to every additional right and remedy now or hereafter
afforded by law or equity. The rights of Mortgagee under this
Mortgage shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of
Mortgagee shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision.
Resort to security will not be required at any time. In the
event of a foreclosure of this Mortgage, the Obligations then due
the Mortgagee shall not be merged into any decree of foreclosure
entered by the court, and Mortgagee may concurrently or
subsequently seek to foreclose one or more mortgages or deeds of
trust which also secure said Obligations.
Section 5.07 Exercise by Trustee. Notwithstanding
anything herein to the contrary, Trustee (a) shall not exercise,
or waive the exercise of, any of its rights or remedies under
this Article (other than its right to reimbursement) except upon
the request of Mortgagee, and (b) shall exercise, or waive the
exercise of, any or all of such rights or remedies upon the
request of Mortgagee and, at the direction of Mortgagee, adhere
to Mortgagee's manner of such exercise or waiver, provided that
Trustee shall have the right to decline to follow any of such
requests or directions if Trustee shall be advised by counsel
that the action or proceeding, or manner thereof, so directed may
not lawfully be taken or waived.
ARTICLE VI
Defeasance
If the Obligations shall be paid as the same become due
and payable and there shall be no further Obligations whether
contingent or otherwise, then and in that event only all rights
hereunder shall terminate and the Premises shall become wholly
released and cleared of the liens, security interests,
conveyances and assignments evidenced hereby, at Grantor's sole
cost and expense, upon receipt by Mortgagee of evidence
satisfactory to it, that the foregoing conditions have been
satisfied. In such event, Trustee or Mortgagee, as applicable,
shall, at the request of Grantor, promptly deliver to Grantor, in
recordable form, all such documents as shall be necessary to
release the Premises from the liens, security interests,
conveyances and assignments evidenced hereby. Notwithstanding
anything in the preceding sentence to the contrary, Trustee shall
so release the Premises only upon the direction of Mortgagee.
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ARTICLE VII
Additional Provisions
Section 7.01 General.
(a) No delay or omission by Trustee or Mortgagee to
exercise any right or remedy hereunder upon an Event of Default
shall impair such exercise, or be construed to be a waiver of any
such Event of Default or an acquiescence therein.
(b) The failure, refusal or waiver by Trustee or
Mortgagee of its right to assert any right or remedy hereunder
upon any Event of Default or other occurrence shall not be
construed as waiving such right or remedy upon any other or
subsequent Event of Default or other occurrence.
(c) No recovery of any judgment by Trustee or
Mortgagee and no levy of an execution upon the Premises or any
other property of Grantor shall affect, in any manner or to any
extent, the lien and security interest of this Mortgage upon the
Premises, or any liens, rights, powers or remedies of Trustee or
Mortgagee hereunder, and such liens, rights, powers and remedies
shall continue unimpaired as before.
(d) Acceptance of any payment after the occurrence of
an Event of Default shall not be deemed a waiver or a cure of
such Event of Default, and acceptance of any payment less than
any amount then due shall be deemed an acceptance on account
only.
(e) Nothing in any Mortgage Document shall affect the
obligations of Grantor to pay the Obligations in the manner and
at the time and place herein or therein respectively expressed.
(f) In the event that Trustee or Mortgagee shall have
proceeded to enforce any right or remedy hereunder by foreclo-
sure, sale, entry or otherwise, and such proceeding shall be
discontinued, abandoned or determined adversely for any reason,
then Grantor, Trustee and Mortgagee shall be restored to their
former positions and rights hereunder with respect to the
Premises, subject to the lien hereof.
Section 7.02 Provisions as to Payments; Advances.
(a) All payments of the Obligations shall be made in
such lawful money of the United States of America as shall be
legal tender for payment of all debts, public and private, at the
time of payment, shall be made in the manner expressly designated
therefor or, if no such designation is made, at the address of
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Mortgagee indicated in Section 7.05, or at such other place as
Mortgagee may designate from time to time.
(b) If any of the Obligations cannot lawfully be
secured by this Mortgage, or if any part of the Premises cannot
lawfully be subject to the lien and security interest hereof, to
the full extent of said Obligations, then all payments made
thereon shall be applied first in discharge of that portion
thereof which is unsecured by this Mortgage.
(c) To the extent that any of the Obligations are used
to pay indebtedness secured by any Permitted Encumbrance or other
outstanding lien, security interest or charge against the
Premises or to pay in whole or in part the purchase price there-
for, Trustee and Mortgagee shall be subrogated to any and all
rights, security interests and liens held by any owner or holder
of the same, whether or not the same are released. Grantor
agrees that, in consideration of such payment by Trustee or
Mortgagee, Grantor hereby waives and releases all demands,
defenses and causes of action for offsets and payments with
respect to the same.
(d) Any payment made under this Mortgage by any person
at any time liable for the payment of the Obligations, or by any
subsequent owner of the Premises, or by any other person whose
interest in the Premises might be prejudiced in the event of a
failure to make such payment, or by any partner, stockholder,
officer or director thereof, shall be deemed, as between Trustee
or Mortgagee and all such persons, to have been made on behalf of
all such persons.
Section 7.03 Usury Savings Clause. All agreements
in any Mortgage Document are expressly limited so that in no
contingency or event whatsoever, whether by reason of advancement
or acceleration of maturity of the Obligations, or otherwise,
shall the amount agreed to be paid hereunder for the use,
forbearance or detention of money exceed the highest lawful rate
permitted under applicable usury laws. If, from any circumstance
whatsoever, fulfillment of any provision of any Mortgage
Document, at the time performance of such provision shall be due,
shall involve transcending the limit of validity prescribed by
law which a court of competent jurisdiction may deem applicable
hereto, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity and if, from any
circumstance whatsoever, Trustee or Mortgagee shall ever receive
as interest an amount which would exceed the highest lawful rate,
the receipt of such excess shall be deemed a mistake and shall be
canceled automatically or, if theretofore paid, such excess shall
be credited against the principal amount of the Obligations to
which the same may lawfully be credited, and any portion of such
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excess not capable of being so credited shall be rebated to
Grantor.
Section 7.04 Separability. If, in the jurisdiction
where the Premises are located, all or any portion of any
provision of any Mortgage Document shall be held to be invalid,
illegal or unenforceable in any respect, then, at Mortgagee's
option, such invalidity, illegality or unenforceability shall
not affect any other provision thereof, and such provision shall
be limited and construed in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion thereof were not
contained therein.
Section 7.05 Notices.
(a) All notices and other communications provided for
hereunder shall be in writing, shall be sent by messenger or by
registered, certified or express mail, postage prepaid, and shall
be addressed as follows:
If to Grantor:
PF Acquisition Corp.
90 Linden Place
Rochester, New York 14603
Attention: Roy A. Myers
President
Curtice-Burns Foods, Inc.
90 Linden Place
Rochester, New York 14603
Attention: William D. Rice
Senior Vice President
If to Mortgagee:
Springfield Bank for Cooperatives
67 Hunt Street
Agawam, Massachusetts 01001
Attention: C. Scott Herring
Vice President
If to Trustee:
Commonwealth Title Company
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1120 Pacific Avenue
Tacoma, Washington 98402
or, as to each such person, at such other address as shall be
designated by such person in a written notice to the other
persons entitled to receive notices and other communications
hereunder. All such notices and communications shall, when
mailed, be effective when deposited in the mails.
Section 7.06 Right to Deal. In the event that
ownership of the Premises becomes vested in a person other than
Grantor, Trustee and Mortgagee may, without notice to Grantor,
deal with such successor or successors in interest with reference
to this Mortgage or the Obligations in the same manner as with
Grantor, without in any way vitiating or discharging Grantor's
liability hereunder or for the payment of the Obligations or
being deemed a consent to such vesting.
Section 7.07 No Merger.
(a) If both the lessor's and the lessee's interest
under any lease which constitutes a part of the Premises shall at
any time become vested in any one person, this Mortgage and the
lien and security interest created hereby shall not be destroyed
or terminated by the application of the doctrine of merger and,
in such event, Trustee and Mortgagee shall continue to have and
enjoy all of the rights and privileges of Trustee and Mortgagee
hereunder as to each separate estate.
(b) Upon the foreclosure of the lien created hereby on
the Premises, as herein provided, any leases then existing shall
not be destroyed or terminated by application of the doctrine of
merger or as a matter of law or as a result of such foreclosure
unless Trustee or Mortgagee or any purchaser at a foreclosure
sale shall so elect by notice to the lessee in question.
Section 7.08 Applicable Law. This Mortgage shall be
governed by and construed in accordance with the laws of the
State in which the Premises are located.
Section 7.09 Sole Discretion of Trustee and
Mortgagee. Whenever Trustee's or Mortgagee's judgment, consent
or approval is required hereunder for any matter, or either shall
have an option or election hereunder, such judgment, the decision
as to whether or not to consent to or approve the same or the
exercise of such option or election shall be in the sole
discretion of Trustee or Mortgagee, as the case may be. If, at
any time, Grantor believes that Mortgagee or Trustee has not
acted reasonably in granting or withholding any approval or
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consent under this Mortgage or any other Mortgage Document, as to
which approval or consent either Mortgagee or Trustee has
expressly agreed to act reasonably or, absent such agreement, a
court of law having jurisdiction over the subject matter would
require Mortgagee or Trustee to act reasonably, then Grantor's
sole remedy shall be to seek injunctive relief or specific
performance and no action for monetary damages or punitive
damages shall in any event or under any circumstance be
maintained by Grantor against Mortgagee or Trustee.
Section 7.10 Provisions as to Covenants and
Agreements. All of Grantor's covenants and agreements hereunder
shall run with the land, and time is of the essence with respect
thereto.
Section 7.11 Matters to be in Writing. This Mortgage
cannot be altered, amended, modified, terminated or discharged
except in a writing signed by the party against whom enforcement
of such alteration, amendment, modification, termination or
discharge is sought. No waiver, release or other forbearance by
Trustee or Mortgagee will be effective against Trustee or
Mortgagee unless it is in a writing signed by Trustee and
Mortgagee, and then only to the extent expressly stated.
Notwithstanding the preceding two (2) sentences, Trustee shall
not enter into any such writing without Mortgagee's consent,
except pursuant to Section 5.07.
Section 7.12 Construction of Provisions. The
following rules of construction shall be applicable for all
purposes of this Mortgage and all documents or instruments
supplemental hereto, unless the context otherwise requires:
(a) All references herein to numbered Articles or
Sections or to lettered Exhibits are references to the Articles
and Sections hereof and the Exhibits annexed to this Mortgage,
unless expressly otherwise designated in context.
(b) The terms 'include', 'including' and similar
terms shall be construed as if followed by the phrase 'without
being limited to.'
(c) The term 'Premises' shall be construed as if
followed by the phrase 'or any part thereof.'
(d) The term 'Obligations' shall be construed as if
followed by the phrase 'or any other sums secured hereby, or any
part thereof.'
(e) Words of masculine, feminine or neuter gender
shall mean and include the correlative words of the other
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genders, and words importing the singular number shall mean and
include the plural number, and vice versa.
(f) The term 'person' shall include natural persons,
firms, partnerships, corporations and any other public and
private legal entities.
(g) The term 'provisions' when used with respect
hereto or with respect to any other document or instrument, shall
be construed as if preceded by the phrase 'terms, covenants,
agreements, requirements, conditions and/or.'
(h) All Article, Section and Exhibit captions herein
are used for convenience and reference only and in no way define,
limit or describe the scope or intent of, or in any way affect,
this Mortgage.
(i) No inference in favor of, or against, any party
shall be drawn from the fact that such party has drafted any
portion hereof.
(j) The cover page of and all recitals set forth in,
and all Exhibits to, this Mortgage are hereby incorporated in
this Mortgage.
(k) All obligations of Grantor hereunder shall be
performed and satisfied by or on behalf of Grantor at Grantor's
sole cost and expense.
(l) The term 'lease' shall mean 'tenancy, subtenancy,
lease or sublease' and the term 'lessee' shall mean 'tenant,
subtenant, lessee and sublessee.'
Section 7.13 Successors and Assigns. The provisions
hereof shall be binding upon each Individual Grantor and the
heirs, devisees, representatives, successors and assigns of such
Individual Grantor, including successors in interest of such
Individual Grantor in and to all or any part of the Premises, and
shall inure to the benefit of Trustee, Mortgagee and the holders
of the Obligations and their respective heirs, successors, legal
representatives, substitutes and assigns. All references in
this Mortgage to such Individual Grantor, Trustee or Mortgagee
shall be construed as including all of such other persons with
respect to the person referred to. Where two or more persons
have executed this Mortgage, the obligations of such persons
shall be joint and several except to the extent the context
clearly indicates otherwise.
Section 7.14 Counterparts. This Mortgage may be
executed in any number of counterparts with the same effect as if
all parties hereto had executed the same document. All such
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counterparts shall be construed together and shall constitute one
instrument, but in making proof hereof, it shall only be
necessary to produce one such counterpart.
Section 7.15 Use of Mortgagee's Name. Grantor shall
not use Mortgagee's name or the name of any person, firm or
corporation controlling, controlled by or under common control
with the Mortgagee in connection with any of the Grantor's
activities, except as such use may be required by applicable law
or regulation of any governmental body, or by any financing
institution with which Grantor may be doing business.
Section 7.16 Management. Grantor covenants that, at
all times prior to the payment in full of the Obligations, the
Premises shall be managed by Grantor or by a management company
which shall have been approved in writing by Mortgagee and
pursuant to a management agreement which shall have been approved
in writing by the Mortgagee prior to the execution thereof.
Section 7.17 Conflicts. If the terms and conditions
hereof conflict with the terms and conditions of the Loan
Agreement, the terms and conditions of the Loan Agreement will
prevail.
Section 7.18 Security Agreement; Fixture Filing.
This Mortgage, to the extent that it conveys or otherwise deals
with personal property or with items of personal property which
are or may become fixtures, shall also be construed as a security
agreement under the Uniform Commercial Code as in effect in the
state in which the Premises are located and, to the extent
permitted by applicable law, this Mortgage constitutes a
financing statement filed as a fixture filing in the official
records of the county recorder of the county in which the
Premises are located with respect to any and all fixtures
included within the term 'Premises' as used herein and with
respect to any goods or other personal property that may now be
or hereafter become such fixtures. For purposes of the
foregoing, the Grantor is the debtor (with its address as set
forth above), and the Mortgagee is the secured party (with its
address as set forth above).
Section 7.19 Relationship. The relationship of
Mortgagee to Grantor hereunder is strictly and solely that of
lender and borrower and nothing contained in this Mortgage or any
other Mortgage Document is intended to create, or shall in any
event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between Mortgagee and
Grantor other than as lender and borrower.
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Section 7.20 Nonagricultural Clause. The Premises
are not used principally or primarily for agricultural or farming
purposes.
ARTICLE VIII
Provisions as to Trustee and Mortgagee
Section 8.01 Trustee's Appointment. Trustee may
resign by an instrument in writing addressed to Mortgagee, or
Trustee may be removed at any time with or without cause by an
instrument in writing executed by Mortgagee. In case of the
death, resignation, removal or disqualification of Trustee or if
for any reason Mortgagee shall deem it desirable to appoint a
substitute or successor trustee to act instead of Trustee herein
named or any substitute or successor Trustee, then Mortgagee
shall have the right and is hereby authorized and empowered to
appoint a successor Trustee, or a substitute Trustee, without any
formality other than an appointment and designation in writing
executed by Mortgagee, and the authority hereby conferred shall
extend to the appointment of other successor and substitute
Trustees successively until the Obligations have been paid in
full or until the Premises are sold hereunder. Such appointment
and designation by Mortgagee shall be full evidence of the right
and authority to make the same and of all facts therein recited.
If Mortgagee is a corporation or a national banking association
and such appointment is executed in its behalf by an officer of
such corporation or national banking association, such
appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any
action by the board of directors or any superior officer of the
corporation or national banking association. Upon the making of
such appointment and designation, all of the estate and title of
Trustee in the Premises shall vest in the named successor or
substitute Trustee and it shall thereupon succeed to and shall
hold, possess and execute all the rights, powers, privileges,
immunities and duties herein conferred upon Trustee; but,
nevertheless, upon the written request of Mortgagee or of the
successor or substitute Trustee, the Trustee ceasing to act shall
execute and deliver an instrument transferring to such successor
or substitute Trustee all of the estate and title in the Premises
of the Trustee so ceasing to act, together with all the rights,
powers, privileges, immunities and duties herein conferred upon
Trustee, and shall duly assign, transfer and deliver any of the
properties and moneys held by said Trustee hereunder to said
successor or substitute Trustee. All references herein to the
Trustee shall be deemed to refer to the Trustee (including any
successor or substitute appointed and designated as herein
provided) from time to time acting hereunder. Grantor hereby
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ratifies and confirms any and all acts which the Trustee herein
named or its successor or successors, or substitute or
substitutes, in this trust, shall do lawfully by virtue hereof.
Section 8.02 Exculpation. Neither Trustee nor
Mortgagee, as the case may be, shall be liable for any error of
judgment or act done by Trustee or Mortgagee, or be otherwise
responsible or accountable under any circumstances whatsoever,
except for any act or omission due to gross negligence or willful
misconduct. Trustee or Mortgagee, as the case may be, shall have
the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be
taken by it hereunder, believed by it to be genuine. All moneys
received by Trustee and Mortgagee shall, until used or applied as
herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law), and neither
Trustee nor Mortgagee shall be under any liability for interest
on any moneys received by it hereunder.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF.
IN WITNESS WHEREOF, each Individual Grantor has
executed this Mortgage as of the day and year first above
written.
PF ACQUISITION CORP.
[Corporate Seal]
ATTEST: By: ROY A. MYERS
------------------------
Name: Roy A. Myers
Title: President
THOMAS M. HAMPSON
-------------------------
Name: Thomas M. Hampson
Title: Assistant Secretary
CURTICE-BURNS FOODS, INC.
[Corporate Seal]
ATTEST: By: WILLIAM D. RICE
-----------------------------
Name: William D. Rice
Title: Senior Vice President
THOMAS M. HAMPSON
-------------------------
Name: Thomas M. Hampson
Title: Assistant Secretary
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RIDER TO MORTGAGE, OPEN END MORTGAGE, DEED OF TRUST,
TRUST DEED, DEED TO SECURE DEBT, PURCHASE MONEY
MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT AND
FINANCING STATEMENT DATED NOVEMBER 3, 1994,
BETWEEN PF ACQUISITION CORP. AND CURTICE-BURNS
FOODS, INC., COLLECTIVELY AS GRANTOR,
COMMONWEALTH TITLE COMPANY, AS TRUSTEE, AND
SPRINGFIELD BANK FOR COOPERATIVES, AS MORTGAGEE
The foregoing instrument is hereby modified and
supplemented as follows (terms referred to in the foregoing
instrument shall have their defined meanings herein unless
otherwise stated):
1. All references to the term 'purchase money
mortgage' contained in the Mortgage are hereby deleted.
2. The words 'good, marketable and insurable'
contained in the first sentence of Section 1.03 of the Mortgage
are hereby deleted so that such sentence shall read '(i) Grantor
has and will have fee simple title to the Premises, free and
clear of all liens, charges and encumbrances of very kind and
character, subject only to Permitted Encumbrances.'
3. (v) of Section 1.03 of the Mortgage is hereby
deleted in its entirety and the following is hereby inserted in
its place and stead: '(v) Grantor will forever defend such title
and the validity, enforceability and priority of the lien and
security interest hereof against the claims of all persons and
parties whomsoever.'
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4. If, as of the date hereof, there exists a default
by any Individual Grantor under any of the Permitted
Encumbrances, or any event has occurred which, with the giving of
notice or the passage of time, or both, would constitute or
result in such a default, notwithstanding Section 1.04 and
Section 5.01(c) of the Mortgage, the existence of same shall not
be deemed an Event of Default under the Mortgage if Grantor shall
give Mortgagee written notice of such default or event as soon as
Grantor has knowledge of same and shall thereafter proceed to
diligently cure such default or correct such event.
5. Subparagraph (e) of Section 2.02 of the Mortgage
is hereby deleted in its entirety and the following is hereby
inserted in its place and stead:
'(e) Environmental Provisions. For the purposes
of this paragraph, the following terms shall have
the following meanings: (i) the term 'Hazardous
Material' shall mean any material or substance
that, whether by its nature or use, is subject to
regulation under any Environmental Requirement,
(ii) the term 'Environmental Requirements' shall
collectively mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980
(42 U.S.C. ss 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss 1801 et
seq.), the Resource Conservation and Recovery Act
(42 U.S.C. ss 6901 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss 2601 et seq.), the Clean
Air Act (42 U.S.C. ss 7401 et seq.) and the
Federal Water Pollution Control Act (33 U.S.C. ss
1251 et seq.), all as presently in effect and as
the same may hereafter be amended, any regulation
pursuant thereto, or any other present or future
law, ordinance, rule, regulation, order or
directive addressing environmental, health or
safety issues of or by any Governmental
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Authority, and (iii) the term 'Governmental
Authority' shall mean the Federal government, or
any state or other political subdivision thereof,
or any agency, court or body of the Federal
government, any state or other political
subdivision thereof, exercising executive,
legislative, judicial, regulatory or
administrative functions. Grantor hereby
represents and warrants to Mortgagee that, to the
best of Grantor's knowledge, (i) no Hazardous
Material has been or is currently located at, in,
on, under or about the Premises in a manner which
violates any Environmental Requirement, or which
requires cleanup or corrective action of any kind
under any Environmental Requirement, (ii) no
releasing, emitting, discharging, leaching,
dumping or disposing of any Hazardous Material
from the Premises onto or into any other property
or from any other property onto or into the
Premises has occurred or is occurring in
violation of any Environmental Requirement, and
(iii) no notice of violation, lien, complaint,
suit, order or other notice with respect to the
environmental condition of the Premises is
outstanding, nor has any such notice been issued
which has not been fully satisfied and complied
with in a timely fashion so as to bring the
Premises into full compliance with all
Environmental Requirements. Grantor shall
comply, and shall cause all tenants or other
occupants of the Premises to comply, in all
respects with all Environmental Requirements, and
will not generate, store, handle, process,
dispose of or otherwise use, and will not permit
any tenant or other occupant of the Premises to
generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on,
under or about the Premises in a manner that
could lead or potentially lead to the imposition
on Grantor, Mortgagee or the Premises of any
liability or lien of any nature whatsoever under
any Environmental Requirement. Grantor shall
notify Mortgagee promptly in the event of any
spill or other release of any Hazardous Material
at, in, on, under or about the Premises which is
required to be reported to a Governmental
Authority under any Environmental Requirement,
will promptly forward to Mortgagee copies of any
notices received by Grantor relating to alleged
violations of any Environmental Requirement which
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may result in a potential liability in excess of
$500,000 in the aggregate and will promptly pay
when due any fine or assessment against
Mortgagee, Grantor or the Premises relating to
any Environmental Requirement, subject to
Grantor's right to contest the same set forth in
Section 2.02(d) hereof. If at any time it is
determined that the operation or use of the
Premises violates any applicable Environmental
Requirement or that there are Hazardous Materials
located at, in, on, under or about the Premises
which, under any Environmental Requirement,
require special handling in collection, storage,
treatment or disposal, or any other form of
cleanup or corrective action, subject to
Grantor's right to contest the same set forth in
Section 2.02(d) hereof, Grantor shall, within
thirty (30) days after receipt of notice thereof
from any Governmental Authority or from
Mortgagee, take, at its sole cost and expense,
such actions as may be necessary to full comply
in all respects with all Environmental
Requirements, provided, however, that if such
compliance cannot reasonably be completed within
such thirty (30) day period, Grantor shall
commence such necessary action within such thirty
(30) day period and shall thereafter diligently
and expeditiously proceed to fully comply in all
respects and in a timely fashion with all
Environmental Requirements. If Grantor fails to
timely take, or to diligently and expeditiously
proceed to complete in a timely fashion, any such
action, Mortgagee may, in its sole and absolute
discretion, after prior written notice to
Grantor, make advances or payments towards the
performance or satisfaction of the same, but
shall in no event be under any obligation to do
so. All sums so advanced or paid by Mortgagee
(including, without limitation, counsel and
consultant fees and expenses, investigation and
laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid
in connection with any judicial or administrative
investigation or proceeding relating thereto,
will immediately, upon demand, become due and
payable from Grantor and shall bear interest at
the rate payable on Prime Loans under the Loan
Agreement from the date any such sums are so
advanced or paid by Mortgagee until the date any
such sums are repaid by Grantor to Mortgagee.
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Grantor will execute and deliver, promptly upon
request, such instruments as Mortgagee may deem
useful or necessary to permit Mortgagee to take
any such action, and such additional notes and
mortgages as Mortgagee may require to secure all
sums so advanced or paid by Mortgagee. If a lien
is filed against the Premises by any Governmental
Authority resulting from the need to expend or
the actual expending of monies arising from an
action or omission, whether intentional or
unintentional, of Grantor or for which Grantor is
responsible resulting in the releasing, spilling,
leaking, leaching, pumping, emitting, pouring,
emptying or dumping of any Hazardous Material
into the waters or onto land located within or
without the State where the Premises is located,
then Grantor will, within thirty (30) days from
the date that Grantor is first given notice that
such lien has been placed against the Premises
(or within such shorter period of time as may be
specified by Mortgagee if such Governmental
Authority has commenced steps to cause the
Premises to be sold pursuant to such lien) either
(a) pay the claim and remove the lien, or (b)
furnish a cash deposit, bond or such other
security with respect thereto as is satisfactory
in all respects to Mortgagee and is sufficient to
effect a complete discharge of such lien on the
Premises. Mortgagee may, at its option, if
Mortgagee reasonably believes that the existence
of a Hazardous Material or other environmental
condition on the Premises poses a danger to the
public health and safety by virtue of the fact
the existence of such Hazardous Material or
environmental condition on the Premises violates
or threatens to violate any Environmental
Requirement, cause an environmental audit of the
Premises or portions thereof to be conducted to
confirm Grantor's compliance with the provisions
of this paragraph, and Grantor shall cooperate in
all reasonable ways with Mortgagee in connection
with any such audit and shall pay all costs and
expenses incurred in connection therewith.
Grantor will defend, indemnify and hold harmless
Mortgagee, its employees, agents, officers and
directors from and against any and all claims,
demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs or
expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or
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otherwise (including, without limitation, counsel
and consultant fees and expenses, investigation
and laboratory fees and expenses, court costs and
litigation expenses) arising out of, or in any
way related to, (i) any breach by Grantor of any
of the provisions of this paragraph, (ii) the
presence, disposal, spillage, discharge,
emission, leakage, release or threatened release
of any Hazardous Material which is at, in, on,
under, about, from or affecting the Premises
including, without limitation, any damage or
injury resulting from any such Hazardous Material
to or affecting the Premises or the soil, water,
air, vegetation, buildings, personal property,
persons or animals located on the Premises or on
any other property or otherwise, (iii) any
personal injury (including wrongful death) or
property damage (real or personal) arising out of
or related to any such Hazardous Material, (iv)
any lawsuit brought or threatened, settlement
reached, or order or directive of or by any
Governmental Authority relating to such Hazardous
Material, or (v) any violation of any
Environmental Requirement or any policy or
requirement of Mortgagee hereunder. This
indemnification shall, notwithstanding any
exculpatory or other provision of any nature
whatsoever to the contrary set forth in the
Mortgage Documents, constitute the personal
recourse undertakings, obligations and
liabilities of Grantor, but shall not be
personally recourse to Grantor's officers,
directors, agents or employees. The obligations
and liabilities of Grantor under this paragraph
shall survive and continue in full force and
effect and shall not be terminated, discharged or
released, in whole or in part, irrespective of
whether the Obligations have been paid in full
and irrespective of any foreclosure of this
Mortgage or acceptance by Mortgagee, its nominee
or wholly owned subsidiary of a deed or
assignment in lieu of foreclosure and
irrespective of any other fact or circumstance of
any nature whatsoever.'
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6. Subparagraph (a) of Section 2.03 of the Mortgage
is hereby deleted in its entirety and the following is hereby
inserted in its place and stead:
'(a) Casualty Insurance. Grantor will keep the
Improvements and the Equipment insured for the
benefit of Trustee, Mortgagee and the holders of
the Obligations against loss or damage of the
kind and in the amounts customarily insured
against by corporations of established reputation
engaged in the same or similar business and
similarly situated.'
7. Notwithstanding paragraph (b) of Section 2.03 of
the Mortgage, insurance companies issuing policies under Section
2.03 need not be licensed to do business in the State of New
York, but must be licensed to do business in the State where the
Premises are located and must otherwise be approved by the
Mortgagee.
8. Notwithstanding (a) (ii) of Section 2.04 of the
Mortgage, Grantor shall not have any obligation to restore the
Premises upon the occurrence of a casualty if, as a consequence
of same, Grantor shall elect to discontinue all or substantially
all of its operations at the Premises and to pay Mortgagee all of
the net insurance proceeds (after payment of the usual costs of
collection) from such casualty.
9. Notwithstanding anything to the contrary contained
in subparagraph (b) of Section 2.04 of the Mortgage, the
following shall apply:
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(a) Grantor shall not be required to obtain
Mortgagee's consent, and Mortgagee shall not be authorized and
empowered on its own, to settle, adjust or compromise any claim
for damage, destruction or loss under any insurance described in
Section 2.03 of the Mortgage, unless such claim exceeds $100,000.
(b) If the Premises are damaged or destroyed and
Mortgagee determines that all the conditions described in this
paragraph have been satisfied, then Mortgagee shall apply the
proceeds of insurance first to all its costs in the collection
thereof, and second to reimbursing Grantor for Grantor's actual
costs, approved by Mortgagee, of restoring the Premises.
Insurance proceeds shall be so applied only if Mortgagee
determines that: (i) the Premises are capable of being suitably
restored to the value, condition and function existing prior to
such damage or destruction; (ii) Grantor is not in default or in
breach of any Obligations, nor has an uncured Event of Default
occurred under the Mortgage, nor do any facts or circumstances
exist that would constitute an Event of Default with the passage
of time or the giving of notice; (iii) sufficient funds are
available (from proceeds of insurance and/or from funds of
Grantor) to enable Grantor to complete such restoration; (iv) the
validity and priority of the Mortgage will not be adversely
affected; (v) Grantor enters into an agreement, reasonably
satisfactory in form and substance to Mortgagee, establishing
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<PAGE>
conditions to disbursements similar to those employed at the time
by institutional construction lenders; (vi) Grantor delivers to
Mortgagee such security as Mortgagee shall reasonably require to
assure completion of restoration; and (vii) Grantor complies with
such further reasonable conditions as Mortgagee shall require.
10. Notwithstanding subparagraph (a) of Section 2.05 of
the Mortgage, Grantor shall not have any obligation to restore
the Premises upon the occurrence of a condemnation if, as a
consequence of same, Grantor shall elect to discontinue all or
substantially all of its operations at the Premises and to pay
Mortgagee all of the net proceeds (after payment of the usual
costs of collection) from such condemnation.
11. Section 2.08 of the Mortgage is hereby deleted in
its entirety.
12. Section 2.11 of the Mortgage is hereby deleted in
its entirety and the following is hereby inserted in its place
and stead:
'Section 2.11 Information Regarding the Operation
of the Premises. Grantor shall furnish to
Mortgagee, with ten (10) days after request, such
information covering the operation of the
Premises, as may be reasonably requested by
Mortgagee.'
13. The following Subparagraphs are hereby added to the
end of Section 7.12 of the Mortgage:
61
<PAGE>
'(m) Whenever Grantor is required to reimburse or pay
Mortgagee or Trustee for any attorney's fees and expenses
expended or incurred by either hereunder, Grantor shall
only be required to reimburse or pay such amounts to the
extent that the amount thereof was reasonable.
(n) Whenever Mortgagee or Trustee is permitted to take
any action after an Event of Default, Mortgagee or
Trustee shall only be permitted to act while such Event
of Default is continuing, and, in no event shall
Mortgagee or Trustee (or any person acting by, through or
under them) have the right to enter onto and take
possession of the Premises unless an Event of Default
shall have occurred and be continuing.
(o) In the case of any indemnity or exculpation of
Mortgagee or Trustee (or any person acting by, through or
under them), in no event shall Grantor be required to
indemnify any person, nor shall any person be exculpated,
to the extent of such person's gross negligence or
willful misconduct.
(p) The term 'Permitted Encumbrance' in this Mortgage
shall be deemed to include all items which are 'Permitted
Liens' under Subparagraphs 7.1 (b), (c), (f), (g), (i)
and (j) of the Loan Agreement, provided that if any of
the foregoing allows Grantor the right to contest a
particular 'Permitted Lien', such contest shall be
subject to any applicable provision of the Mortgage
governing same.'
14. Section 7.17 of the Mortgage is hereby deleted in
its entirety and the following is hereby inserted in its place
and stead:
'Section 7.17 Conflicts.
(a) Notwithstanding anything in this Mortgage to the
contrary, if any term, provision or condition hereof
shall conflict with any term, provision or condition of
the Loan Agreement, then the term, provision or condition
of the Loan Agreement will prevail. Without limiting the
foregoing, if the Loan Agreement provides for any of the
following and this Mortgage does not so provide in
similar circumstances or this Mortgage provides for the
same in similar circumstances in a manner more
restrictive on or less favorable to the Grantor than
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<PAGE>
under the Loan Agreement, then the same shall be deemed
to be a 'conflict' with respect to which the Loan
Agreement shall govern:
(i) any time period by which the Grantor is
required to take any action or after which Mortgagee or
Trustee is permitted to take any action;
(ii) any notice requirement or grace or cure period
with respect to any Event of Default or other obligation
of the Grantor;
(iii) any qualification or exception to any
representation, affirmative or negative covenant or Event
of Default which creates a 'materiality' standard for
such representation, covenant or Event of Default or a
right to contest any matter (provided that any such
contest shall be subject to the provisions of this
Mortgage governing contests); and
(iv) any restriction on the right of Grantor to
Transfer the Premises, which shall be subject to the
rights of Grantor under Sections 7.3, 7.4 and 7.7 of the
Loan Agreement, provided that the net amount of any
proceeds received by Grantor in connection with any
Transfer under such Sections shall first be used to pay
the maximum amount secured by this Mortgage before any
such net proceeds are retained by Grantor; and
(v) any requirement that Trustee or Mortgagee shall
not unreasonably withhold or delay its consent for any
matter whenever Trustee's or Mortgagee's consent or
approval is required, or either shall have any option or
election to take or not to take any action or otherwise
to exercise discretion.
(b) Notwithstanding anything in this Mortgage to the
contrary, if any term, provision or condition hereof
shall conflict with any term, provision or condition of
the Borrower Security Agreement or the Subsidiaries
Security Agreement (as those terms are defined in the
Loan Agreement) regarding any equipment, machinery or
personal property described in Granting Clause Third
hereof (or any other granting clause covering fixtures
and equipment) that is used in the operation of Grantor's
business and which would not be necessary for the
operation and maintenance of the Improvements if no
business operations were conducted thereon, then the
term, provision or condition of the Borrower Security
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<PAGE>
Agreement or the Subsidiaries Security Agreement, as the
case may be, will prevail.'
If there shall be any conflict between the provisions
contained in the Mortgage and the provisions contained in this
Rider, the provisions contained in this Rider shall prevail.
PF ACQUISITION CORP.
[Corporate Seal] By: /s/ Roy A. Myers
--------------------------------
ROY A. MYERS
Title: President
-----------------------------
ATTEST:
By: /s/ Thomas M. Hampson
---------------------------
Thomas M. Hampson
Title: Assistant Secdretary
------------------------
CURTICE-BURNS FOODS, INC.
[Corporate Seal] By: /s/ William D. Rice
--------------------------------
WILLIAM D. RICE
Title: President
-----------------------------
ATTEST:
By: /s/ Thomas M. Hampson
---------------------------
Thomas M. Hampson
Title: Assistant Secdretary
------------------------
64
<PAGE>
Schedule 1 to Exhibit 4.12
In connection with the New Credit Agreement, PFAC, the Company and certain
subsidiaries of the Company entered into a total of 28 substantially identical
mortgages. The mortgages differ from the one filed herewith as Exhibit 4.12
only in nomenclature and other administrative details (as required by the local
law of the jurisdiction in which the mortgaged property is located) and as
described below.
<TABLE>
<CAPTION>
PROPERTY MORTGAGOR AMOUNT SECURED
<S> <C> <C>
(a) Vancouver, British Columbia Nalley's Canada Limited $ 2,000,000
(b) Denver, Colorado Curtice Burns Meat Snacks, Inc $ 5,000,000
(c) Montezuma, Georgia PFAC $ 8,000,000
(d) Montezuma, Georgia Curtice-Burns $ 800,000
(e) Ridgeway, Illinois PFAC $ 500,000
(f) Mt. Summit, Indiana PFAC $ 9,500,000
(g) Benton Harbor, Michigan PFAC $ 1,500,000
(h) Coloma, Michigan PFAC $ 2,500,000
(i) Fennville, Michigan PFAC $ 2,000,000
(j) Sodus, Michigan PFAC $ 500,000
(k) North Bend, Nebraska PFAC $ 300,000
(l) Bergen, New York PFAC $ 3,500,000
(m) Brockport, New York Monroe County IDA $15,000,000
and Curtice-Burns
(n) Brockport, New York Curtice-Burns $ 250,000
(o) Gorham, New York PFAC $ 400,000
(p) Leicester, New York PFAC $ 3,500,000
(q) LeRoy, New York PFAC $ 3,000,000
(r) Lyons, New York PFAC $ 2,000,000
(s) Oakfield, New York PFAC $ 3,000,000
(t) Red Creek, New York PFAC $ 1,500,000
(u) Rushville, New York PFAC $ 2,000,000
(v) Shortsville, New York PFAC $ 1,000,000
(w) Waterport, New York PFAC $ 250,000
(x) Cincinnati, Ohio PFAC $ 1,000,000
(y) Berlin, Pennsylvania PFAC $ 2,500,000
(z) Alamo, Texas PFAC $ 1,500,000
(aa) Enumclaw, Washington Curtice-Burns $ 1,200,000
(ab) Tacoma, Washington* PFAC $25,000,000
</TABLE>
*Filed as Exhibit 4.12
<PAGE>
MARKETING AND FACILITATION AGREEMENT
This is an agreement dated as of November 3, 1994 between Pro-Fac
Cooperative, Inc. ('Pro-Fac') and Curtice-Burns Foods, Inc. ('Curtice Burns').
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.
Curtice Burns has long been engaged in the processing, distribution and
sale of processed foods, now on a diversified geographical basis, 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.
Pro-Fac and Curtice Burns came together in 1961 because of the need of
Pro-Fac to find a stable market for crops grown by its members and patrons and
because of the need of Curtice Burns for a reliable supply of such crops. While
Curtice Burns has always believed that it has available to it adequate funds to
finance its non-Pro-Fac related operations, in order to process and market
Pro-Fac products Curtice Burns has required significant additional sources of
financing in the form of working capital and facilities necessary to give it the
capacity to provide a reliable and stable market for Pro-Fac crops.
Consequently, the willingness of Curtice Burns to enter into its relationship
with Pro-Fac, which has been embodied, since 1961, in the Integrated Agreement
dated June 27, 1992 and in substantially similar predecessor agreements, has
always depended upon the commitment of Pro-Fac to provide financial support and
other accommodations to Curtice Burns from a variety of sources not directly
available to Curtice Burns. Pro-Fac has always provided such accommodations in
order to achieve its primary objective of a guaranteed and stable market for
crops grown by its members and patrons.
When Agway Inc. announced in March of 1993 that it was looking for ways to
dispose of its controlling interest in Curtice Burns, it became evident that a
sale of Curtice Burns would take place and that such a sale to anyone other than
Pro-Fac would almost certainly lead to a termination of the Integrated Agreement
and the reliable and stable market for the products of Pro-Fac members that this
arrangement provided. During the bidding process that ensued, the members of
Pro-Fac voted overwhelmingly in favor of pursuing a bid by Pro-Fac for the stock
of Curtice Burns as being the best alternative available of protecting for the
future the market for their crops historically provided by Curtice Burns. The
Pro-Fac bid was accepted by the Curtice Burns Board of Directors and has led to
the acquisition of control by Pro-Fac of Curtice Burns through the acquisition
by PF Acquisition Corp., a wholly-owned subsidiary of Pro-Fac ('Subsidiary') of
the stock of Curtice Burns and the subsequent merger of Subsidiary into Curtice
Burns (the 'Transaction'), after which Curtice Burns is to continue its
operations as a wholly-owned subsidiary of Pro-Fac.
Following the Transaction, the relationship between Pro-Fac and Curtice
Burns will continue to embody many of the same elements that have historically
existed which have been
<PAGE>
specified in this Marketing and Facilitation Agreement.
The continuation of the arms length nature of this agreement is required by the
new financial arrangements incurred in connection with the Transaction. Both
parties agree that, to the extent consistent with these new financial
obligations, the basic relationship between them set forth in the Integrated
Agreement should be continued in a manner as close to its historically
successful terms as possible.
Pro-Fac continues to realize that Curtice Burns cannot, on its own, provide
the stable and reliable market for the crops of the members of Pro-Fac, and that
in order to achieve the primary Pro-Fac purpose of obtaining that stable and
reliable market, it will continue to be necessary for Curtice Burns to require
that Pro-Fac make available financial and other resources and accommodations to
Curtice Burns as set forth primarily in the 'Finance, ' the 'Marketing,' and the
'Pro-Fac Facilitation Accommodations' sections of this Agreement.
It is therefore agreed as follows:
TERMINATION
1. As a result of the completion of the Transaction, the Integrated
Agreement is terminated and the relationship between Pro-Fac and Curtice Burns
shall be as expressed in this Marketing and Facilitation Agreement. As a part of
the termination, neither Pro-Fac nor Curtice Burns exercised any right to
purchase assets owned by the other, and Curtice Burns repaid debt to Pro-Fac in
an amount equal to the debt of Pro-Fac to the Springfield Bank for Cooperatives.
DEFINITIONS
2. 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 Curtice Burns
shall mean the weighted average of the prices paid by 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 11 hereof.
b. 'Pro-Fac Products' shall mean all products sold by Curtice Burns
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 Curtice Burns 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 Curtice Burns 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.
2
<PAGE>
c. 'Earnings (Losses) on Pro-Fac Products' shall mean the entire
proceeds received by Curtice Burns from the sale of Pro-Fac Products less
the costs incurred by Curtice Burns 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 13 but shall not
include any additional payment pursuant to paragraph 14. '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) the guarantee by Pro-Fac of all indebtedness
for borrowed funds of Curtice Burns; (ii) making available by Pro-Fac to
Curtice Burns access to the Federal Farm Credit System for borrowing of
funds; (iii) the long term commitment of Pro-Fac hereunder to provide to
Curtice Burns a stable and reliable source of high quality crops that
provide the essential basis for the operation and utilization of facilities
of Curtice Burns in which Pro-Fac products are processed; (iv) favorable
extended payment terms provided by Pro-Fac for the payment of Commercial
Market Value for crops of its members; (v) the acceptance by Pro-Fac of the
risk of losses by Curtice Burns on the sale of Pro-Fac Products as set
forth in this Agreement; and (vi) the commitment of Pro-Fac to provide
loans to Curtice Burns for use as working capital of funds of Pro-Fac not
needed by Pro-Fac for its own business purposes, and as permitted under any
third-party debt instruments by which Pro-Fac is bound, at no stated
interest rate.
e. 'Pro-Fac Working Capital' shall mean funds lent to Pro-Fac by
Curtice Burns as provided in paragraph 7 hereof.
f. 'Joint Committee' shall mean a joint committee of the boards of
directors of Pro-Fac and Curtice Burns which shall be comprised of the
chief executive officer of Curtice Burns and an equal number of Pro-Fac
Directors and Disinterested Directors.
STRUCTURE
3. Directors of Curtice Burns. The board of directors of Curtice Burns
shall consist of such number of directors as may from time to time be elected by
Pro-Fac as the sole shareholder of Curtice Burns, initially as follows:
a. Three 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 Curtice Burns from among management
employees of Curtice Burns.
3
<PAGE>
c. Three directors shall be known as 'Disinterested Directors' and may
be selected from among persons suggested by the president of Curtice Burns.
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 the Company) of
either Pro-Fac or the Company. '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. 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. While Pro-Fac may vary the number of directors, the number of
Disinterested Directors shall always be at least two and at least equal to
the number of Pro-Fac Directors.
FINANCE
4. Capital Contribution. Upon the termination of the Integrated Agreement,
Pro-Fac has contributed to Subsidiary as a capital contribution all funds
derived from the equity of Pro-Fac, its investment in the Springfield Bank for
Cooperatives, and all its right, title and interest in all fixed assets and all
intangible assets owned by Pro-Fac (other than accounts and other rights to
receive payment from Curtice Burns) ('Capital Assets'). The value of the Capital
Assets contributed is equal to the book value on the books of Pro-Fac as of the
date of such capital contribution to Subsidiary. In addition, as a part of the
Transaction, Pro-Fac has made an additional capital contribution to Curtice
Burns by converting a portion of loans owed to Pro-Fac by Curtice Burns into
capital of Curtice Burns.
5. Investment of Pro-Fac Equity. Pro-Fac will also provide working capital
to Curtice Burns by making available to Curtice Burns not less than 70% of funds
paid by Curtice Burns to Pro-Fac as Earnings on Pro-Fac Products as provided in
paragraph 14. Such investment shall be made as an additional capital
contribution to Curtice Burns to the extent required by any third-party debt
instrument by which Curtice Burns or Pro-Fac is bound. Any additional amounts
beyond the requirements of such debt instrument which Pro-Fac shall make
available to Curtice Burns from funds not needed by Pro-Fac in the conduct of
its own business shall be advanced as loans at no stated interest rate but as a
part of the Pro-Fac Facilitation Accommodations in consideration of payments to
be made for crops by Curtice Burns to Pro-Fac derived from Earnings on Pro-Fac
Products as provided in paragraph 14.
6. Working Capital. Pro-Fac agrees to provide Curtice Burns with additional
working capital for the conduct of the business of Curtice Burns, either through
additional investment by Pro-Fac in Curtice Burns as hereinafter provided or
through the guarantee by Pro-Fac of loans obtained directly by Curtice Burns for
use in its business, in each case to the extent of available funds or ability to
guaranty and subject to any restrictions set forth in any third-party debt
instrument.
4
<PAGE>
7. Borrowings by Pro-Fac. Curtice Burns shall to the extent requested by
Pro-Fac lend to Pro-Fac funds for use as Pro-Fac Working Capital in amounts not
exceeding $10,000,000 at any time outstanding, on which Pro-Fac shall pay
interest to Curtice Burns at the same rate paid by Curtice Burns for seasonal
financing. Pro-Fac shall for a period of not less than fifteen consecutive days
during each fiscal year repay the entire amount of Pro-Fac Working Capital.
MARKETING
8. Delivery of Crops. Pro-Fac agrees to sell and deliver to Curtice Burns
all crops of the type and in the amounts set forth by acreage or tonnage in the
raw product section of the profit plan. The profit plan shall be determined by
the boards of directors of Pro-Fac and Curtice Burns. Approval of the profit
plan by boards of directors of Curtice Burns shall require the affirmative vote
of a majority of the Disinterested Directors. 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 agreements between Pro-Fac and its
members, Pro-Fac shall deliver to Curtice Burns the crops described in the
profit plan, and Curtice Burns agrees to process and market such crops as herein
provided.
9. Marketing Discretion. Curtice Burns 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. Curtice Burns
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 Curtice Burns, title to the Pro-Fac crops shall pass to Curtice
Burns at the time such crops are graded and accepted by Curtice Burns.
10. Agency. Curtice Burns 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 Curtice Burns pursuant to the terms and conditions of this
agreement.
PAYMENT FOR CROPS AND FACILITATION ACCOMMODATIONS
11. Commercial Market Value. Commercial Market Value shall be determined by
the boards of directors of Pro-Fac and of Curtice Burns acting upon the
recommendation of the Joint Committee. Approval of Commercial Market Value by
the board of directors of Curtice Burns shall require the affirmative vote of a
majority of the Disinterested Directors.
12. Calculation of Earnings and Losses. The determination of Earnings and
Losses on Pro-Fac Products shall be made on the basis of all Pro-Fac Products
considered in the aggregate each year as of the end of the fiscal year for each
party.
13. Payment for Crops. Subject to the provisions of paragraph 15, Curtice
Burns 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
5
<PAGE>
Pro-Fac pursuant to paragraph 14 hereof. The due date for payment of the
purchase price by Curtice Burns shall coincide with the time of payment for
crops by Pro-Fac to its members.
14. Additional Payment for Crops and for Pro-Fac Facilitation
Accommodations. In any year in which Curtice Burns has Earnings on Pro-Fac
Products, as an additional payment for crops beyond Commercial Market Value and
for the Pro-Fac Facilitation Accommodations, Curtice Burns shall as of the end
of such fiscal year remit to Pro-Fac 90% of such earnings, retaining the
remaining 10% of such earnings as compensation for its services in processing
and marketing Pro-Fac Products. However, such payment shall not exceed 50% of
pre-tax earnings of Curtice Burns for such fiscal year determined in the manner
used in its audited financial statements but before payments due under this
Section 14.
15. Sharing of Losses. In any year in which Curtice Burns has Losses on
Pro-Fac Products, Curtice Burns shall deduct 90% of such losses from the
Commercial Market Value it would otherwise be required to pay to Pro-Fac for
crops as provided in paragraph 13. However, the amount of such deduction by
Curtice Burns from what it pays Pro-Fac for crops shall not exceed 50% of
pre-tax losses by Curtice Burns for such year determined in the manner used in
its audited financial statements but before charging losses under this Section
15.
16. 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 purchase
price received from Curtice Burns for crops and for the Pro-Fac Facilitation
Accommodations. 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 Curtice Burns pursuant to this 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 Curtice Burns and for the
creation of such reserve funds as may be deemed fair and reasonable.
MANAGEMENT
17. Management Services. Pro-Fac hereby employs Curtice Burns to supervise
and manage the business of Pro-Fac, including the performance of its
responsibilities under this agreement and also including responsibility for
handling the business of Pro-Fac with any bank or other lending source with
which Pro-Fac may do business. Pro-Fac shall pay Curtice Burns a fee of $100,000
per fiscal year for such management services, payable in $25,000 installments at
the end of each fiscal quarter.
18. Financial Management. All moneys and receipts derived from the business
of Pro-Fac shall be the property of Pro-Fac, and unless otherwise directed by
Pro-Fac to be held in separate Pro-Fac accounts, shall be deposited in such
depositories in the name of Curtice Burns as shall be determined by resolution
of the board of directors of Curtice Burns, subject to withdrawal by Curtice
Burns in the course of managing Pro-Fac business.
19. Financial Agency. All checks, drafts, orders or other instruments for
the payment of money to Pro-Fac shall be signed and endorsed by Curtice Burns in
the name of Pro-Fac.
6
<PAGE>
20. Payment of Expenses. In managing the business of Pro-Fac, Curtice Burns
shall pay the costs and expenses of such business, including, but not limited
to, taxes, insurance, interest, repairs, refunds, bonuses, legal and accounting
fees, licenses, transportation, service, promotion, and any and all other
expenses necessary or incident to operate the business of and comply with the
legal commitments made by Pro-Fac.
21. Funds for Pro-Fac Expenses. In addition to paying expenses as provided
in paragraph 20, at such times and in such amounts as may be requested by
Pro-Fac, Curtice Burns shall pay to Pro-Fac up to $250,000 annually for use by
Pro-Fac in payment of expenses incurred directly by Pro-Fac in its business.
22. Books of Account. All accounting records and books of account necessary
for Curtice Burns to perform its obligations hereunder shall be kept at such
office of Curtice Burns as it deems appropriate.
23. Policy Established by Pro-Fac Board of Directors. The supervision and
management of the business of Pro-Fac by Curtice Burns pursuant to this
agreement shall be in accordance with the policies formulated and approved by
the board of directors of Pro-Fac, which by this agreement only delegates to
Curtice Burns the authority to manage and operate the business of Pro-Fac in its
normal course, limited by the provisions of law as to the delegation of
authority by a corporate board of directors. Curtice Burns shall consult Pro-Fac
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.
24. Access to Records. Pro-Fac, through its officers and board of
directors, shall have free access to all the books and records of both Curtice
Burns and Pro-Fac related to the business of Pro-Fac. Curtice Burns will also
make available to the Pro-Fac officers and board of directors such operating and
financial statements and other information as the board may deem necessary and
proper to keep Pro-Fac fully informed of the operation of its business.
GENERAL
25. Term. This agreement shall remain in effect until terminated by the
parties. However, this agreement shall not be terminated so long as any of the
Senior Subordinated Notes issued by Curtice Burns as a part of the Transaction
(the 'Notes') remain outstanding. By their terms the Notes mature on February 1,
2005, though they may be redeemed prior to that time under certain conditions.
26. 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.
27. 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.
7
<PAGE>
28. Headings. The headings preceding the text of paragraphs of this
agreement are for convenience only and shall not be deemed part of this
agreement.
29. 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 November 3, 1994.
<TABLE>
<CAPTION>
PRO-FAC COOPERATIVE, INC. CURTICE-BURNS FOODS, INC.
<S> <C>
By: /s/ ROBERT V. CALL, JR. By: /s/ ROY A. MYERS
................................. ...................................
ROBERT V. CALL, JR. ROY A. MYERS
Title: President Title: Chief Executive Officer
................................. ...................................
</TABLE>
8
<PAGE>
CURTICE BURNS FOODS
MANAGEMENT INCENTIVE PLAN
The Curtice Burns Foods' Management Incentive Plan (the 'Plan') is
an important part of management compensation. The objective of the
Plan is to motivate key managers to perform in a way that will
optimize Curtice Burns earnings, effectively employ the company's
capital, and to encourage market development for Pro-Fac members.
The plan is designed to recognize the impact key managers can have
on the achievement of our business goals.
Participation
Participation is limited to executives who are strategic decision
makers in their business units. Each year, division Presidents and
corporate management will determine who is eligible to participate
in the plan for the upcoming fiscal year. Participation in one
year does not assure participation in the next.
Targeted Incentive Awards
Each individual's targeted incentive award is based on competitive
bonuses paid at other food companies similar in size to Curtice
Burns Foods and is expressed as a percentage of base salary paid
during the fiscal year. (See Exhibit 1.) Division CEOs and Snack
Division COOs have targeted awards fixed at 35 percent.
Performance Targets
The performance targets for each division and for Curtice Burns as
a whole are based on the original profit plan for pre-tax earnings
and return on capital employed (ROCE). The Corporate CEO will
assign a target value to each division profit plan. A plan of
normal challenge and difficulty will earn 100 percent of target.
Under certain rare and extreme circumstances, such as a total crop
failure or selling of a business unit, corporate management may in
its sole discretion, adjust these targets at mid-year or at fiscal
year end.
Incentive Payments
Two-thirds of the annual incentive award will be based on division
performance and one-third on overall corporate performance compared
to original profit plan targets. Actual results equaling or
<PAGE>
exceeding 120 percent of target can result in an incentive award
equal to 200 percent of your targeted award. Actual results equal
to 80 percent of target will result in an annual incentive award of
25 percent. Results on either pre-tax earnings or ROCE below 80
percent of profit plan target will result in no incentive payment.
The enclosed performance grid (Exhibit 2) is used to determine the
level of incentive payment associated with varying levels of
performance. This same data will also be provided in tabular form.
Pro-Fac Multiplier
The Plan is also designed to recognize the important relationship
Curtice Burns has with Pro-Fac. The plan encourages increase of
Pro-Fac volume. After the division's incentive pool has been
determined from the performance grid, that pool can increase or
decrease based on the division's plan on Pro-Fac deliveries when
compared to the Pro-Fac stock commitment. The Pro-Fac 'multiplier'
is multiplied by the proportion of Pro-Fac related sales in a
division to determine the impact as shown below:
<TABLE>
<CAPTION>
Plan as % of Pro-Fac Proportion (example) Impact on
Stock Commitment Multiplier Pro-Fac Related Sales Division
Portion
Of Award
<S> <C> <C> <C>
120% + 20% 50% 10%
110% + 10% 50% 5%
100% 0% 50% 0%
90% - 10% 50% -5%
80% - 20% 50% -10%
</TABLE>
The impact of the Pro-Fac multiplier will be potentially great in
divisions with a large Pro-Fac Proportion, such as CMF, and less in
divisions with less Pro-Fac crop-related sales.
Payment of Awards
Individual incentive awards will be paid on the September 15th
following each fiscal year end. The payment will be made in cash
and be subject to the appropriate income tax withholding. In order
to receive their award, an individual must be on the payroll on
September 15th. Exceptions to this are for retirement, disability
or death, which would occasion pro-rata payments based upon actual
salary earned during the fiscal year. Any other exceptions are to
be made only with the approval of the Corporate CEO.
2
<PAGE>
Change of Control
Effective upon a Change of Control as defined in the Curtice Burns
Foods Key Executive Severance Plan, then for purposes of the Fiscal
Year in which such Change of Control occurs and for the following
two Fiscal Years, a Participant shall be entitled to an allocation
of contributions under this plan regardless of whether the
Participant is an Employee of the Employer on September 15th
following the last day of the Employer's fiscal year.
Notwithstanding the foregoing, effective upon a Change of Control
as defined in the Curtice Burns Foods Key Executive Severance Plan,
then for purposes of the Fiscal Year in which such Change of
Control occurs and for the following two Fiscal Years, the Employer
shall have no right to amend the provisions of the preceding
paragraph and provided further that, if the Employer amends the
provisions of the preceding paragraph and within one year of the
date upon which such amendment becomes effective, a Change of
Control occurs, then the provisions of such amendment shall be
automatically revoked without further action by the Employer and
the provisions of the preceding paragraph, as in effect immediately
prior to such amendment shall thereupon be effective.
3
<PAGE>
CURTICE BURNS FOODS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As Amended to September 19, 1994
<PAGE>
Curtice Burns Foods
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Preamble
The principal objective of the Curtice Burns Foods Supplemental
Executive Retirement Plan is to ensure the payment of a competitive
level of retirement income in order to attract, retain and motivate
selected executives. The plan is designed to provide a benefit
which, when added to other retirement income of the executive, will
meet the objective described above. Eligibility for participation
in the plan shall be limited to executives recommended by the
President and CEO of Curtice Burns Foods and approved by the Budget
and Salary Committee of the Board of Directors. This plan was
effective on July 1, 1987, and will be effective as to each
participant on the date he or she is designated as such hereunder.
The restatement of the plan is effective on August 12, 1992.
2
<PAGE>
SECTION I
DEFINITIONS
1.1 'Affiliate' means any corporation, partnership or other
organization which, during any period of employment of a
Participant, was at least 50% controlled by the Company or an
affiliate of the Company.
1.2 'Basic Plan' means the Curtice Burns Foods Master Salaried
Retirement Plan.
1.3 'Committee' means the Human Resources Committee of the Board
of Directors of the Company, which has been given authority by
the Board of Directors to administer this Plan.
1.4 'Company' means Curtice Burns Foods.
1.5 'Curtice Burns Foods Deferred Profit Sharing Annuity
Equivalent' shall be calculated by multiplying the 10-year US
Treasury Bill yield on the first day of the calendar month
preceding the month in which the Participant retires,
(published in the Federal Reserve Statistical Release) by the
sum of (1) the Participant's actual final balance in the
Curtice Burns Foods Non-Qualified Profit Sharing Plan and the
Curtice Burns Foods Deferred Profit Sharing Plan on the
Participant's date of retirement as defined in Section 2.1,
plus (2) any in-service withdrawals made from the Curtice
Burns Foods Non-Qualified Profit Sharing Plan and/or the
Curtice Burns Foods Deferred Profit Sharing Plan, plus (3) any
3
<PAGE>
amounts transferred from the Curtice Burns Foods Deferred
Profit Sharing Plan into the Curtice Burns Foods Investment
Plan plus investment income on such transfers through the
Participant's retirement date, plus (4) any portion of annual
awards from the Curtice Burns Foods Non-Qualified Profit
Sharing Plan elected to be taken in cash by the Participant.
1.6 'Earnings' means total earnings, consisting of salary and
incentive compensation, averaged over the final full three
calendar years prior to the Participant's year of retirement,
death or disability. In the event the Participant's earnings
for his year of retirement, death or disability exceed his
earnings for the third-preceding full calendar year, then the
earnings for the year of retirement, death, or disability
shall be substituted for the earnings in such third-preceding
full calendar year for purposes of computing the Participant's
Earnings.
1.7 'Other Retirement Income' means retirement income payable to
the Participant at age 65 from any of the following sources:
(a) Any qualified defined benefit pension plan sponsored by
the Company (other than the Basic Plan).
(b) Any defined benefit pension plan sponsored by a prior
employer of the Participant.
(c) Social Security Benefits as defined in Section 1.11.
1.8 'Participant' means an employee of the Company designated as
a participant by the Committee. An employee shall become a
Participant in the Plan as of the date he or she is
4
<PAGE>
individually selected by, and specifically named in the
resolution of the Committee for inclusion in the Plan.
1.9 'Plan' means the Company's Supplemental Executive Retirement
Plan.
1.10 'Retirement' means the termination of a Participant's
employment with the Company on one of the retirement dates
specified in Section 2.1.
1.11 'Social Security Benefit' means the annual Primary Insurance
Amount estimated by the Committee to be payable to the
Participant at age 65 under the Federal Social Security Act,
provided, however, that:
(a) the Social Security Benefit for a Participant who dies or
retires prior to age 65 will be calculated assuming the
Participant will not receive any future wages which would
be treated as wages for purposes of the Federal Social
Security Act.
(b) the Social Security Benefit, once calculated, will be
frozen as of the date the Participant dies or retires,
whichever is applicable.
1.12 'Surviving Spouse' means the spouse of a Participant who is
eligible to receive a surviving spouse benefit under the Basic
Plan.
1.13 The masculine gender, where appearing in the Plan, will be
deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates the
contrary.
5
<PAGE>
SECTION II
ELIGIBILITY FOR BENEFITS
2.1 Each Participant is eligible to retire and receive a benefit
under this Plan beginning on one of the following dates:
(a) 'Normal Retirement Date,' which is the first day of the
month following the month in which the Participant
reaches age 65.
(b) 'Early Retirement Date,' which is the first day of any
month following the month in which the Participant
reaches age 62.
(c) 'Postponed Retirement Date,' which is the first day of
the month following the Participant's Normal Retirement
Date in which the Participant terminates employment with
the Company.
2.2 Anything herein to the contrary notwithstanding, if a
Participant who is receiving, or may be entitled to receive,
a benefit hereunder engages in competition with the Company
(without prior authorization given by the Committee in
writing) or is discharged for cause, or performs acts of
willful malfeasance or gross negligence in a matter of
material importance to the Company, payments thereafter
payable hereunder to such Participant or such Participant's
Surviving Spouse will, at the discretion of the Committee, be
forfeited and the Company will have no further obligation
hereunder to such Participant or spouse. For purposes of this
6
<PAGE>
Section 2.2, the term 'discharged for cause' shall mean
termination by the Company as a result of (a) the conviction
of the Participant by a court of competent jurisdiction of a
crime which constitutes a felony under any state or federal
law, (b) an act by the Participant which in the opinion of the
Board of Directors of the Company constitutes a theft of the
Company's property, or (c) the insubordination, gross
negligence or willful misconduct of the Participant (such
finding having been initially made by the Board of Directors
of the Company). 'Competition with the Company' shall occur
if, before or after termination of employment, the
Participant, directly or indirectly, comes to own, manage,
operate, control, be employed by or participate in the
ownership, management, operation or control of, or be
connected in any other manner with, any business which, in the
judgment of the Board of Directors of the Company, is in
substantial competition with the Company (unless the
Participant has first obtained the Board's prior written
consent).
7
<PAGE>
SECTION III
AMOUNT AND FORM OF RETIREMENT BENEFIT
3.1 The annual retirement benefit payable as a Straight-Life
Annuity at Normal Retirement Date under the Plan will equal
50% of Earnings, less any Basic Plan Benefit, less the Curtice
Burns Foods Deferred Profit-Sharing Annuity Equivalent, and
less any Other Retirement Income. For the purposes of this
Section, the Basic Plan Benefit and any Other Retirement
Income are each to be expressed as a Straight-Life Annuity,
payable at age 65, regardless of the actual form of payment
for such benefits. The conversion of other forms of payment
to a Straight-Life Annuity, if necessary, shall be made using
the actuarially equivalent factors as specified from time to
time in the Curtice Burns Foods Master Salaried Retirement
Plan or any successor to such plan.
3.2 The annual benefit payable at an Early Retirement Date will
equal the benefit determined in Section 3.1 reduced by the
following factors:
<TABLE>
<CAPTION>
Age at Retirement Reduction Factor
<S> <C>
65 0%
64 10
63 30
62 50
</TABLE>
8
<PAGE>
(a) If the Participant's age at retirement is greater than 64
years, then the Participant's annual benefit shall be
reduced by .8333% multiplied by the number of full
calendar months by which the Participant's benefit
commencement date precedes the Participant's Normal
Retirement Date.
(b) If the Participant's age at retirement is greater than 62
years but less than 64 years, then the Participant's
annual benefit shall be reduced by the sum of (i) 10%
plus (ii) 1.667% multiplied by the number of full
calendar months by which the Participant's benefit
commencement date precedes the first day of the month
coincident with or next following the Participant's 64th
birthday.
3.3 The annual benefit payable at a Postponed Retirement Date will
be equal to the benefit determined in accordance with Section
3.1 based on earnings determined as of the Participant's
Normal Retirement Date.
3.4 The benefit determined under this Plan will be payable either
as a Straight-Life Annuity or as a Surviving Spouse Annuity.
A Straight-Life Annuity is an annuity payable monthly
solely during the life of the Participant.
A Surviving Spouse Annuity is an annuity payable monthly
during the life of the Participant. Upon the death of
the Participant, 50% of the monthly annuity payable to
9
<PAGE>
the Participant will be paid to the Participant's spouse
and will cease upon the spouse's death.
The amount of Surviving Spouse Annuity payable to the
Participant shall equal 90% of the amount payable to the
Participant as a Straight-Life Annuity. A Participant who is
married may elect to receive either a Straight-Life Annuity or
a Surviving Spouse Annuity at the time of his retirement. Any
election so made shall be irrevocable.
10
<PAGE>
SECTION IV
PAYMENT OF RETIREMENT BENEFITS
4.1 Benefits payable in accordance with Section III will commence
on the Participant's date of retirement. In the case of Early
Retirement, however, the Participant may elect to commence
benefits on the first day of any month following the
Participant's Early Retirement Date but not later than his
Normal Retirement Date. Benefits will continue to be paid on
the first day of each succeeding month. The last payment will
be on the first day of the month in which the retired
Participant dies unless a Surviving Spouse Annuity is elected
in accordance with Section 3.4.
4.2 No benefits are payable under this Plan if a Participant
terminates employment for any reason, except by death or
disability as specified in Sections V and VI, prior to the
Participant's Early Retirement Date provided hereunder.
11
<PAGE>
SECTION V
DEATH BENEFITS PAYABLE
5.1 If a Participant should die after attaining age 62 and before
Retirement, the Surviving Spouse will receive a benefit equal
to 50% of the amount of the Participant's retirement benefit
determined in accordance with Section III, as if the
Participant had retired and elected the Surviving Spouse
Annuity as defined in Section 3.4 and commenced receiving a
benefit on the first of the month following the date of his
death.
5.2 A Surviving Spouse's benefit will be payable monthly, and will
commence on the first day of the month following the month in
which the Participant dies. The last payment will be on the
first day of the month in which the Surviving Spouse dies.
12
<PAGE>
SECTION IV
DISABILITY BENEFITS PAYABLE
6.1 In the event the Committee determines that a Participant has
become and remains totally disabled, the Participant shall be
entitled to retire on his Normal Retirement Date or on the
first of the month following the date when the Participant's
benefits cease under the Company's Long-Term Disability
program, if later.
6.2 The annual disability benefit will equal the retirement
benefit that would be payable under Section III of this Plan,
based on Earnings determined as of the last day of active
employment with the Company before commencement of disability.
6.3 In the event a disabled Participant dies prior to Retirement,
a benefit equal to 45% of the amount determined in Section 6.2
will be paid to the Surviving Spouse.
6.4 The Committee may require, no more frequently than once in any
calendar year, that a disabled Participant submit medical
evidence of disability satisfactory to the Committee. The
Committee will have sole discretion to discontinue eligibility
for a disability benefit based on a consideration of such
evidence or lack thereof.
13
<PAGE>
SECTION VII
MISCELLANEOUS
7.1 The Committee may, in its sole discretion, terminate, suspend
or amend this plan at any time or from time to time, in whole
or in part. No termination, suspension, or amendment of the
Plan will affect a retired Participant's right or the right of
a Surviving Spouse to continue to receive a benefit in
accordance with this Plan as in effect on the date such
Participant commenced to receive a benefit under this Plan.
In addition, no termination, suspension, or amendment of the
Plan will, without the affected Participant's consent, or the
consent of such Participant's Beneficiary, reduce the benefit
hereunder of a Participant who has completed both five (5)
years of service with the Company and three (3) years of
participation in this Plan. The provisions of this Section
7.1 shall be subordinate to the provisions of Section 2.2
concerning the forfeiture of benefits.
7.2 Nothing contained herein will confer upon any Participant the
right to be retained in the service of the Company, nor will
it interfere with the right of the Company to discharge or
otherwise deal with Participants without regard to the
existence of this Plan.
7.3 This Plan is unfunded, and the Company will make Plan benefit
payments solely on a current disbursement basis.
14
<PAGE>
7.4 To the maximum extent permitted by law, no benefit under this
Plan shall be assignable or subject to any manner to
alienation, sale, transfer, claims of creditors, pledge,
attachment or encumbrances of any kind.
7.5 The Committee may adopt rules and regulations to assist it in
the administration of the Plan.
7.6 Each participant shall receive a copy of this Plan and the
Committee will make available for inspection by any
Participant a copy of the rules and regulations used by the
Committee in administering the Plan.
7.7 This Plan is established under and will be construed according
to the laws of the State of New York.
7.8. The Company shall pay, upon request and documentation thereof,
all reasonable legal fees and expenses which any Participant
may incur as a result of the Company or any of its
subsidiaries contesting the validity or enforceability of any
provision of this Plan or any claim by such Participant under
this Plan; provided, however, that the Company shall be
entitled to be reimbursed by such Participant for such amount
previously paid to such Participant if it is finally
judicially determined that such Participant's claims under
this Plan are frivolous.
7.9. In the event of any dispute after the occurrence of 'Change of
Control' (as defined in the Key Executive Severance Plan of
the Company) between the Company and any Participant with
respect to such Participant's rights to any payment under this
15
<PAGE>
Plan, the Company shall pay all disputed amounts to such
Participant and, if it is finally judicially determined that
such Participant was not entitled to all or a portion of such
disputed amounts, such Participant shall repay to the Company
the amount to which he or she was not entitled, together with
interest thereon at the weighted average interest rate on the
Company's outstanding borrowings.
16
<PAGE>
IN WITNESS WHEREOF, the foregoing Amendment and
Restatement having been duly adopted by the Board of Directors,
Curtice-Burns Foods, Inc. has caused this instrument to be executed
in its name and its corporate seal to be affixed this _____________
day of _________________________________.
CURTICE-BURNS FOODS, INC.
By:________________________________
ATTEST: _____________________________
<PAGE>
CURTICE BURNS FOODS
KEY EXECUTIVE SEVERANCE PLAN
As executed March 22, 1993
As Amended to September 19, 1994
<PAGE>
1. Preamble and Statement of Purpose. The purpose of this
Plan is to assure Curtice Burns Foods, Inc. ('Curtice Burns') that
it will have the continued dedication of, and the availability of
objective advice and counsel from, key executives of Curtice Burns
notwithstanding the possibility, threat or occurrence of a change
in control of Curtice Burns.
In the event there is a possible change in control of Curtice
Burns, the Board of Directors of Curtice Burns (the 'Board')
believes it imperative that Curtice Burns and the Board be able to
rely upon key executives to continue in their positions and be
available for advice, if requested, without concern that those
individuals might be distracted by the personal uncertainties and
risks created by the possibility of a change in control.
Should there be a proposed change in control of Curtice Burns,
such key executives may be called upon, in addition to their
regular duties, to assist in the assessment of proposals, advise
management and the Board as to whether such proposals would be in
the best interest of Curtice Burns and its shareholders, and to
take such other actions as the Board might determine to be
appropriate.
2. Eligible Executives. Executives under this Plan shall
consist of those key executives of Curtice Burns and its
Subsidiaries (as hereinafter defined) who are from time to time
designated as key executives to be included within this Plan by the
Board. The Board shall designate key executives as either Group A
Executives, Group B Executives or Group C Executives, and the key
executives, under circumstances described in this Plan, shall be
entitled to benefits under this Plan in lieu of other severance
benefits in accordance with this designation. The Board's initial
designation of key executives as Group A, Group B or Group C
Executives is set forth in Exhibit A.
An executive who the Board determines has ceased to be a key
executive for purposes of the Plan shall cease to be an executive
in the Plan when notified by the Board of such determination;
except that no such determination that an executive has ceased to
be such a key executive shall be made, and if made shall have no
effect, (i) within two years after the Change of Control (as
hereinafter defined) in question or (ii) during any period of time
when Curtice Burns has knowledge that any third person ( excluding
Agway, Inc. and its affiliates) has taken steps reasonably
calculated to effect a Change of Control until, in the opinion of
the Board, the third person has abandoned or terminated its
efforts to effect a Change of Control. Any decision by the Board
that the third person has abandoned or terminated its efforts to
effect a Change of Control shall be conclusive and binding on the
executives.
1
<PAGE>
3. Benefits. Any key executive designated by the Board
as provided above shall, for so long as such executive participates
in the Plan, be entitled to the following benefits:
Group A Executives. In the event of a Termination (as
hereinafter defined) of a Group A Executive's employment with
Curtice Burns (including its Subsidiaries) within two years after
a Change of Control, the Group A Executive shall receive the
following severance payments and benefits:
(a) Twenty-four equal, consecutive monthly salary continuance
payments, the aggregate amount of such payments to be equal to
twice the executive's annual salary in effect at the date of
Termination.
(b) The Group A Executive's participation in life, accident
and health insurance plans of Curtice Burns and in similar benefit
plans shall be continued at no direct cost to the executive (in
excess of such cost as might apply if the executive remained
employed) during any period in which salary continuance payments
are being paid hereunder.
The salary continuance payments and other benefits payable to
a Group A Executive under this Plan shall be discontinued in the
event that the executive obtains other employment at an annual
salary level equal to 75% or more of his or her prior year's annual
salary level from Curtice Burns in effect at the date of
Termination.
Group B Executives. In the event of a Termination (as
hereinafter defined) of a Group B Executive's employment with
Curtice Burns (including its Subsidiaries) within two years after
a Change of Control, the Group B Executive shall be entitled to the
following salary continuance payments and benefits:
(a) Twelve equal consecutive monthly salary continuance
payments, the aggregate amount of such payments to be equal to the
executive's annual salary in effect at the date of Termination.
(b) Following the twelfth month after Termination, the
Group B Executive shall receive as a supplemental retirement
benefit, monthly payments the annual aggregate amount of which
shall equal the amount of annual retirement income (expressed as an
annuity for the executive's life only) to which the executive would
have been entitled under the terms of the Curtice Burns Foods
Master Salaried Retirement Plan (or any successor to such plan) had
he or she retired on the Termination date, at the presumed age of
65 years, with credit for years of service for all purposes under
such plan as if the executive's employment had continued until the
executive's 65th birthday, and with the executive's compensation
determined under such plan for the year of Termination and each
succeeding year through and including the year in which the
2
<PAGE>
executive would have attained age 65 as if the executive's
compensation were the same as his or her compensation in the year
prior to the year in which the executive's Termination occurs. The
amount so determined shall be reduced by the amount of the annual
retirement income (expressed as an annuity for the executive's life
only) to which the executive is entitled under the Curtice Burns
Foods Master Salaried Retirement Plan (or any successor to such
plan) had he or she retired on the date of Termination.
Such supplemental retirement benefit payments shall
continue monthly through and including the month in which the
executive dies; provided, however, that the executive may
irrevocably elect, prior to the first payment of such supplemental
retirement benefits, to receive a spousal annuity in which case the
monthly payment hereunder to the executive shall be reduced in a
manner identical to the reduction incurred from a spousal annuity
election under the Master Salaried Retirement Plan.
(c) The Group B Executive's participation in life,
accident and health insurance plans of Curtice Burns and in similar
benefit plans shall be continued at no direct cost to the Executive
(in excess of such cost as might apply if the executive remained
employed) during any period in which severance payments are being
paid hereunder.
Group C Executives. In the event of (i) a Special Termination
(as hereinafter defined) of a Group C Executive's employment with
Curtice Burns (including its Subsidiaries) within two years after
a Special Change of Control (as hereinafter defined) or (ii) a
Termination (as hereinafter defined) of a Group C Executive's
employment with Curtice Burns (including its Subsidiaries) within
two years after a Change of Control, the Group C Executive shall
receive the following payments and benefits:
(a) Monthly severance payments equal to one-twelfth of
the Group C Executive's 'Base Compensation.' The term 'Base
Compensation' is defined as the executive's annual salary in effect
at the date of Termination, but in no event less than $400,000.
These monthly payments shall continue through and including the
month in which the executive reaches age 62.
(b) If the Group C Executive attains age 62 prior to
Termination, the Group C Executive shall nevertheless be entitled
to the monthly payments provided in subparagraph (a) above for 12
months from Termination as salary continuance payments; provided,
however, that the monthly salary continuance payments to be
received by the Group C Executive after reaching age 62 shall be
reduced by the Group C Executive's earned income from other sources
of employment.
(c) The Group C Executive's participation in life,
accident and health insurance plans of Curtice Burns and in similar
3
<PAGE>
benefit plans shall be continued at no direct cost to the executive
(in excess of such cost as might apply if the executive remained
employed) during any period in which severance payments are being
paid hereunder.
(d) Upon Termination, the Group C Executive shall be
immediately vested in the Curtice Burns Supplemental Executive
Retirement Plan as if the executive had continued employment with
Curtice Burns and retired at the later of age 62, or the
executive's actual age upon termination.
(e) Following expiration of the benefit payment periods
described in subparagraphs (a) and (b) above, the Group C Executive
shall receive, as a supplemental retirement benefit, monthly
payments, the annual aggregate amount of which shall equal 50% of
the executive's Base Compensation as defined in subparagraph (a)
reduced by the amount of the executive's supplemental retirement
benefit, if any, under the Curtice Burns Foods Supplemental
Executive Retirement Plan as determined in subparagraph (d) above,
and further reduced by the amount, if any, of the executive's
'other retirement income' (as such term is defined in the Curtice
Burns Foods Supplemental Executive Retirement Plan).
Such supplemental retirement benefit payments shall
continue monthly through and including the month in which the
executive dies; provided, however, that the executive may
irrevocably elect, prior to the first payment of such supplemental
retirement benefits, to receive a spousal annuity in which case the
monthly payment hereunder to the executive shall be 90% of the
monthly amount otherwise determined, payable monthly through and
including the month of the executive's death, with a monthly
payment continuing thereafter to the executive's surviving spouse,
payable monthly through and including the month in which the
executive's surviving spouse dies, in an amount equal to 50% of the
monthly amount determined for the executive under this spousal
annuity.
(f) Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by Curtice Burns to or for the benefit of
the Group C Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, but
determined without regard to any additional payments required under
this Section (f)) (a 'Payment') would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Group C
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the 'Excise Tax'), payment (a 'Gross-Up
Payment') in an amount such that after payment by the executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
4
<PAGE>
(and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the payments.
For purposes of this subparagraph (f), the proper
amounts, if any, of the Excise Tax and the Gross-Up Payment shall
be determined in the first instance by Curtice Burns. Within 45
days of being provided with written notice of any such
determination, the Group C Executive may provide written notice to
the Chairman of the Finance Committee of the Board of Directors of
Curtice Burns of any disagreement, in which event the amounts, if
any, of the Excise Tax and the Gross-Up Payment shall be determined
by independent tax counsel selected by Curtice Burns's independent
auditors. The determination of Curtice Burns (or, in the event of
disagreement, the tax counsel selected) shall be final; provided,
however, (i) that if Curtice Burns shall provide the Group C
Executive with such further Gross-Up Payment as may be necessary to
hold him harmless from the Excise Tax if he notifies the Chairman
of the Curtice Burns Board of Directors Finance Committee of any
proposed audit adjustment by the Internal Revenue Service to the
amount of the Excise Tax, fully cooperates with Curtice Burns in
contesting the proposed adjustment, but is ultimately required to
pay an additional Excise Tax amount; and (ii) that in no event
shall the Excise Tax for which Curtice Burns is required to make a
Gross-Up Payment included any interest or penalties resulting from
the failure of the Group C Executive to report and pay by the time
prescribed by law an amount of Excise Tax at least equal to that
determined by Curtice Burns (or, if relevant, tax counsel) as the
basis for prior Gross-Up Payment(s) made to him.
(g) In the event of a Termination of a Group C
Executive's employment with Curtice Burns more than two years after
a Change of Control, but prior to normal retirement at age 65, the
executive shall be entitled to the benefits set forth in
subparagraphs (d), (e) and (f) above. The existing Curtice Burns
Foods Supplemental Executive Retirement Plan is unaffected by this
Plan insofar as this Plan relates to the Group C Executive's
voluntary retirement.
4. Nonassignability. Each executive's rights under this
Plan shall inure to the benefit of the executive and his or her
estate. No rights arising under this Plan may be assigned or
pledged by the executive.
5. Certain Definitions.
(a) A 'Change of Control' shall be deemed to have taken
place if: (i) anyone other than Agway Inc. or any of its affiliates
('Agway'), including a 'group' (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934 (the '1934 Act') becomes the
'beneficial owner' (within the meaning of Rule 13d-3 under the 1934
5
<PAGE>
Act) of a majority of the Class B shares of Curtice Burns or more
than 30% of any other class of stock of Curtice Burns entitled to
elect a majority of the directors of Curtice Burns; or (ii) Curtice
Burns is a party to a merger, consolidation or other business
combination in which it is not the surviving corporation or sells
or transfers all or a major portion of its assets to any other
person (any of the foregoing, a 'Business Combination') unless both
(A) the holders of a majority of the Class A and Class B shares of
Curtice Burns immediately prior thereto shall hold at least a
majority of the shares of capital stock of the Successor
Corporation and (B) no person or 'group' shall 'beneficially own'
more than 30% of all shares of capital stock of the Successor
Corporation entitled to vote in the election of directors of the
Successor Corporation; or (iii) as a result of, or in connection
with, any cash tender or exchange offer, purchase of stock, or
Business Combination or contested election, or any combination of
the foregoing transactions (a 'Transaction'), the persons who were
directors of Curtice Burns before the Transaction shall cease to
constitute a majority of the board of directors of Curtice Burns or
any Successor Corporation. 'Successor Corporation' means the
surviving, resulting or transferee corporation in a Business
Combination or, if such corporation is a direct or indirect
subsidiary of another corporation, the parent corporation of such
surviving, resulting or transferee corporation. Notwithstanding
the foregoing, (x) in no event shall a Business Combination or
Transaction described in clause (i), (ii) or (iii) above which
results from a proposal initiated by Curtice Burns management be
considered a Change of Control for purposes of this Plan and (y)
the grant by Agway of an option, proxy or 'lock-up'
agreement over its Class B Shares shall not constitute a Change of
Control if such option shall have been granted in conjunction with
a transaction that has been approved by the board of directors of
Curtice Burns and that, if implemented in accordance with its
terms, would constitute a Change of Control (provided that any
exercise of such an option shall constitute a Change of Control).
(b) 'Termination' shall mean termination by Curtice
Burns of the employment of the executive with Curtice Burns
including its Subsidiaries for any reason other than death,
disability or Cause (as defined below), or resignation of the
executive for Good Reason (as defined below).
(c) 'Cause' means (i) the willful and continued failure
by the executive to substantially perform his duties with Curtice
Burns (other than any such failure resulting from termination for
Good Reason), after a demand for substantial performance is
delivered to the executive that specifically identifies the manner
in which Curtice Burns believes that the executive has not
substantially performed his duties, if the executive fails to
resume substantial performance of his duties on a continuous basis
within fourteen (14) days of receiving such demand, (ii) willful
and gross misconduct on the part of the executive that is
6
<PAGE>
materially and demonstrably detrimental to Curtice Burns; or (iii)
the executive's conviction for any felony involving fraud,
embezzlement or breach of trust. 'Cause' under (i), (ii) or (iii)
shall be determined in good faith by a written resolution duly
adopted by the affirmative vote of not less than two-thirds (2/3)
of all the Directors of Curtice Burns at a meeting duly called and
held for that purpose after reasonable notice to the executive and
opportunity for the executive and his or her legal counsel to be
heard.
'Good Reason' shall mean the occurrence of one of the
following events:
(i) Without the express written consent of the
executive, the assignment of the executive to any duties materially
inconsistent with the executive's positions, duties,
responsibilities and status with Curtice Burns immediately prior to
the occurrence of a Change of Control, or a material change in the
executive's titles, offices, or reporting responsibilities as in
effect immediately prior to such Change in Control, or any removal
of the executive from or any failure to re-elect the executive to
any of such positions, except in connection with the termination of
the executive's employment for Cause, death, disability,
retirement, or by the executive for other than Good Reason (as
defined herein), which situation is not remedied within thirty (30)
days after the receipt by Curtice Burns of written notice by the
executive.
(ii) Without the express written consent of the
executive, a reduction in the executive's annual salary (and in the
case of a Group C Executive, a reduction in the executive's Base
Compensation, as defined in paragraph 2, Group C Executives,
subparagraph (a)), or opportunity for total annual compensation, in
effect immediately prior to such Change in Control which is not
remedied within thirty (30) days after receipt by Curtice Burns of
written notice by the executive.
(iii) Without the express written consent of the
executive, Curtice Burns requires the executive to be based
anywhere other than: (A) his office location immediately preceding
the occurrence of the Change in Control; or (B) one of Curtice
Burns's principal executive offices, provided that such office is
located within fifty (50) miles of the location specified in the
preceding clause (A), except for required travel on Curtice Burns's
business to an extent substantially consistent with the business
travel obligations of the executive immediately preceding the
occurrence of the Change of Control.
(iv) Without the express written consent of the
executive, the failure by Curtice Burns to continue in effect any
benefit or compensation plan, stock ownership plan, stock purchase
plan, stock option plan, life insurance plan, health and accident
7
<PAGE>
plan, or disability plan in which the executive is participating at
the time of a Change in Control (or plans providing substantially
similar benefits) the taking of any action by Curtice Burns which
would adversely affect the participation in or materially reduce
the benefits under any of such plans either in terms of the amount
of benefits provided or the level of the executive's participation
relative to other participants or deprive the executive of any
material fringe benefit enjoyed by the executive at the time of the
Change in Control, or the failure by Curtice Burns to provide the
number of paid vacation days to which the executive was then
entitled in accordance with Curtice Burns's normal vacation policy
in effect immediately prior to said Change in Control, which is not
remedied within thirty (30) days after receipt by Curtice Burns of
written notice by the Executive.
(v) The liquidation, dissolution, consolidation, or
merger of Curtice Burns or transfer of all or a significant portion
of its assets, unless a successor or successors (by merger,
consolidation, or otherwise) to which all or a significant portion
of its assets have been transferred assumes all duties and
obligations of Curtice Burns under this Plan.
The executive's right to terminate employment for Good
Reason shall not be affected by the executive's incapacity due to
physical or mental illness.. The executive's continued employment
shall not constitute consent to, or a waiver of rights with respect
to any circumstances constituting Good Reason herein.
In the event a breach embraced within the foregoing
clauses (i), (ii), or (iv) of this paragraph 5(b) is cured within
the thirty (30) day period specified in such clauses, any
subsequent breach of any provision embraced within the clauses of
this paragraph 5(b) shall immediately be deemed to constitute Good
Reason, and there shall be no provision for a thirty (30) day
remedial period.
(c) 'Subsidiary' shall mean any domestic or foreign
corporation a majority of whose shares normally entitled to vote in
electing directors is owned directly or indirectly by Curtice Burns
or by other Subsidiaries.
(d) 'Special Termination' shall mean (i) termination by
Curtice Burns of the employment of the executive with Curtice Burns
including its Subsidiaries for any reason other than death,
disability or the executive's conviction for any felony involving
fraud, embezzlement or breach of trust, or (ii) the resignation of
the executive for any reason.
(e) 'Special Change of Control' shall mean a Change of
Control involving, directly or indirectly, Pro-Fac Cooperative,
Inc. or any subsidiary or affiliate of Pro-Fac Cooperative, Inc.
8
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(f) Unless the context otherwise requires, the term
'Curtice Burns' shall be deemed to include a Successor Corporation
in a Business Combination.
7. Unfunded Plan. The Plan shall be unfunded. Neither
Curtice Burns nor the Board shall be required to segregate any
assets with respect to benefits under this Plan. Neither Curtice
Burns nor the Board shall be deemed to be a trustee of any amounts
to be paid under this Plan. Any liability of Curtice Burns to any
executive with respect to any benefit shall be based solely upon
any contractual obligations created by this Plan; no such
obligation shall be deemed to be secured by any pledge or any
encumbrance on any property of Curtice Burns.
8. Termination and Amendment of this Plan. The Board shall
have power at any time, in its discretion, to amend, abandon or
terminate this Plan, in whole or in part; except that no amendment,
abandonment or termination shall impair or abridge the obligations
of Curtice Burns to any executive then designated as a participant
in this Plan if such amendment, abandonment or termination is made
within two years after a Change of Control or during any period of
time when Curtice Burns has knowledge that any third person has
taken steps reasonably calculated to effect a Change of Control
(until, in the opinion of the Board, the third person has abandoned
or terminated efforts to effect a Change of Control).
10. Duration. This Plan shall remain in effect until
February 2, 1995; provided, however, that in the event a Change of
Control or a Special Change of Control occurs prior to such date,
this Plan shall remain in effect for two years after the date of
such Change of Control or Special Change of Control.
11. Legal Fees and Expenses. Curtice Burns shall pay, upon
request and documentation thereof, all reasonable legal fees and
expenses which any executive may incur as a result of Curtice Burns
or any of its Subsidiaries contesting the validity or
enforceability of any provision of this Plan or any claim by such
executive under this Plan; provided, however, Curtice Burns shall
be entitled to be reimbursed by the executive for such amounts
previously paid to the executive if it is finally judicially
determined that the executive's claims under this Plan were
frivolous.
12. Disputed Payments. In the event of any dispute after a
Change of Control between Curtice Burns and any executive entitled
to participate in this Plan with respect to such executive's rights
to any payment under this Plan, Curtice Burns shall pay all
disputed amounts to such executive and, if it is finally judicially
determined that such executive was not entitled to all or a portion
of such disputed amounts, such executive shall repay to Curtice
Burns the amount to which he or she was not entitled, together with
9
<PAGE>
interest thereon at the weighted average interest rate on Curtice
Burns's outstanding borrowings.
10
<PAGE>
CURTICE BURNS FOODS
Key Executive Severance Plan
Exhibit A
The following key executives are designated as Group A
Executives, Group B Executives, and Group C Executives as of
February 18, 1993 (as amended to September 19, 1994):
GROUP A EXECUTIVES
Thomas A. Collins
John Frostad
Eugene Hermenet
Patrick Lindenbach*
Dennis M. Mullen
Tommy Murray
Earl Powers
GROUP B EXECUTIVES
William D. Rice
Roy A. Meyers
GROUP C EXECUTIVES
J. William Petty
* For purposes of determining whether Patrick Lindenbach is
entitled to any benefits under Paragraph 3 of the Plan, he shall be
deemed to be a Group C Executive, and for purposes of determining
the amount of benefits Patrick Lindenbach is entitled to receive
under Paragraph 3 of the Plan, he shall be deemed a Group A
Executive.
<PAGE>
CURTICE BURNS FOODS
MASTERED SALARIED RETIREMENT PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section One
PLAN NAME AND DEFINITIONS. . . . . . . . . . . . . . . . . . . 2
1.1 Name of Plan . . . . . . . . . . . . . . . . . . . . 2
1.2 'Accrued Benefit'. . . . . . . . . . . . . . . . . . 2
1.3 'Accumulated Employee Contributions' . . . . . . . . 2
1.4 'Acquisition Date' . . . . . . . . . . . . . . . . . 2
1.5 'Actual Retirement Date' . . . . . . . . . . . . . . 2
1.6 'Actuarial Equivalent' . . . . . . . . . . . . . . . 3
1.7 'Actuary'. . . . . . . . . . . . . . . . . . . . . . 3
1.8 'Affiliate'. . . . . . . . . . . . . . . . . . . . . 3
1.9 'Benefit Service'. . . . . . . . . . . . . . . . . . 3
1.10 'Board of Directors' . . . . . . . . . . . . . . . . 3
1.11 'Code'. . . . . . . . . . . . . . . . . . . . . . . 3
1.12 'Company'. . . . . . . . . . . . . . . . . . . . . . 4
1.13 'Compensation' . . . . . . . . . . . . . . . . . . . 4
1.14 'Covered Compensation' . . . . . . . . . . . . . . . 6
1.15 'Covered Unit' . . . . . . . . . . . . . . . . . . . 6
1.16 'Current Social Security Taxable Wage Base'. . . . . 6
1.17 'Disability' . . . . . . . . . . . . . . . . . . . . 6
1.18 'Employee' . . . . . . . . . . . . . . . . . . . . . 6
1.19 'Employer' . . . . . . . . . . . . . . . . . . . . . 7
1.20 'ERISA'. . . . . . . . . . . . . . . . . . . . . . . 7
1.21 'Final Average Compensation' . . . . . . . . . . . . 7
1.22 'Leave of Absence' . . . . . . . . . . . . . . . . . 8
1.23 'Normal Form'. . . . . . . . . . . . . . . . . . . . 8
1.24 'Normal Retirement Age'. . . . . . . . . . . . . . . 8
1.25 'Normal Retirement Date' . . . . . . . . . . . . . . 8
1.26 'Participant'. . . . . . . . . . . . . . . . . . . . 9
1.27 'Pension Committee'. . . . . . . . . . . . . . . . . 9
1.28 'Plan Year'. . . . . . . . . . . . . . . . . . . . . 9
1.29 'Prior Plan' . . . . . . . . . . . . . . . . . . . . 9
1.30 'Prior Plan Benefit' . . . . . . . . . . . . . . . . 9
1.31 'Prior Plan Participant' . . . . . . . . . . . . . . 10
1.32 'Retirement Income'. . . . . . . . . . . . . . . . . 10
1.33 'Spouse' . . . . . . . . . . . . . . . . . . . . . . 10
1.34 'Trust Agreement'. . . . . . . . . . . . . . . . . . 10
1.35 'Trust Fund' . . . . . . . . . . . . . . . . . . . . 10
1.36 'Trustee'. . . . . . . . . . . . . . . . . . . . . . 10
1.37 'Vesting Service'. . . . . . . . . . . . . . . . . . 10
Section Two
SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Service Definitions. . . . . . . . . . . . . . . . . 11
2.2 Vesting Service. . . . . . . . . . . . . . . . . . . 12
2.3 Benefit Service. . . . . . . . . . . . . . . . . . . 12
</TABLE>
1
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<TABLE>
<S> <C> <C>
2.4 Service Prior to Acquisition Date. . . . . . . . . . 13
2.5 Break in Service . . . . . . . . . . . . . . . . . . 13
2.6 No Duplication . . . . . . . . . . . . . . . . . . . 13
2.7 Service Computations . . . . . . . . . . . . . . . . 13
2.8 Leased Employees . . . . . . . . . . . . . . . . . . 14
Section Three
PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Eligibility. . . . . . . . . . . . . . . . . . . . . 15
3.2 Reemployed Participant . . . . . . . . . . . . . . . 15
3.3 Prior Plan Participant . . . . . . . . . . . . . . . 15
Section Four
RETIREMENT DATES AND CONDITIONS. . . . . . . . . . . . . . . . 16
4.1 Normal Retirement. . . . . . . . . . . . . . . . . . 16
4.2 Early Retirement . . . . . . . . . . . . . . . . . . 16
4.3 Late Retirement. . . . . . . . . . . . . . . . . . . 16
4.4 Disability Retirement. . . . . . . . . . . . . . . . 16
Section Five
RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . . . . . 17
5.1 Normal Retirement Benefit. . . . . . . . . . . . . . 17
5.2 Early Retirement Benefit . . . . . . . . . . . . . . 18
5.3 Late Retirement Benefit. . . . . . . . . . . . . . . 19
5.4 Disability Retirement Benefit. . . . . . . . . . . . 20
5.5 Methods of Payment of Retirement Benefits. . . . . . 20
5.6 Maximum Benefit Limits . . . . . . . . . . . . . . . 30
5.7 Reduction in Retirement Income Benefits. . . . . . . 33
5.8 1981 Supplemental Retirement Benefits. . . . . . . . 33
5.9 Transfer . . . . . . . . . . . . . . . . . . . . . . 34
5.10 Rights Forfeited . . . . . . . . . . . . . . . . . . 36
Section Six
TERMINATION OF EMPLOYMENT. . . . . . . . . . . . . . . . . . . 37
6.1 Termination of Employment Before Retirement. . . . . 37
Section Seven
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Death Before Eligibility for Early Retirement. . . . 41
7.2 Death After Eligibility for Early Retirement . . . . 41
7.3 Amount of Benefit Payable Under section 7.1. . . . . 41
7.4 Amount of Benefit Payable Under section 7.2. . . . . 42
7.5 Additional Reduction in Benefits for Spouses of
Former Participants [DELETED] . . . . . . . . . . . 43
7.6 Death Benefits If Participant Not Married. . . . . . 44
7.7 Minimum Death Benefit. . . . . . . . . . . . . . . . 44
7.8 Spouse's Election of Lump Sum Payment. . . . . . . . 44
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Section Eight
FUNDING OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . 45
8.1 Annual Contributions . . . . . . . . . . . . . . . . 45
8.2 Additional Contributions . . . . . . . . . . . . . . 45
8.3 Administrative Expenses. . . . . . . . . . . . . . . 45
Section Nine
ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . 46
9.1 Pension Committee. . . . . . . . . . . . . . . . . . 46
9.2 Officers and Agents. . . . . . . . . . . . . . . . . 46
9.3 Records. . . . . . . . . . . . . . . . . . . . . . . 46
9.4 Administration . . . . . . . . . . . . . . . . . . . 47
9.5 Disqualification of Member . . . . . . . . . . . . . 49
9.6 Liability of Members; Indemnification. . . . . . . . 49
9.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 49
9.8 Claims and Appeal Procedure. . . . . . . . . . . . . 49
Section Ten
AMENDMENT, MERGER, AND TERMINATION . . . . . . . . . . . . . . 51
10.1 Amendment. . . . . . . . . . . . . . . . . . . . . . 51
10.2 Merger of Plans. . . . . . . . . . . . . . . . . . . 51
10.3 Termination of the Plan. . . . . . . . . . . . . . . 51
10.4 Return of Contributions of the Company . . . . . . . 52
Section Eleven
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 53
11.1 Rights Determined by the Terms of this Plan. . . . . 53
11.2 Restrictions on Alienation . . . . . . . . . . . . . 53
11.3 Headings and Gender for Convenience Only . . . . . . 53
11.4 Applicable Laws. . . . . . . . . . . . . . . . . . . 54
11.5 Company to Have No Interest in the Plan Assets . . . 54
Section Twelve
TOP-HEAVY PLAN REQUIREMENTS. . . . . . . . . . . . . . . . . . 55
12.1 Additional Requirements. . . . . . . . . . . . . . . 55
12.2 Additional Vesting Requirements. . . . . . . . . . . 56
12.3 Minimum Benefits . . . . . . . . . . . . . . . . . . 56
12.4 Compensation Taken Into Account. . . . . . . . . . . 56
12.5 Additional Limitations on Contributions and
Benefits . . . . . . . . . . . . . . . . . . . . . . 57
12.6 Definitions. . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
3
<PAGE>
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
(As Amended and Restated Effective January l, 1988)
Introduction
This Retirement Plan was originally adopted effective April 1,
1971. Effective January 1, 1988, Colonial Provision Company, Inc.
Salaried Employees' Retirement Plan, the Retirement Plan for
Salaried Employees of National Oats, Inc., and Nalley's Retirement
Plan I of Curtice-Burns, Inc. were merged into the Curtice-Burns,
Inc. Salaried and Clerical Employees' Pension Plan, and the name of
the merged plan was changed to the Curtice Burns Foods Master
Salaried Retirement Plan. Curtice-Burns Foods, Inc. hereby amends
and restates this Plan effective January 1, 1988, and continues it
for the benefit of its eligible employees on the terms and
conditions described hereinafter.
<PAGE>
Section One
PLAN NAME AND DEFINITIONS
1.1 Name of Plan: The Plan shall be known as the Curtice
Burns Foods Master Salaried Retirement Plan, and is hereafter
referred to as 'the Plan'.
1.2 'Accrued Benefit' means the annual amount of Retirement
Income determined with respect to a Participant as of any date in
accordance with the benefit formula in Section Five (Retirement
Benefits) using the Participant's Vesting Service, Benefit Service,
and Compensation as of the date of determination.
1.3 'Accumulated Employee Contributions' means the sum of the
Participant's contributions plus interest thereon to the date of
death, termination of employment or retirement, as the case may be,
computed at the rate of 3 percent compounded annually prior to
April 1, 1971, at the rate of 5 percent compounded annually from
April 1, 1971 through December 31, 1987, and at the rate of 120
percent of the Federal mid-term rate (as in effect under section
1274 of the Code for the first month of a Plan Year) compounded
annually thereafter. For the purposes of computing such interest,
all contributions in any Plan Year shall be deemed to have been
made on the last day of such Plan Year.
1.4 'Acquisition Date' means the date as of which the Plan
became effective for a group of Employees.
1.5 'Actual Retirement Date' means the first day of the month
coincident with or next following the date on which a Participant
2
<PAGE>
actually retires from employment under Section 4.1, 4.2, 4.3, or
4.4 (Retirement Dates and Conditions).
1.6 'Actuarial Equivalent' means, unless the computation of
such amount is otherwise specifically provided herein, an amount of
equivalent current value to the benefit which otherwise would have
been provided to the Participant, based on an interest assumption
of 7-1/2%, compounded annually, and mortality based on the 1971
TPF&C Forecast Mortality Table, set back one year for participants
and five years for beneficiaries.
1.7 'Actuary' means an independent actuary who is an enrolled
actuary (as defined in section 7701(a) (35) of the Code) or an
actuarial consulting firm or corporation having such an individual
on its staff, which individual, firm, or corporation is selected by
the Committee to serve as the actuarial consultant for the Plan.
1.8 'Affiliate' means any entity which is, together with the
Company, a member of a 'controlled group of corporations' or under
'common control', as determined under section 414(b) and 414(c) of
the Code, or a member of an 'affiliated service group' as
determined under section 414(m) of the Code.
1.9 'Benefit Service' means the period of a Participant's
service for purposes of determining the amount of the benefit
payable to him, as provided in Section Two (Service).
1.10 'Board of Directors' means the Board of Directors of
Curtice Burns.
1.11 'Code' means the Internal Revenue Code of 1986, as
amended.
3
<PAGE>
1.12 'Company' means Curtice-Burns Foods, Inc., a New York
corporation, and any successor by merger, consolidation or
otherwise that assumes the obligations of the Plan.
1.13 'Compensation' for any calendar year means the basic
earnings excluding overtime, premiums, bonuses, and severance pay
received by the Employee from the Company during the calendar year.
In addition to other applicable limitations which may be set
forth in the Plan and notwithstanding any other contrary provision
of the Plan, compensation taken into account under the Plan shall
not exceed $200,000, adjusted for changed in the cost of living as
provided in section 415(d) of the Internal Revenue Code (the
'Code), for the purpose of calculating a Participant's accrued
benefit (including the right to any optional benefit provided under
the Plan) for any plan year commencing after December 31, 1988.
However, the accrued benefit determined in accordance with this
provision shall not be less than the accrued benefit determined on
May 31, 1989 without regard to this provision.
Notwithstanding the preceding sentence, the accrued benefit of
any Participant who is a highly compensated employee within the
meaning of section 414(q)(1)(A) or (B) of the Code, is reduced to
the extent a benefit has accrued with respect to compensation in
excess of $200,000 during the 1989 plan year before the later of
the adoption date or effective date of this provision.
Notwithstanding any other contrary provision of the Plan, in
calculating the accrued benefit (including the right to any option
benefit provided under the Plan) of any Participant who is a highly
4
<PAGE>
compensated employee within the meaning of section 414(q)(1)(A) or
(B) of the Code, such highly compensated employee shall accrue no
additional benefit under the Plan on or after the date of the
adoption of this amendment to the extent that such additional
benefit accrual exceed the benefit which would otherwise accrue in
accordance with the terms of the Plan as subsequently amended to
comply with those qualification requirements described in income
tax regulations section 1.401(b)-1(b)(2)(ii).
This provision shall be effective until the last day by which
the Plan may be amended retroactively to comply with Tax Reform Act
of 1986 for its first plan year beginning in 1989 in order to
remain qualified under the Code and shall be effective for such
period if and only if the subsequent plan amendment to comply with
Tax Reform Act of 1986 is made on or before the last day by which
the Plan may be amended retroactively to comply with Tax Reform Act
of 1986 for its first plan year commencing in 1989 in order to
remain qualified under the Code.
In addition, the benefit accrued by any highly compensated
employee, within the meaning of section 414(q)(1)(A) or (B) of the
Code, shall in no event exceed the benefit accrual provided during
the 1989 plan year with respect to such Participant under the terms
of the Plan as subsequently amended to comply with the terms of Tax
Reform Act of 1986; provided, however, such highly compensated
employee's benefit shall not be less than the benefit such
Participant had accrued as of the last day of the last plan year
beginning before January 1, 1989.
5
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1.14 'Covered Compensation' means the average at age 65 of the
annual compensation amounts which would be treated as wages for
purposes of the Federal Social Security Act if the Participant had
earned during each calendar year from the later of 1959 and the
calendar year containing the Participant's 30th birthday through
the calendar year containing his 64th birthday, inclusive, the
maximum amount of wages subject to taxation under the Federal
Social Security Act; in determining the amount to be treated as
wages for this purpose for calendar years following the calendar
year of the Participant's termination of employment, the maximum
amount of wages subject to taxation under the Federal Social
Security Act during such calendar year of termination shall be used
for each calendar year following such calendar year of termination.
1.15 'Covered Unit' means a group of Employees as identified
in the Schedules to the Plan.
1.16 'Current Social Security Taxable Wage Base' for any
calendar year means the maximum amount of earnings which may be
considered wages under Section 3121(a) (1) of the Code for that
calendar year.
1.17 'Disability' means, with respect to any Participant,
except as set forth in Schedule B, Section B.8(a), a determination
by the Committee that he is disabled by bodily injury or disease so
as to be prevented from regularly engaging in an occupation or
performing work for substantial remuneration or profit.
6
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1.18 'Employee' means any person who is employed by an
Employer or Affiliate in a salaried or clerical classification,
excluding:
(a) any person who receives compensation only as a
pension retirement allowance, retainer or fee under contract, or
(b) any person eligible for participation in any other
pension benefit plans sponsored by the Company. Such definition of
an Employee shall also include any person who is employed by
another company if the Company has contracted to acquire the
business by which such person was employed and the other company
has contracted to manage such business for the Company until the
effective date of acquisition.
1.19 'Employer' means the Company and any Affiliate that has
adopted the Plan with the approval of the Company.
1.20 'ERISA' means the Employee Retirement Income Security Act
of 1974.
1.21 'Final Average Compensation' means the average annual
Compensation of a Participant for the five consecutive calendar
years for which he received the highest Compensation, during the
years included in his Vesting Service for the period ending on the
earlier of his Actual Retirement Date or the date as of which a
determination of his benefit is made.
If the Participant's Vesting Service includes fewer than
five years, his Final Average Compensation shall be deemed to be
his average annual Compensation for his entire period of Vesting
Service.
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1.22 'Leave of Absence' means:
(a) The period of an Employee's absence from service if
authorized in writing by an Employer or Affiliate for sickness,
temporary layoff or other sufficient cause, provided that the
Employee returns to service with an Employer or Affiliate within
thirty (30) days after the authorized absence period expires,
unless his failure to return is attributable to his Disability,
retirement at or after his Early or Normal Retirement Date or
death; and provided further that no such absence may be authorized
for a period of more than one (1) year but such authorization may
be renewed for additional periods up to one (1) year each, with the
total authorized absence not to exceed three consecutive years; or
(b) The period of an Employee's absence from service
because of military service in the armed forces of the United
States, provided that the Employee (1) retains his reemployment
rights under federal law upon discharge and (2) returns to service
with an Employer or Affiliate within ninety (90) days after
discharge or during any longer period for which his reemployment
rights are protected by federal law.
1.23 'Normal Form' means, as applied to any benefit payable to
a Participant under the Plan, the method of payment described in
Section 5.5(a) (Normal Form of Payment).
1.24 'Normal Retirement Age' means the date a Participant
attains age sixty-five (65).
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1.25 'Normal Retirement Date' means the first day of the month
coincident with or next following the 65th birthday of the
Employee.
1.26 'Participant' means any person included in the Plan as
provided in Section Three (Participation).
1.27 'Pension Committee' means the committee appointed by the
Board of Directors to manage and administer the Plan as provided in
Section Nine (Administration of the Plan).
1.28 'Plan Year' shall mean the calendar year.
1.29 'Prior Plan' means any and all of the following pension
plans as in effect on the applicable date shown below:
(a) Retirement Plan for the Salaried Employees of
National Oats, Inc. as in effect on March 31, 1980.
(b) Nalley's Retirement Plan I as in effect on March 31,
1977.
(c) Colonial Provision Company, Inc. Salaried Employees'
Retirement Plan as in effect on November 30, 1983.
(d) Borden Plan as in effect on May 8, 1977.
(e) Borden Plan as in effect on December 31, 1985.
The Schedules annexed to the Plan contain provisions
pertaining to the Prior Plan Benefits of the Prior Plan
Participants under all Prior Plans.
1.30 'Prior Plan Benefit' means the defined benefit payable to
a Prior Plan Participant, determined in accordance with the
applicable Schedule to the Plan.
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1.31 'Prior Plan Participant' means any individual who was a
participant in a Prior Plan.
1.32 'Retirement Income' means the annual income provided
under this Plan.
1.33 'Spouse' means the Participant's wife or husband, married
to him or her by a legal contract on the date benefits commence to
be paid to the Participant, or on the Participant's date of death,
if earlier.
1.34 'Trust Agreement' means the agreement between the Company
and the Trustee for the administration of the Trust Fund and any
and all amendments to such agreement.
1.35 'Trust Fund' means all moneys and property paid or
delivered to and accepted by the Trustee pursuant to the Trust
Agreement and the Plan and all investments made therewith and
proceeds thereof and all earnings and profits thereon less the
payments made by the Trustee as authorized in the Trust Agreement.
1.36 'Trustee' means the trustee appointed pursuant to the
Trust Agreement.
1.37 'Vesting Service' means the period of an Employee's
service for purposes of determining his eligibility for a benefit
from the Plan, as provided in Section Two (Service).
10
<PAGE>
Section Two
SERVICE
2.1 Service Definitions.
(a) 'Break in Service' means any Severance Period
greater than twelve (12) months, excluding any period of up to
twelve (12) months during which an Employee is on a
maternity/paternity leave. The term 'maternity/paternity leave'
means any absence of an Employee from work for reasons of (i)
pregnancy of the Employee, (ii) the birth of a child of the
Employee or the placement of a child with the Employee for the
purposes of adoption, or (iii) the care of a child for a period
beginning immediately following such birth or placement.
(b) 'Employment Date' means the date on which an
Employee first completes an Hour of Service.
(c) 'Hour of Service' means an hour for which an
Employee is directly or indirectly paid or entitled to payment for
the performance of duties for any Employer or Affiliate.
(d) 'Reemployment Date' means the date on which an
Employee first completes an Hour of Service after a Severance Date.
(e) 'Severance Date' means the earlier of (1) the date
on which an Employee retires or dies or his employment with all
Employers and Affiliates is otherwise terminated or (2) the first
anniversary of the first date of a period in which an Employee
remains absent from service with all Employers and Affiliates for
any reason other than (A) his retirement, death or other
termination of employment or (B) a Leave of Absence.
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(f) 'Severance Period' means each period beginning on an
Employee's Severance Date and ending on his next Reemployment Date.
2.2 Vesting Service. Vesting Service shall be credited to
each Employee based on the periods of time described below:
(a) Each period beginning on his Employment or
Reemployment Date and ending on his next Severance Date.
(b) Each period which is a Severance Period but neither
is nor includes any Break in Service.
(c) Each period of Disability.
2.3 Benefit Service. The Benefit Service credited to each
Participant shall be equal to (a) that portion of his Vesting
Service credited under Section 2.2(a) which is attributable to (1)
any period of his employment as a Participant or (2) any period
while he was on a Leave of Absence, if he was an Employee at the
beginning of such period and (b) to that portion of his Vesting
Service credited under Section 2.2(c) if he is eligible for a
benefit under Section 4.4 (Disability Retirement).
In determining years of Benefit Service for purposes of
the Final Average Pay Benefit set forth in Section 5.1(a), any
Participant who retires after June 30, 1982 who was prevented from
becoming a Participant prior to April 1, 1976, either because of
the Plan's then effective three-year waiting period or because he
or she declined to contribute to the Plan, shall be credited with
additional years of Benefit Service, determined by recalculating a
Participant's eligibility date as if he had been eligible to become
a Participant one year after employment. Such Participant shall be
12
<PAGE>
credited with 0.65 additional years of participation for each such
additional year of eligibility calculated hereunder, up to a
maximum of 1.3 additional years.
2.4 Service Prior to Acquisition Date. Vesting Service shall
be credited to a Participant (whether or not he is a Prior Plan
Participant) with respect to any period prior to the Acquisition
Date for his Covered Unit only in accordance with the Schedule
applicable to the Covered Unit in which he was employed on its
Acquisition Date.
2.5 Break in Service. If an Employee who is not entitled to
a deferred benefit under Section 6.1 (Termination of Employment)
incurs a Break in Service, and if at his Reemployment Date the
period of his Break in Service equals or exceeds the greater of
five
years or his period of Vesting and Benefit Service prior to his
Severance Date, then his prior Vesting and Benefit Service shall be
cancelled for all Plan purposes.
2.6 No Duplication. In no event shall any period be counted
twice in computing the Vesting or Benefit Service to be credited to
an Employee or Participant under any Plan provision.
2.7 Service Computations. A Participant's years and months
of Vesting and Benefit Service shall be computed by (a) assuming
that an Employee's Employment Commencement Date or his Reemployment
Date or his Severance Date occurs on the first day of the month
next following his Employment Commencement Date or Reemployment
Date or Severance Date, respectively, and (b) aggregating all
13
<PAGE>
periods to be credited, after excluding any period to be
disregarded, as Vesting or Benefit Service under this Section Two.
2.8 Leased Employees. Any person (other than an employee)
who provides services to an Employer or an Affiliate for purposes
of certain pension requirements under section 414(n) of the Code (a
'Leased Employee'), shall be deemed to be an 'Employee' of such
Employer or Affiliate for purposes of the service definitions and
rules of this Section Two. Notwithstanding the foregoing, no
Leased Employee shall be eligible to participate in this Plan by
reason of this Section 2.8.
14
<PAGE>
Section Three
PARTICIPATION
3.1 Eligibility. Each Prior Plan Participant who is an
Employee or on a Leave of Absence on the Acquisition Date for his
Covered Unit shall become a Participant in the Plan on the later of
the Acquisition Date for his Covered Unit or the first day of the
month coincident with or next following completion of one year of
Vesting Service. Each other Employee shall become a Participant in
the Plan on the first day of the month coincident with or next
following completion of one year of Vesting Service.
3.2 Reemployed Participant. If a Participant's employment
terminates before he becomes entitled to a deferred benefit under
Section 6.1 (Termination of Employment Before Retirement) and he is
thereafter reemployed as an Employee, he shall again become a
Participant as of the first day of the month coincident with or
next following completion of one year of Vesting Service after the
date of his reemployment. If a Participant's employment terminates
after he becomes entitled to a deferred benefit under Section 6.1
(Termination of Employment Before Retirement) and he is thereafter
reemployed as an Employee, he shall again become a Participant as
of the date he performs his first Hour of Service as an Employee on
or after the date of his reemployment.
3.3 Prior Plan Participant. Each Prior Plan Participant who
does not become a Participant in the Plan under Section 3.1 shall
have only such rights and benefit entitlements as are provided
under the terms of his Prior Plan.
15
<PAGE>
Section Four
RETIREMENT DATES AND CONDITIONS
4.1 Normal Retirement. A Participant who reaches his Normal
Retirement Age while in the employment of an Employer shall be
eligible to retire as of his Normal Retirement Date, and shall be
entitled to receive a normal retirement benefit as determined in
Section 5.1 (Normal Retirement Benefit).
4.2 Early Retirement. A Participant who has attained age 55
while in the employment of an Employer and completed 5 years of
Vesting Service may elect to retire on the first day of any month
thereafter. In the event of such early retirement, the Participant
shall be entitled to receive an early retirement benefit as
determined in Section 5.2 (Early Retirement Benefit).
4.3 Late Retirement. A Participant may continue in the
employment of an Employer beyond his Normal Retirement Date. Upon
his Actual Retirement Date, the Participant shall be entitled to
receive a late retirement benefit as determined in Section 5.3
(Late Retirement Benefit).
4.4 Disability Retirement. Except as provided in Schedule B,
Section B.8(b), a Participant who incurs a Disability, while in the
employment of an Employer, after he has attained age 50 and
completed 5 years of Vesting Service may elect to retire on the
first day of any month more than 6 months after his Disability has
begun, but not beyond his Normal Retirement Date. In the event of
such disability retirement, the Participant shall be entitled to
receive a disability retirement benefit as determined in Section
5.4 (Disability Retirement Benefit).
16
<PAGE>
Section Five
RETIREMENT BENEFITS
5.1 Normal Retirement Benefit. The normal Retirement Income
of a Participant who becomes eligible therefor under Section 4.1
shall be an amount, commencing as of the Participant's Normal
Retirement Date, equal to the amount determined under Section
5.1(c) (Prior Plan Benefit), if any, plus an additional amount as
follows: for an individual who became employed in a salaried or
clerical classification after June 30, 1981, the amount determined
under Section 5.1(a) (Final Average Pay Benefit); for an individual
who was employed in a salaried or clerical classification prior to
July 1, 1981, the amount as elected by the Participant under
Section 5.1(a) (Final Average Pay Benefit), or Section 5.1(b)
(Career Average Benefit).
(a) Final Average Pay Benefit. The sum of (1) plus (2)
in which (1) equals 0.9% multiplied by a Participant's Final
Average Compensation multiplied by a Participant's years of Benefit
Service subsequent to June 2, 1962, and (2) equals 0.5% multiplied
by the excess, if any, of Final Average Compensation over Covered
Compensation, multiplied by years of Benefit Service subsequent to
June 2, 1962; provided, however, that for purposes of (2), years of
Benefit Service shall not exceed a maximum of 35.
Effective March 15, 1990 (or if later fifteen days after
the date the adoption of this Amendment is communicated to affected
participants in accordance with ERISA SS204(h) former participants
in the Curtice Burns Lowrey's Retirement Income PLan who now
17
<PAGE>
participate in this Plan shall accrue benefits at the rate set
forth in Section 5.1(a) of the Plan. All benefits accrued by such
participants prior to such effective date shall be unaffected by
this Amendment and shall not be reduced hereby.
(b) Career Average Benefit. The sum of (1), (2), (3),
and (4) in which (1) equals the Participant's accrued benefit
determined under the provisions of Schedule A, (2) equals,
commencing January 1, 1988, 1.60% of a Participant's Compensation
for the Plan Year up to the Current Social Security Taxable Wage
Base, (3) equals, for Plan Years commencing on or after January 1,
1988, and before January 1, 1992, 2.45% of a Participant's
Compensation for the Plan Year in excess of the Current Social
Security Taxable Wage Base, and (4) equals, for Plan Years
commencing on January 1, 1992, 1.88% of a Participant's
Compensation for the Plan Year in excess of the Current Social
Security Taxable Wage Base; provided, however, that years of
Benefit Service in excess of 35 years total shall be disregarded
for purposes of (4).
(c) Prior Plan Benefit. If the Participant is a Prior
Plan Participant, his Prior Plan Benefit.
5.2 Early Retirement Benefit. The early retirement benefit
of a Participant who becomes eligible therefor under Section 4.2
(Early Retirement) shall be computed as in Section 5.1 (Normal
Retirement Benefit) based on his Benefit Service and Compensation,
up to his Actual Retirement Date, and shall be payable at the
option of the Participant as follows:
18
<PAGE>
(a) Commencing as of his Normal Retirement Date in the
full, unreduced amount, or
(b) Commencing as of his Actual Retirement Date or as of
the first day of any month after his Actual Retirement Date, but
reduced as follows:
(1) The reduction for the benefit as computed in
Section 5.1(a) (Final Average Pay Benefit) and
Section 5.1(b) (Career Average Benefit) shall
be equal to the sum of (A) and (B) in which
(A) equals to 0.0025 times the number of
months up to a total of 84 months by which the
benefit commencement date precedes Normal
Retirement Date and (B) equals 0.0050 times
the number of additional months (in excess of
84 months but not to exceed an additional 36
months) by which the benefit commencement date
precedes Normal Retirement Date.
(2) The reduction for the benefit as computed in
Section 5.1(c) (Prior Plan Benefit) shall be
as specified in the applicable Schedule
applicable to the Participant.
(3) The following transition rules shall apply to
the provisions of (1) above:
(i) For a Participant born prior to January
1, 1938, the provisions of (1) above shall not
apply and the prior provisions of Section
5.2(b) shall continue to apply.
(ii) For a Participant who is born after
December 31, 1937, the provisions of (1) shall
be effective January 1, 1992.
5.3 Late Retirement Benefit. The late retirement benefit of
a Participant who becomes eligible therefor under Section 4.3 (Late
Retirement) shall be computed as in Section 5.1 (Normal Retirement
Benefit) based on his Benefit Service and Compensation up to his
Actual Retirement Date and shall be payable as of his Actual
Retirement Date.
19
<PAGE>
5.4 Disability Retirement Benefit.
(a) The disability retirement benefit of a Participant
who becomes eligible therefor under Section 4.4 shall be computed
as in Section 5.1 (Normal Retirement Benefit) based on his Benefit
Service and Compensation up to his Actual Retirement Date and shall
be payable as of his Actual Retirement Date in the full, unreduced
amount.
(b) For purposes of Section 5.4(a), a Participant's
annual Compensation for the period of Disability shall be deemed to
be his annual Compensation immediately prior to the commencement of
such period of Disability, and the Benefit Service credited to him
shall include that portion of his Vesting Service which is
attributable to any period of Disability, if he was an Employee at
the beginning of such period.
5.5 Methods of Payment of Retirement Benefits.
(a) Normal Form of Payment. The Normal Form of payment
of retirement benefits under this Plan for any Participant who is
married on the date his retirement benefits commence to be paid
shall be in the form of a reduced joint and survivor benefit which
provides for 50% of the reduced benefit payable to the Participant
during his lifetime to continue after his death to his spouse for
her remaining lifetime, with the reduction as provided in Section
5.5(c), 50% Contingent Annuitant Option. Provided, however, that
the Normal Form of payment of retirement benefits under this Plan
for any Participant who is married on the date his retirement
benefits commence to be paid, and who elects under Section 5.1
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(Normal Retirement Benefit) to receive the Career Average Benefit
In Section 5.1(b), shall be in the form of an unreduced joint and
survivor benefit which provides for 50% of the benefit payable to
the Participant during his lifetime to continue after his death to
his spouse for her remaining lifetime. The Normal Form of payment
of retirement benefits under the Plan for any Participant who is
not married on the date his retirement benefits commence to be paid
shall be payable to the Participant for his life only. A
Participant may elect, however, in the manner prescribed in Section
5.5(b) (Election of Optional Forms) not to take his retirement
benefit in the Normal Form. Notwithstanding the preceding
provisions of this Section 5.5(a), the Normal Form of payment for
a Participant's Prior Plan Benefit, and any optional forms of
payments with regard thereto, shall be determined under the
applicable Schedule for the Participant.
(b) Election of Optional Forms. A Participant may elect
by filing an election in writing with the Pension Committee to
convert his retirement benefit otherwise payable to him into
payments with an Actuarial Equivalent value pursuant to any of the
options available to him hereunder so long as such election is made
prior to the Participant's Actual Retirement Date. Such election
or any new election under Section 5.5(c) (Options Available) below
shall be made on a form approved by the Pension Committee and shall
contain the consent of the Participant's spouse to such election.
Such consent shall contain the spouse's acknowledgement of the
effect of the election and be witnessed by a Plan representative or
21
<PAGE>
a notary public. If it is established to the satisfaction of a
Plan representative that there is no spouse or that the spouse
cannot be located, no consent will be required. The Plan
Administrator shall notify each Participant in writing at least
ninety (90) days before he becomes entitled to a retirement benefit
hereunder of his right to elect an optional form of benefit. The
notice shall also indicate the availability of a written
explanation of the terms and conditions of the form of benefit
normally applicable for the Participant and the effect that an
election of an optional form of benefit will have on his monthly
annuity payment. For a Participant who retires before his Normal
Retirement Date, his benefits shall commence to be paid on the date
the Participant selects but such date shall not be earlier than his
Early Retirement Date or his Actual Retirement Date if he retires
under Section 4.4 and not later than his Normal Retirement Date.
For a participant who retires on or after his Normal Retirement
Date, his benefits shall commence to be paid on his Actual
Retirement Date.
(c) Options Available. The optional payments which may
be elected by a Participant shall provide as follows:
100% Contingent Annuitant Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that after his
death 100% of his reduced Retirement Income shall
continue during the life of and shall be paid to
such contingent annuitant as he shall have
nominated in writing and filed with the Pension
Committee at the time of his election. The amount
of Retirement Income that shall be payable under
this option shall be the Actuarial Equivalent of
the normal Retirement Income payable to a
22
<PAGE>
Participant and his spouse pursuant to the Normal
Form of Retirement Benefit provided above.
75% Contingent Annuitant Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that after his
death 75% of his reduced Retirement Income shall
continue during the life of and shall be paid to
such contingent annuitant as he shall have
nominated in writing and filed with the Pension
Committee at the time of his election. The amount
of Retirement Income that shall be payable under
this option shall be the Actuarial Equivalent of
the normal Retirement Income payable to a
Participant and his spouse pursuant to the Normal
Form of Retirement Benefit provided above.
66-2/3% Contingent Annuitant Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that after his
death 66-2/3% of his reduced Retirement Income
shall continue during the life of and shall be paid
to such contingent annuitant as he shall have
nominated in writing and filed with the Pension
Committee at the time of his election. The amount
of Retirement Income that shall be payable under
this option shall be the Actuarial Equivalent of
the normal Retirement Income payable to a
Participant and his spouse pursuant to the Normal
Form of Retirement Benefit provided above.
50% Contingent Annuitant Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that after his
death 50% of his reduced Retirement Income shall
continue during the life of and shall be paid to
such contingent annuitant as he shall have
nominated in writing and filed with the Pension
Committee at the time of his election. The amount
of Retirement Income that shall be payable under
this option shall be the Actuarial Equivalent of
the normal Retirement Income payable to a
Participant and his spouse pursuant to the Normal
Form of Retirement Benefit provided above.
10 Year Certain and Continuous Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that, if he
23
<PAGE>
shall die before he has received at least 120
monthly Retirement Income payments, his payments
shall continue to his designated beneficiary until
a total of 120 monthly Retirement Income payments
in all have been paid. The amount of Retirement
Income that shall be payable under this option
shall be the Actuarial Equivalent of the normal
Retirement Income payable to the Participant as
provided above.
5 Year Certain and Continuous Option -
Retirement Income payable during his life in equal
monthly amounts, with the provision that, if he
shall die before he has received as least 60
monthly Retirement Income payments, his payments
shall continue to his designated beneficiary until
a total of 60 monthly Retirement Income payments in
all have been paid. The amount of Retirement
Income that shall be payable under this option
shall be the Actuarial Equivalent of the normal
Retirement Income payable to the Participant as
provided above.
Single Sum Option -
A single sum equal to the commuted value of his
Retirement Income, with the commuted value deter-
mined on the basis of the UP-1984 Table and the
interest rates specified by the Pension Benefit
Guaranty Corporation for the valuation of annuities
in pension plans terminated on the first day of the
plan year such value is to be paid.
Straight Life Annuity Option -
A married Participant whose benefits are determined
under the Final Average Pay Benefit of Section
5.1(a) shall be permitted to elect to receive his
Retirement Income unreduced in the form of equal
monthly amounts for life with no surviving spouse's
benefit.
Level Income Option -
A Participant who retires under Section 4.2 (Early
Retirement) prior to age 62 shall be permitted to
elect to receive his Retirement Income payable
during his life, with no surviving spouse's
benefit, in monthly amounts providing larger
monthly payments until his Social Security payments
begin, with these payments reduced at that time by
24
<PAGE>
the approximate amount of the Social Security
benefit which the Participant will receive, so
that, insofar as practical, a level total
Retirement Income will be available for the
Participant after his retirement. The amount of
Retirement Income that shall be payable under this
option shall be the Actuarial Equivalent of the
normal Retirement Income payable to the Participant
as provided above.
Single sum and straight life annuity combination
option -
A combination of two benefit forms determined as
follows:
(1) A single sum equal to the commuted value of
51% of his Retirement Income payable in the normal
form, with the commuted value determined on the
basis of the UP 1984 Table and the interest rates
specified by the Pension Benefit Guaranty
Corporation for the valuation of annuities in
pension plans terminated on the first day of the
plan year such value is to be paid, and
(2) A straight line annuity paid form the balance
of his Retirement Income which shall be the
Actuarial Equivalent of 49% of his Retirement
Income payable in the normal form with equal
monthly amounts for life with no surviving spouse's
benefit.
(d) Designation of Beneficiary. In the election filed
with the Pension Committee, the Participant shall designate his
contingent annuitant or beneficiary, as the case may be. If a
married Participant designates as his contingent annuitant or his
beneficiary a person other than his spouse, such designation shall
not be effective unless the spouse consents to such designation as
in Section 5.5(b) (Election of Optional Forms). Election of the
100%, 75%, 66-2/3%, or 50% Contingent Annuity Option is conditional
upon (1) designation of the name of the contingent annuitant and
(2) furnishing to the Pension Committee, within ninety days after
25
<PAGE>
the filing of such election, proof satisfactory to the Pension
Committee of the age of the contingent annuitant.
(e) Conditions on Election. Election of the option
shall be subject to the following conditions:
(1) If a Participant dies after his Normal
Retirement Date while in the active service of
the Company but before his benefits commence,
the option will be deemed not to have taken
effect, and
(2) No option involving a person other than the
Participant's spouse designated as a
contingent annuitant shall apply unless it
shall anticipate, except for the premature
death of the Participant, payments of more
than one-half of the proceeds of his benefits
to the Participant during the period of his
life expectancy determined as of the date the
option becomes effective from the actuarial
mortality table last adopted by the Pension
Committee for the determination of the costs
of the Plan.
Election of the 100%, 75%, 66-2/3%, or 50%
Contingent Annuitant Option shall be subject to the
following additional provisions:
(3) If the contingent annuitant dies before the
date the option becomes effective, the
election of the option will be deemed to be
cancelled and the Participant may thereafter
make another election, subject to the
conditions required therefor, and
(4) If the contingent annuitant dies after the
date the option becomes effective while the
Participant is living, the amount of the
payments to which the Participant is then
entitled will continue unchanged and will
cease upon the Participant's death.
(f) Changes in Election. A Participant may revoke his
election of an optional form of benefit. A Participant may elect
another optional form of benefit by filing a new election in
writing with the Pension Committee, provided his spouse consents as
26
<PAGE>
in Section 5.5(b) (Election of Optional Forms). However, no change
may be made in the election of the option after the date the option
becomes effective. Any option elected by a Participant and
consented to by his spouse, as applicable, shall become effective
on the date the Participant's benefits commence to be paid.
The latest beneficiary designation in the possession
of the Pension Committee at the time of the Participant's death
shall control. If no designated beneficiary is living at the death
of the Participant, any remaining payments due shall be computed
and paid in one lump sum to the estate of the Participant. If a
designated beneficiary is living at the death of the Participant,
but does not live to receive all payments due, any remaining
payments due shall be computed and paid in one lump sum to the
estate of the beneficiary.
(g) Payment of Retirement Benefits.
(1) Subject to the preceding provisions of this
Section 5.5 and Section 6.1(f), all Normal
Retirement Benefits, Early Retirement Benefits
and Late Retirement Benefits, provided for in
Sections 5.1, 5.2, and 5.3, shall be payable
in monthly installments on the first day of
the month and shall continue to the last
payment prior to death; provided, however,
that any Retirement Income amounting to less
than $10.00 per month shall be paid quarterly.
(2) (A) Subject to the preceding provisions of
this Section 5.5 and Section 6.1(f), all
Disability Retirement Benefits provided
for in Section 5.4 shall be payable in
monthly installments commencing as of the
Participant's Actual Retirement Date with
subsequent installments payable as of the
first day of each calendar month there
after and shall cease with the last
monthly payment payable prior to the
Participant's death or the date he ceases
27
<PAGE>
to be totally and permanently disabled,
whichever is the earlier to occur.
(B) A disabled Participant who ceases to be
totally and permanently disabled prior to
his Normal Retirement Age and who again
becomes an Employee shall have his
Vesting Service, annual Compensation, and
Benefit Service up to his Disability
Retirement Date restored, and he shall
commence to accrue benefits in accordance
with section 5.1, based on his annual
Compensation, Benefit Service, and, if
applicable, Vesting Service, both before
his Disability Retirement Date and after
his reemployment.
(C) A disabled Participant who ceases to be
totally and permanently disabled prior to
his Normal Retirement Age and who does
not return to employment as an Employee
within 30 days of his recovery shall
receive no further benefits of any kind
under the Plan, except that (l) if he was
also entitled to benefits under Section
4.2 as of his Disability Retirement Date,
he shall be entitled to receive an Early
Retirement Benefit under Section 4.2,
determined based on the provisions of the
Plan as in effect as of his Disability
Retirement Date and his annual
Compensation, Benefit Service, and, if
applicable, Vesting Service, up to his
Disability Retirement Date, and shall be
payable commencing as of his Normal
Retirement Date or such earlier date as
may be elected under Section 5.2(b), or
(2) if he was not also entitled to
benefits under Section 4.2 as of his
Disability Retirement Date, he shall be
entitled to receive a deferred retirement
benefit under Section 6.1(a), determined
based on the provisions of the Plan as in
effect as of his Disability Retirement
Date and his annual Compensation, Benefit
Service, and, if applicable, Vesting
Service, up to his Disability Retirement
Date, and shall be payable commencing as
of his Normal Retirement Date or such
earlier date as may be elected under
Section 6.1(d).
28
<PAGE>
(3) Notwithstanding any other provision of this
plan, for Employees who attain age 70-1/2
after December 31, 1987, payment of benefits
will begin no later than the April 1 following
the calendar year in which the Employee
attains age 70-1/2.
(4) If a Participant is reemployed as an Employee
by an Employer after his retirement benefits
have commenced, payment of his retirement
benefits shall not cease during the period of
reemployment, and, in addition, his retirement
benefit shall be redetermined annually during
the period of his reemployment. The
redetermination shall be done as of the last
day of the Plan Year, or, if earlier, the date
he again retires from active service, and
shall reflect his age as of such date, his
Compensation and Benefit Service both before
and after his reemployment, and any retirement
benefits paid to him prior to his Normal
Retirement Date. The retirement benefits as
so redetermined shall be payable to him as of
the first day of the Plan Year following
redetermination, or, if earlier, the first day
of the month following the date he again
retires from active service.
(5) A Participant who retires under the provisions
of Sections 4.1, 4.2, 4.3, or 4.4 (Retirement
Dates and Conditions) may elect to receive a
refund of his Accumulated Employee
Contributions. If such Participant receives
his Accumulated Employee Contributions, his
Retirement Income shall be reduced by the
amount of the benefit attributable to the
Participant's Accumulated Employee
Contributions. The amount of the benefit
attributable to the Participant's Accumulated
Employee Contributions shall be an annual
benefit, commencing at his Normal Retirement
Date, equal to his Accumulated Employee
Contributions, determined as of his Actual
Retirement Date, projected to his Normal
Retirement Date at the interest rate under
Section 411(c) of the Code, and multiplied by
10% or such other factor as may be
29
<PAGE>
established by regulation. In no event may a
Participant receive a refund of such
Contributions prior to his Actual Retirement
Date.
5.6 Maximum Benefit Limits.
(a) General Limitation on Benefits. No Retirement
Income shall be payable from this Plan to the extent it exceeds the
lesser of (1) the Defined Benefit Dollar Limitation, as adjusted in
Section 5.6(c), as applicable, or (2) the Defined Benefit Pay
Limitation, as adjusted in Section 5.6(d), if applicable.
(b) Definitions. For purposes of this Section 5.6
(1) 'Adjustment Factor' shall mean the cost of
living adjustment factor prescribed under
section 415(d) of the Code for years beginning
after December 31, 1987, applied to such items
and in such manner as prescribed.
(2) 'Current Accrued Benefit' shall mean a
Participant's Accrued Benefit under the Plan,
determined as if the Participant had separated
from service as of the close of the last
Limitation Year beginning before January 1,
1987, when expressed as an annual benefit
within the meaning of Section 415(b) (2) of
the Code. In determining the amount of a
Participant's Current Accrued Benefit, the
following shall be disregarded:
(A) any change in the terms and
considerations of the Plan after May 5,
1986; and
(B) any cost of living adjustment occurring
after May 5, 1986.
(3) 'Defined Benefit Dollar Limitation' shall mean
the limitation set forth in Section 415(b) (1)
(A) of the Code.
(4) 'Defined Benefit Pay Limitation' shall mean
100% of the Employee's average Section 415
Compensation for his highest 3 years of
Vesting Service.
30
<PAGE>
(5) 'Limitation Year' shall mean the calendar
year.
(6) 'Section 415 Compensation' shall mean
compensation as defined in Sections 1.415-2(d)
(1) and (2) of the Income Tax Regulations
published under Section 415 of the Code.
(7) 'Social Security Retirement Age' shall mean
the age used as the retirement age for the
Participant under Section 215(1) of the Social
Security Act, except that such section shall
be applied without regard to the age increase
factor, and as if the early retirement age
under Section 216(1) (2) of such Act were 62.
(c) Adjustment to Defined Benefit Dollar Limitation.
(1) Adjustment for Early Retirement. If the
retirement benefit of a Participant commences
before the Participant's Social Security
Retirement Age, the Defined Benefit Dollar
Limitation shall be adjusted so that it is the
actuarial equivalent of an annual benefit of
$90,000, multiplied by the Adjustment Factor,
beginning at the Social Security Retirement
Age. The adjustment provided for in the
preceding sentence shall be made in such
manner as the Secretary of the Treasury may
prescribe which is consistent with the
reduction for old-age insurance benefits
commencing before the Social Security
Retirement Age under the Social Security Act.
(2) Adjustment for Deferred Retirement. If the
retirement benefit of a Participant commences
after the Participant's Social Security
Retirement Age, the Defined Benefit Dollar
Limitation shall be adjusted so that it is the
actuarial equivalent of a benefit of $90,000,
beginning at the Social Security Retirement
Age, multiplied by the Adjustment Factor based
on the lesser of the interest rate assumption
under the Plan or on an assumption of five
percent (5%) per year.
(3) Protection of Current Accrued Benefit. If the
Current Accrued Benefit of an individual who
is a Participant as of the first day of the
Limitation Year beginning on or after
January 1, 1987, exceeds the Defined Benefit
Dollar Limitation, the Defined Benefit Dollar
31
<PAGE>
Limitation with respect to such individual
shall be equal to such Current Accrued
Benefit.
(4) Adjustment for Less Than 10 Years of Benefit
Service. If a Participant has completed less
than ten years of Benefit Service, the
Participant's Accrued Benefit shall not exceed
the Defined Benefit Dollar Limitation as
adjusted by multiplying such amount by a
fraction, the numerator of which is the
Participant's number of years (or part
thereof) of Benefit Service in the Plan, and
the denominator of which is ten.
(d) Adjustment to Defined Benefit Pay Limitation. If a
Participant has completed less than ten years of Vesting Service
with an Affiliate or an Employer, the Defined Benefit Pay
Limitation shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the Participant's number of
years of Vesting Service (or part thereof), and the denominator of
which is ten, but not less than one-tenth of the limitation before
the adjustment.
(e) Additional Limit for Multiple Plans. The limits
specified in Section 5.6(a) (General Limitation on Benefits) shall
be further reduced if the Combined Plan Fraction exceeds 1.0. The
Combined Plan Fraction is the sum of the Defined Contribution Plan
Fraction and the Defined Benefit Plan Fraction.
(1) The Defined Contribution Plan Fraction is
determined by dividing the total Annual
Additions (as defined in Section 415(c) (2) of
the Code) to the Curtice Burns Foods Deferred
Profit-Sharing Plan by the total of the
Defined Contribution Plan dollar limitations
applicable to each Plan Year (as specified in
Section 415(c)(1)(A) of the Code) multiplied
by 1.25, or 35% of the Section 415
Compensation received by the Employee during
32
<PAGE>
that Plan Year if less, for each Plan Year in
which the Employee was credited with Vesting
Service.
(2) The Defined Benefit Plan Fraction is
determined by dividing the Employee's
projected annual benefit at age 65 (or
attained age if later) by the dollar limit
specified in Section 5.6(a) (1) multiplied by
1.25, or the compensation limit specified in
Section 5.6(2) multiplied by 1.4, whichever is
less. For this purpose, the projected annual
benefit shall be determined without using a
salary scale and may not exceed the dollar
limit specified in Section 5.6(a)(1).
5.7 Reduction in Retirement Income Benefits. Any Retirement
Income payable from this Plan to any Participant shall be reduced
by (a) any amount payable to such Participant under Equitable Group
Annuity Contract AC-548 or Aetna Life Insurance Company Group
Annuity Contract GA 598 and (b) any amount payable to such
Participant from the South Jersey Labor and Management Pension Fund
as a result of service after April 1, 1969. In making such
reduction, the normal pension benefit payable under the above Plans
before determining any optional benefit payable shall be subtracted
from the normal pension benefit payable under this Plan.
5.8 1981 Supplemental Retirement Benefits. The Retirement
Income payable to the Plan Participant described below as
determined under the other applicable provision of this Plan shall
be increased as of July 1, 1981 as follows:
<TABLE>
<S> <C> <C> <C>
(a) Participants who retired
between January 1, 1980 and
June 30, 1981 -- 3%
(b) Participants who retired
between January 1, 1979 and
December 31, 1979 -- 6%
(c) Participants who retired
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C> <C>
between January 1, 1978 and
December 31, 1978 -- 9%
(d) Participants who retired
between January 1, 1977 and
December 31, 1977 -- 12%
(e) Participants who retired
between January 1, 1976 and
December 31, 1976 -- 15%
(f) Participants who retired
between January 1, 1975 and
December 31, 1975 -- 18%
(g) Participants who retired
between January 1, 1974 and
December 31, 1974 -- 21%
(h) Participants who retired
between January 1, 1973 and
December 31, 1973 -- 24%
(i) Participants who retired
between January l, 1972 and
December 31, 1972 -- 27%
(j) Participants who retired
prior to January 1, 1972 -- 30%
</TABLE>
5.9 Transfer.
(a) If a Participant is transferred to a classification
of employment with an Affiliate or an Employer or any of its
subsidiary corporations which is not covered by this Plan, he shall
be considered a transferred Participant. Upon the subsequent
retirement, termination of employment, or death, such transferred
Participant shall be entitled to benefits in accordance with the
provisions of the Plan then in effect, computed in accordance with
this Section Five but subject to the following:
(1) No additional Benefit Service shall accrue to
the transferred Participant under this Plan
while in said other classification.
34
<PAGE>
(2) For purposes of fulfilling any requirement of
a minimum number of years of Vesting Service
specified in Section 4.2 (Early Retirement),
6.1 (Termination of Employment Before
Retirement), 7.1 (Death Before Eligibility For
Early Retirement), or 7.2 (Death After
Eligibility For Early Retirement), continuous
employment in said other classification shall,
subject to Section Two, be considered as
Vesting Service under this Plan.
(3) If applicable under Section 5.1(a) (Final
Average Pay Benefit), the transferred
Participant's Final Average Compensation shall
be determined in accordance with the
provisions of the Plan, taking into account
compensation paid to the transferred
Participant while in said other
classification.
(b) If an employee of an Affiliate or an Employer or any
of its subsidiary corporations is transferred from a classification
of employment which is not covered by this Plan to a classification
wherein he is an Employee, he shall become a Participant under the
Plan immediately upon the later of completion of one year of
Vesting Service or his date of transfer. Upon subsequent
retirement, termination of employment, or death, such Participant
shall be entitled to benefits in accordance with the provisions of
the Plan, computed in accordance with this Section 5 but subject to
the following:
(1) For purposes of fulfilling any requirement of
a minimum number of years of Vesting Service
specified in Section 4.2 (Early Retirement),
6.1 (Termination of Employment Before
Retirement), 7.1 (Death Before Eligibility for
Early Retirement), or 7.2 (Death After
Eligibility for Early Retirement), the
Participant's period of continuous employment
with the Affiliate or an Employer or any of
its subsidiary corporations or with any
company which is a predecessor employer of the
Company immediately prior to said transfer
35
<PAGE>
shall be considered as Vesting Service under
the Plan.
5.10 Rights Forfeited.
Any rights forfeited by a Participant under this Plan
shall not be applied to increase the benefits any other Participant
would otherwise receive under the Plan, but will be applied to
reduce the Company's contribution.
36
<PAGE>
Section Six
TERMINATION OF EMPLOYMENT
6.1 Termination of Employment Before Retirement.
On termination of employment of a Participant for any
reason other than death or retirement or transfer under the Plan,
such a Participant shall have the following rights:
(a) (1) If at the time of such termination the
Participant has completed 5 years of Vesting Service or has
attained his Normal Retirement Age, he shall be entitled to
receive, beginning as of his Normal Retirement Date, if he is then
living, a deferred retirement benefit, computed as in section 5.1
(Normal Retirement Benefit) based on his Benefit Service and
Compensation, up to the date of his termination of employment.
(a) (2) [DELETED]
(a) (3) Subject to Section 6.1(f) (Payment of
Small Benefits), the deferred retirement benefit shall be payable
in accordance with Section 5.5 (Methods of Payment of Retirement
Benefits).
(b) (1) If at the time of such termination of
employment the Participant has completed 5 years of Vesting Service
or has attained his Normal Retirement Age, he may elect to receive
a refund of his Accumulated Employee Contributions. If such
Participant receives his Accumulated Employee Contributions, his
Retirement Income shall be reduced by the amount of the benefit
attributable to the Participant's Accumulated Employee
Contributions. The amount of the benefit attributable to the
37
<PAGE>
Participant's Accumulated Employee Contributions shall be an annual
benefit, commencing at his Normal Retirement Date, equal to his
Accumulated Employee Contributions, determined as of his date of
termination of employment, projected to his Normal Retirement Date
at the interest rate under Section 411(c) of the Code, and
multiplied by 10% or such other factor as may be established by
regulation; provided, however, that the amount so determined shall
not exceed the greater of (A) his Accrued Benefit or (B) the sum of
his employee contributions multiplied by 10% or such other factor
as may be established by regulation. In no event may a Participant
receive a refund of such Contributions prior to termination of his
service with the Company.
(b) (2) In the event a Participant who received a
refund of his Accumulated Employee Contributions is reemployed by
an Affiliate or an Employer and is credited with his prior years of
service for purposes of vesting of benefits under Section Two
hereof, such Participant may repay his Accumulated Employee
Contributions plus interest compounded annually at the rate under
Section 411(c) of the Code from the date of withdrawal to the date
of repayment, and his Retirement Income benefit shall be computed
as if such amounts had not been withdrawn. The time for repayment
shall end on the fifth anniversary of a Participant's Reemployment
Date. If the Participant does not repay his Accumulated Employee
Contributions plus interest, his Retirement Income benefit shall be
reduced by the amount of the benefit attributable to the
Participant's Accumulated Employee Contributions.
38
<PAGE>
(c) If, at the time of such termination, the Participant
is not eligible for a deferred retirement benefit under the
provisions of Section 6.1(a), he shall thereupon cease to be
considered a Participant under the Plan, and his Accumulated
Employee Contributions, if any, shall be forthwith refunded to him,
and when he incurs a Break In Service, he shall forfeit all further
rights to all benefits hereunder with respect to his period of
employment with the Company then terminating.
(d) A terminated Participant who is eligible for a
deferred retirement benefit under Section 6.1(a) may elect to have
benefit payments commence as of the first day of any month
following his attainment of age 55 but not later than what would
have been his Normal Retirement Date. If payments commence prior
to what would have been the terminated Participant's Normal
Retirement Date, the benefit shall be reduced as follows:
(1) The reduction for the benefit as computed in
Section 5.1(a) (Final Average Pay Benefit) and
5.1(b) (Career Average Benefit) shall be
0.0055 times the number of months that benefit
commencement date precedes Normal Retirement
Date.
(2) The reduction for the benefit as computed in
Section 5.1(c) (Prior Plan Benefit) shall be
as specified in the applicable Schedule
applicable to the Participant.
The benefit as reduced in Sections 6.1(d)(1) and (2) shall be
further reduced as in Section 7.5 (Additional Reduction in Benefits
for Spouses of Former Participants) to reflect the time between
termination of employment and the date benefit payments commence.
39
<PAGE>
(e) Subject to section 5.5(b) (Election of Optional
Forms) with respect to the election, if any, under Section 5.5(a)
(Normal Form of Payment), application for commencement of a
deferred retirement benefit shall be filed with the Committee by
the terminated Participant prior to the date payments are to
commence.
(f) Payment of Small Benefits. Notwithstanding any
other provision of this Section 6, if the commuted value of any
benefit payable under this Section 6 to a Participant who has
terminated before retirement or other payee shall be $3,500 or
less, the commuted value of such benefits shall be paid in one lump
sum. For purposes of this Section 6.1(f), such commuted value
shall be determined based on the UP-1984 Table and the interest
rates specified by the Pension Benefit Guaranty Corporation for the
valuation of annuities in pension plans terminated on the first day
of the plan year such value is scheduled to be paid.
40
<PAGE>
Section Seven
DEATH BENEFITS
7.1 Death Before Eligibility for Early Retirement. The
surviving Spouse of either (a) a Participant who dies before
termination of employment or retirement and before having attained
age 55, but after having completed 5 years of Vesting Service, or
(b) a former Participant entitled to a deferred benefit under
Section 6.1(a) who dies before the commencement of benefit
payments, shall be entitled, as the beneficiary of the Participant,
to receive a benefit, as specified in Section 7.3, if such spouse
survives to the date as of which she elects, under the provisions
of Section 7.3, to have payments begin.
7.2 Death After Eligibility for Early Retirement. The
surviving Spouse of either (a) a Participant who dies before
termination of employment or retirement but after having attained
age 55 and completed 5 years of Vesting Service or after having
attained Normal Retirement Age, or (b) a former Participant
entitled to a deferred benefit under Section 6.1(a) who dies before
the commencement of benefit payments but after having attained age
55, shall be entitled, as the beneficiary of the Participant, to
receive a benefit, as specified in Section 7.4, if such spouse
survives to the date as of which she elects, under the provisions
of Section 7.4, to have payments begin.
7.3 Amount of Benefit Payable Under section 7.1. The benefit
payable to a surviving spouse who becomes eligible therefor under
Section 7.1(a) shall commence, at the surviving spouse's option, as
41
<PAGE>
of the first day of any month on or after the date on which the
Participant would have attained age 55 had he not died and, subject
to the provisions of Section 7.8, shall be equal to 50% of the
monthly benefit determined in accordance with the provisions of
Section 6.1(a) (1) (Termination of Employment Before Retirement)
that would have been payable to the Participant for his lifetime
only had he terminated employment under the provisions of Section
6.1 on the day immediately preceding his death and elected to have
his benefits commence in accordance with the provisions of Section
6.1(d) (1) and (2) as of the date chosen by his spouse under the
provisions of this Section 7.3. The benefit payable to a surviving
spouse who becomes eligible therefor under Section 7.1(b) shall
commence, at the surviving spouse's option, as of the first day of
any month on or after the date on which the former Participant
would have attained age 55 had he not died and, subject to the
provisions of Section 7.8, shall be equal to 50% of the monthly
benefit to which he was entitled under Section 6.1(a) (1) as if he
elected to have his benefits commence in accordance with Section
6.1(d) (1) and (2) as of the date chosen by his spouse under the
provisions of this Section 7.3.
7.4 Amount of Benefit Payable Under section 7.2. The benefit
payable to a surviving spouse who becomes eligible therefor under
Section 7.2(a) shall commence, at the surviving spouse's option, as
of the first day of any month following the death of the
Participant and, subject to the provisions of Section 7.8, shall be
equal to 50% of the monthly benefit determined in accordance with
42
<PAGE>
the provisions of Section 5.2 (Early Retirement Benefit) that would
have been payable to the Participant for his lifetime only had he
retired under the provisions of Section 4.2 (Early Retirement) on
the day immediately preceding his death and elected to have his
benefit payments commence in accordance with the provisions of
Section 5.2(b) as of the date chosen by his spouse under the
provisions of this Section 7.4, or, if the Participant dies after
his Normal Retirement Age but prior to termination of employment or
retirement, such benefit shall be equal to 50% of the monthly
benefit determined in accordance with the provisions of Section 5.3
(Late Retirement Benefit) that would have been payable to the
Participant for his lifetime only had he retired under the
provisions of Section 4.3 (Late Retirement) on the day immediately
preceding his death. The benefit payable to a surviving spouse who
becomes eligible therefor under Section 7.2(b) shall commence, at
the surviving spouse's option, as of the first day of any month
following the death of the Participant and, subject to Section 7.8,
shall be equal to 50% of the monthly benefit to which he was
entitled under Section 6.1(a)(l) (Termination of Employment Before
Retirement) as if he elected to have his benefits commence in
accordance with Section 6.1(d) (1) and (2) as of the date chosen by
his spouse under the provisions of this Section 7.4.
7.5 Additional Reduction in Benefits for Spouses of Former
Participants [DELETED].
7.6 Death Benefits If Participant Not Married. Upon the
death of a Participant before termination of employment or
43
<PAGE>
retirement whose surviving Spouse, if any, is not eligible for the
benefit provided for in Section 7.1(a) or 7.2(a), no death benefit
is payable under this Plan, except that the Participant's
Accumulated Employee Contributions, if any, shall be refunded to
the deceased - Participant's designated beneficiary.
7.7 Minimum Death Benefit. In the event that the aggregate
retirement benefits paid to a Participant, his Spouse and his
designated beneficiary are less than the amount of his Accumulated
Employee Contributions, the balance of such amount shall be paid to
the estate of the Participant.
7.8 Spouse's Election of Lump Sum Payment. In lieu of
receiving a monthly benefit for her remaining lifetime, the
surviving spouse who is entitled to a benefit under Section 7.1 or
Section 7.2 may elect a lump sum payment of the benefits otherwise
payable to her under this Section. The lump sum payment amount
shall be equal to the commuted value of the benefit, determined
under Section 7.3 or Section 7.4, based on the UP-1984 Table and
the interest rates specified by the Pension Benefit Guaranty
Corporation for the valuation of annuities in pension plans
terminated on the first day of the plan year such value is
scheduled to be paid.
44
<PAGE>
Section Eight
FUNDING OF THE PLAN
8.1 Annual Contributions. The Company intends to make at
least the minimum contribution to the Plan for each plan year that
is determined by actuarial calculations to be in accordance with
requirements of the law applicable to the Plan.
8.2 Additional Contributions. The Company shall also be
authorized to, and may in its sole discretion, make such additional
contributions to the Plan as the Company may from time to time deem
desirable in order to maintain in whole or in part or to increase
the benefits payable from the Plan.
8.3 Administrative Expenses. The Company also intends to pay
the administrative expenses of the Plan and Trust Fund, but in the
event the Company does not pay such expenses, they shall be paid
from the Trust Fund.
45
<PAGE>
Section Nine
ADMINISTRATION OF THE PLAN
9.1 Pension Committee. The Plan shall be administered by a
Pension Committee pursuant to the provisions of Section 9.4
(Administration). Such Pension Committee shall be appointed by the
Company which shall consist of not less than three nor more than
seven persons, and shall be the named fiduciary of the Plan as
defined in ERISA. Any officer, director, stockholder or employee
of the Company shall be eligible for appointment to the Pension
Committee. All members of the Pension Committee shall hold office
pursuant to the terms of their designation by the Company.
9.2 Officers and Agents. The Pension Committee shall appoint
a chairman and a secretary from its members. It may appoint such
agents and representatives to carry out the administration of the
Plan, including a Plan Administrator, as the Pension Committee
deems necessary, and such agents and representatives need not be
members of the Pension Committee. A majority of the entire Pension
Committee shall constitute a quorum and a majority of the members
present at the time of a vote, if a quorum is present at such time,
shall be an act of the Pension Committee. The members of the
Pension Committee shall serve without compensation.
9.3 Records. All acts and decisions of the Pension Committee
shall be duly recorded by the secretary thereof or under his
supervision. All records together with such other documents as may
be necessary for the administration of this Plan shall be preserved
46
<PAGE>
in the custody of the secretary. Any instrument executed by a duly
designated member of such Pension Committee shall be conclusive as
to all parties dealing with the Plan, and the Trustee shall be
fully protected in dealing with any members so designated in
writing to it by the said Pension Committee.
9.4 Administration. The duties and responsibilities for the
administration of the Plan shall be held by the following persons
and in the following manner:
(a) The duties and responsibilities of the Company shall
be limited to:
(1) The adoption, modification and termination of
the Plan.
(2) The appointment of the members of the Pension
Committee of the Plan.
(3) The selection of, and if desirable, the
removal of, the Trustee for the Plan and the
periodic review and evaluation at least once
each year of the management of the funds of
the Plan by the Trustee.
(4) The selection of such funding policy to be
used in the actuarial calculations of the Plan
including the selection of rates of interest
and service and mortality tables as is
appropriate to carry out the objectives of the
Plan after consulting with the actuary or
actuaries retained by the Company for that
purpose.
(5) The periodic review and evaluation, at least
once each year, of the activities of the
Pension Committee in order to keep the
directors advised of the activities of the
Pension Committee and assist the directors in
making future appointments of members to the
Pension Committee.
47
<PAGE>
(b) The duties and responsibilities of the Pension
Committee shall be:
(1) The administration, interpretation, operation
and construction of the Plan.
(2) The selection, and if desirable, the
termination of legal counsel, auditors and
actuaries for the Plan.
(3) The delegation of such specific duties of the
administration and operation of the Plan to a
Plan Administrator and such other persons as
the Pension Committee deems appropriate or
necessary.
(4) The periodic review and evaluation, at least
once each year, of the person or persons to
whom specific duties of the administration and
operation of the Plan as been delegated.
(c) The duties and responsibilities of the Plan
Administrator of the Plan shall be:
(1) The collection and retention of all of the
factual information and data from the Company
and the plan participants and beneficiaries
necessary for the proper administration of the
Plan and as may be requested by the Pension
Committee, including application forms,
beneficiary designation forms and election
forms where appropriate and employees' wages,
contributions, enrollment, beneficiaries,
dates of employment, levels of compensation
and length of service.
(2) The preparation of and submission of all
reports and notices required by law and the
various provisions of the Plan.
(3) The communication of all appropriate
information to the participants and
beneficiaries of requirements for estimated
benefit calculations.
48
<PAGE>
9.5 Disqualification of Member. A member of the Pension
Committee shall not vote upon any question or upon the exercise of
any right or option under the plan relating specifically to himself
or his beneficiaries.
9.6 Liability of Members; Indemnification. Each member of
the Pension Committee shall be liable only for his own willful
misconduct. Each person who is or has been a member of the Pension
Committee shall be indemnified by the Company against expenses
(including amounts paid in settlement with approval of the Company)
reasonably incurred by him in connection with any motion, suit or
proceeding to which he may be a party or with which he shall be
threatened by reason of his being, or having been, a member of the
Pension Committee, except in relation to matters as to which he
shall be adjudged in such action, suit or proceeding to be liable
for his own willful misconduct in the performance of his duty as
such member of the Pension Committee.
9.7 Notices. All communications and notices to the Pension
Committee shall be deemed to be delivered to the Pension Committee
upon their delivery to the chairman of the Pension Committee at the
address of the Company. All communications and notices to the
Participants or beneficiaries shall be delivered in the manner
required by ERISA, the Code, or any of the Regulations or Rulings
published under any applicable federal or state law.
9.8 Claims and Appeal Procedure. All claims for benefits
under the Plan shall be submitted to the Pension Committee. If the
Pension Committee determines that any individual who has claimed a
49
<PAGE>
Appeal Procedure right to receive benefits under the Plan is not
entitled to receive all or any part of the benefits claimed, the
Pension Committee shall inform the claimant by certified mail of
its determination and the reasons for such determination with
specific references to the pertinent Plan provisions and with the
description of the appeal procedures set forth below. The claimant
may, within sixty (60) days thereafter, submit to the Pension
Committee by certified or registered mail, such further information
as will, in the claimant's opinion, establish his right to such
benefits. If, upon receipt of this further information, the
Pension Committee determines that the claimant is not entitled to
the benefits claimed, it may afford the claimant or his
representative the reasonable opportunity to appear personally
before it, to submit issues and comments in writing, and review
pertinent documents. The Pension Committee shall render its final
decision with the specific reasons therefor in writing and shall
transmit it to the claimant by certified mail within sixty (60)
days of any such final consideration.
50
<PAGE>
Section Ten
AMENDMENT, MERGER, AND TERMINATION
10.1 Amendment. The Company hopes and expects to continue the
Plan in effect but assumes no contractual obligation as to the
continuance of this Plan and shall have the right for any reason to
amend the Plan, in whole or in part, at any time or from time to
time or to reduce or suspend payments to be made under the Plan or
to terminate the Plan, provided any such action shall be made in
accordance with the law. Except to the extent required to permit
the Plan to meet the requirements of the Code, ERISA, or the
requirements of governmental authority, no such action by the
Company shall affect adversely in any way any rights theretofore
acquired under the Plan by Participants.
10.2 Merger of Plans. In the case of any merger or
consolidation of this Plan and/or the Trust Fund with, or transfer
of the assets or liabilities of the Plan and/or Trust Fund to, any
other plan at any time after September 2, 1974, the terms of such
merger, consolidation, or transfer shall be such that each
Participant would receive (in the event of termination of this Plan
or its successor immediately thereafter) a benefit which is no less
than he would have received in the event of termination of this
Plan immediately before such merger, consolidation, or transfer.
10.3 Termination of the Plan. In the event of termination or
partial termination of the Plan, the rights of all affected
Participants to benefits accrued to the date of such termination or
partial termination to the extent then funded or guaranteed by the
51
<PAGE>
Pension Benefit Guaranty Corporation, shall be nonforfeitable, and
upon the occurrence of such event, the assets of the Trust Fund
shall be allocated among the Participants and their beneficiaries
in accordance with the law, but not beyond the value of their
accrued benefits.
10.4 Return of Contributions of the Company.
(a) Notwithstanding Section 11.5 (Company to Have No
Interest in the Plan Assets), in the case of an excess contribution
made by reason of:
(1) a good faith mistake of fact, or
(2) a good faith mistake in determining the
deductibility of a contribution, resulting in
a disallowance of a deduction,
the excess contribution, as determined in Section 10.4(b), may be
returned to the Company within one year after the date of payment,
or in the case of a disallowed contribution, the date of
disallowance.
(b) The amount of the excess contribution for purposes
of Section 10.4(a) shall be lesser of:
(1) the excess of the amount contributed over the
amount that would have been contributed had
there not occurred a mistake of fact or a
mistake in determining the deduction, or
(2) the amount determined in (1) above, less any
losses attributable thereto.
(c) After the allocation of the Trust Fund as provided
under Section 10.3 (Termination of the Plan) and after satisfaction
of all fixed and contingent liabilities under the Plan, any part of
the Trust Fund remaining shall revert to the Company.
52
<PAGE>
Section Eleven
MISCELLANEOUS
11.1 Rights Determined by the Terms of this Plan. The Plan
hereby created is purely voluntary on the part of the Company. The
Trust Fund shall be the sole source of all pensions or other
benefits provided under this Plan and under no circumstances shall
the Company be liable or responsible therefor.
Neither the establishment of this Plan nor any provision
of this Plan shall give a Participant the right to be retained in
the services of the Company, and all Participants shall remain
subject to be discharged to the same extent as if this Plan had
never been executed.
11.2 Restrictions on Alienation. To the extent permitted by
law, none of the benefits, payments or proceeds of any contract
arising out of or by virtue of this Plan shall be subject to any
claim of, or any legal process by, a creditor of a Participant or
any beneficiary, and neither the Participant nor any beneficiary
shall have any right to anticipate, alienate, encumber or assign
any of the benefits or payments or proceeds or avails of any
contracts, or any benefits arising out of or by virtue of this Plan
other than pursuant to a Qualified Domestic Relations Order
pursuant to Section 414(p) of the Code.
11.3 Headings and Gender for Convenience Only. The headings
and subheadings in this Plan are reserved for convenience and
reference only and are not to be used construing this Plan or any
provision thereof. The masculine pronoun wherever used shall
53
<PAGE>
include the feminine pronoun and the single shall include the
plural unless the context clearly indicates otherwise.
11.4 Applicable Laws. This Plan and every provision thereof
shall be construed and its validity determined in accordance with
the law of the State of New York and any applicable federal laws.
11.5 Company to Have No Interest in the Plan Assets. No part
of the Plan assets shall under any circumstances be paid to or for
the use of the Company or returned to the Company except in the
case of actuarial error, and then only upon the termination of the
Plan.
54
<PAGE>
Section Twelve
TOP-HEAVY PLAN REQUIREMENTS
12.1 Additional Requirements.
(a) The additional requirements under this Section
Twelve will be applicable in a Plan Year of this Plan beginning on
or after January 1, 1984, if, as of the determination date of this
Plan for such Plan Year, the ratio of the value of benefits for key
employees to the value of benefits for all employees is more than
.60.
(b) In determining the present value of accrued benefits
for key employees or for all employees under a defined benefit plan
of the Company, the present value will be determined as of the
valuation date for such plan falling within the 12 month period -
ending on the determination date for such plan. For purposes of
this Section Twelve, in determining the present value of the
accrued benefit of any employee under a plan or the amount of the
account of any employee under a plan, such present value or amount
shall be increased by the aggregate distributions with respect to
such Employee under the plan during the five-year period ending on
the determination date. The actuarial assumptions used in deter-
mining such present values shall be the same as those used by this
Plan for purposes of the minimum funding standards under Code
section 412, except that no assumption as to future withdrawal or
future salary increases shall be used.
55
<PAGE>
12.2 Additional Vesting Requirements.
If the additional requirements under this section Twelve
are applicable, as provided in Section 12.1, notwithstanding any
other provision of this Plan, a Participant who terminates
employment for any reason other than death or retirement or
transfer under the Plan shall have a nonforfeitable right to the
percentage of the benefit accrued under this Plan derived from the
Company's contribution that is set forth in the following table:
<TABLE>
<CAPTION>
Year of Percentage of
Service Benefit
<S> <C>
2 20
3 40
4 60
5 or more 100
</TABLE>
12.3 Minimum Benefits. If the additional requirements under
this Section Twelve are applicable, as provided in Section 12.1,
the benefits of a Participant who is otherwise eligible for
benefits of this Plan and who is not a key employee shall not be
less than the Participant's minimum benefit. Such minimum benefit
shall be the equivalent of a single life annuity commencing at age
65 determined by multiplying such Participant's minimum benefit
compensation by the lesser of (a) two percent times the
Participant's Vesting Service after December 31, 1983 during each
Plan Year in which additional requirements of this Section Twelve
apply, or (b) 20 percent.
12.4 Compensation Taken Into Account. In any Plan Year to
which this Section Twelve applies, not more than $200,000 of the
annual compensation of any Employee under this Plan shall be taken
56
<PAGE>
into account for any purpose. Such amount shall be adjusted for
increases in the cost of living in accordance with guidelines
published by the Department of the Treasury under Code section
416(d) (2).
12.5 Additional Limitations on Contributions and Benefits. If
the additional requirements under this Section Twelve are
applicable, as provided in Section 12.1, then, notwithstanding any
other provision of this Plan, the maximum dollar limit considered
in the denominator of the fractions described in Section 415(e) of
the Code shall be multiplied by 1.0, rather than 1.25; provided,
however, that if the minimum benefit of Section 12.3 is adjusted
for any Plan Year in which the additional requirements of this
Section Twelve apply, by substituting 'three percent' for 'two
percent' and '30 percent' for '20 percent', then the maximum dollar
limit considered in the denominator of the fractions described in
Section 415(e) of the Code for such year shall be multiplied by
1.25.
12.6 Definitions. For purposes of this Section Twelve, the
following definitions and rules of interpretation shall apply:
(a) 'determination date' for a given plan year shall mean the
last day of the plan year preceding such plan year, or in the case
of the first plan year of a plan, the last day of such plan year.
(b) 'key employee' shall mean a Participant or former
Participant who is, at any time during the current Plan Year, or
has been during any of the four preceding Plan Years:
(1) an officer of the Company whose annual compensation
(as defined in Section 5.6(b) (6)) exceeds 150% of
57
<PAGE>
the dollar amount specified in Code section 415(c)
(1) (A), as adjusted;
(2) one of the 10 employees of the Company owning the
largest interests in the Company and whose annual
compensation (as defined in Section 5.6(b) (6))
exceeds the dollar amount specified in Code section
415(c) (1) (A), as adjusted;
(3) a five percent owner of the Company; or
(4) a one percent owner of the Company having annual
compensation (as defined in Section 5.6(b) (6)) of
more than $150,000. For purpose of this
definition, no more than the lesser of (A) 50
employees or (B) the greater of 10 percent of
employees or three such employees shall be treated
as officers.
(c) 'value of benefits for key employees' shall mean the
sum of (1) the present value of accrued benefits for key employees
under this Plan, and, if applicable, (2) if key employees
participate in one or more other plans of the Company that qualify
under Code section 401(a), the sum of the present value of the
accrued benefits for key employees under each such plan that is a
defined benefit plan and the aggregate of accounts for key
employees under each such plan that is a defined contribution plan,
and, if applicable, (3) if the Company maintains one or more other
plans that qualify under Code section 401(a) which enable a plan in
which a key employee participates to meet the requirements of Code
section 401(a) (4) or 410, the sum of the present value of the
accrued benefits for key employees under each such plan that is a
defined benefit plan and the aggregate of accounts for key
employees under each such plan that is a defined contribution plan.
For purposes of (2) and (3) in the preceding sentence, the present
value of the accrued benefits and the aggregate of accounts for key
58
<PAGE>
employees are considered separately for each plan as of the
determination date for such plan falling within the same calendar
year as the determination date for this Plan. For purposes of this
Section 12.6(c), the value of benefits of any key employee who has
not received compensation from the Company during the current Plan
Year or any of the four preceding Plan Years will not be taken into
account.
(d) 'value of benefits for all employees' for a given
Plan Year of the Plan shall mean the sum of (l) the present value
of accrued benefits for all employees under this Plan, and, if
applicable, (2) if key employees participate in one or more other
plans of the Company that qualify under Code section 401(a), the
sum of the present value of the accrued benefits for all employees
under each such plan that is a defined benefit plan and the
aggregate of accounts for all employees under each such-plan that
is a defined contribution plan, and, if applicable, (3) if the
Company maintains one or more other plans that qualify under Code
section 401(a) which enable a plan in which a key employee
participates to meet the requirements of Code section 401(a) (4) or
410, the sum of the present value of accrued benefits for all
employees under each such plan that is a defined benefit plan and
the aggregate of accounts for all employees under each such plan
that is a defined contribution plan. For purposes of (2) and (3)
in the preceding sentence, the present value of the accrued
benefits for all employees and the aggregate of accounts for all
employees are considered separately for each plan as of the
59
<PAGE>
determination date for such plan falling within the same calendar
year as the determination date for this Plan. For purposes of this
Section 12.6(d), (1) the value of benefits for any employee who is
not a key employee as of the current Plan Year but was a key
employee as of a prior Plan Year will not be taken into account;
and (2) the value of benefits of any employee who has not received
compensation from the Company during the current Plan Year or any
of the four preceding Plan Years will not be taken into account.
(e) 'minimum benefit compensation' shall mean the
Participant's average compensation for the five consecutive years
of Vesting Service for which the Participant's annual compensation
(as defined in Section 5.6(b) (6)) was highest. If the
Participant's number of such consecutive years of Vesting Service
is less than five, the Participant's minimum benefit compensation
shall be based on the Participant's consecutive years of Vesting
Service. For purposes of this section 12.6(e), years of Vesting
Service shall be considered only if such years were (1) completed
after December 31, 1983 and (2) begun during a Plan Year to which
this Section Twelve applies.
60
<PAGE>
A.1. Covered Employees
SCHEDULE A
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
A.1. Covered Employees. The provisions of Schedule A shall apply
in determining the amount of benefits under the Career Average
Benefit formula set forth in Section 5.1(b) for the period between
an Employee's Employment Commencement Date, or Acquisition Date if
later, and December 31, 1987.
A.2. Benefit computations.
(a) Pension benefit for service prior to April 1, 1976:
(1) The Retirement Income for service prior to April 1,
1976, shall be determined as the number of Units
credited under (2) below multiplied by $1.13
subject to the minimum income provided in (3)
below.
(2) Each Participant shall be credited with a number of
Units of Retirement Income equal to the annual
amount of Fixed Retirement Pension credited to him
under the Old Plan for service prior to June 2,
1962 or under Aetna Life Insurance Company Group
Annuity Contract GA-598. Each Participant shall
also be credited with a number of Units of
Retirement Income equal to the Fixed Retirement
Income credited to him for his years of
Participating Prior Service divided by $1.20. For
each Plan Year commencing after March 31, 1971 and
prior to April 1, 1976, each Participant shall be
credited with an additional number of Units of
Retirement Income equal to the amount of Fixed
Retirement Income credited to him for such Plan
Year divided by the value of one Unit at the end of
such Plan Year.
(3) Each Participant shall be credited with an annual
amount of Fixed Retirement Income equal to the
annual amount of Fixed Retirement Pension credited
to him under the Old Plan for service prior to June
2, 1962 or under Aetna Life Insurance Company Group
<PAGE>
Annuity Contract GA-598. Each Participant shall
also be credited with an amount of Fixed Retirement
Income equal to 1.35% of the part of his Past
Compensation which is not in excess of $4,800 plus
2% of the part of such compensation in excess of
$4,800, all multiplied by his Participating Prior
Service. For each Plan Year commencing after March
31, 1971 and prior to April 1, 1976, each
Participant shall be credited with an additional
amount of Fixed Retirement Income depending on the
amount of the Participant's employee contributions
made in accordance with the plan's contribution
requirements as they existed prior to April 1,
1976. If the Participant's employee contributions
are less than $156, the amount is 75% of the
contributions. If the Participant's employee
contributions are more than $156, the amount is
62.5% of the contributions plus $19.50.
(b) Pension benefit for service on or after April 1, 1976
through March 31, 1987: Beginning on or after April 1, 1976, the
Retirement Income credited to each Participant shall be the amount
determined as follows: For each twelve consecutive month period
beginning on April 1, 1976, the Retirement Income accredited to
such Participant shall be 1.60% of Compensation (received during
the calendar year ending on the December 31 preceding the April 1
at the beginning of the twelve-month period) up to the Current
Social Security Taxable Wage Base (as in effect for the calendar
year ending on the December 31 preceding the April 1 at the
beginning of the twelve-month period) plus 2.45% of such
Compensation in excess of such Current Social Security Taxable Wage
Base.
(c) Pension Benefit for the Period From April 1, 1987 through
December 31, 1987. The sum of (1) and (2), multiplied by 0.75; (1)
1.60% of a Participant's Compensation for calendar year 1987 up to
the Current Social Security Taxable Wage Base for calendar year
2
<PAGE>
A.2(d) Additional Benefit Accrual
1987, (2) 2.45% of the excess of such Compensation for calendar
year 1987 over the current Social Security Taxable Wage Base for
calendar year 1987.
(d) Additional Benefit Accrual: Any Participant who retires
after June 30, 1982 who was prevented from becoming a Participant
prior to April 1, 1976 either because of the Plan's then effective
three year waiting period or because he or she declined to
contribute to the Plan, shall be credited with up to two additional
years of benefit accrual. Each such year of benefit accrual shall
be equal to 65 percent of the amount of benefit accrued by the
Participant in his first full year of participation. The number of
additional years of benefit credit shall be determined by
recalculating the Participant's eligibility date as if he had been
eligible to become a Participant one year after employment. If
such recalculation adds two or more years of eligibility, then such
Participant shall be credited with two additional years of benefit
accrual. If such recalculation results in less than two years of
additional eligibility, then the additional years of benefit
accrual shall be equal to the additional years of eligibility.
(e) Minimum Benefit for Participants Retiring by March 31,
1976: Notwithstanding the above, the Retirement Income for
Participants retired on or before March 31, 1976, shall not be less
than the product of the number of Units credited to the Participant
as of March 31, 1976 and $1.32.
3
<PAGE>
A.2(f) Definitions
(f) Definitions. The following definitions apply for
purposes of this Section A.2.:
(1) 'Participating Prior Service' means the number of
plan years from June 2, 1962 to April 1, 1971
during which the Employee was a Participant in the
Curtice-Burns Employees' Pension Plan.
(2) 'Past Compensation' means the annual basic rate of
pay as of April 1, 1971, excluding any pay for
overtime, bonus or any other special remuneration
but may not exceed the average annual amount of
compensation received during the five consecutive
years of Vesting Service during which such average
was the highest.
(3) 'Old Plan' means the Curtice-Burns, Inc. Employees'
Pension Plan, effective as of June 2, 1962 and as
amended.
4
<PAGE>
B.1. Covered Employees
SCHEDULE B
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit B
B.1. Covered Employees. The following groups of Employees have
been designated as included in Covered Unit B:
(a) National Oats, Inc.
(i) All salaried employees of National Oats, Inc. who
were participants in the Retirement Plan for the
Salaried Employees of National Oats, Inc. as of
March 31, 1980.
(ii) The Acquisition Date for purposes of Section
B.1(a)(i) is April 1, 1980.
(b) Blevins Popcorn Company.
(i) All salaried employees of Blevins Popcorn
Company who were employed on the Acquisition
Date.
(ii) The Acquisition Date for purposes of Section
B.1(b)(i) is October 31, 1986.
B.2. Prior Vesting Service. Employees included in Covered Unit B
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with National Oats, Inc. or Blevins
Popcorn Company, respectively.
<PAGE>
B.3. Entitlement to Prior Plan Benefits
B.3.Entitlement to Prior Plan Benefits.
(a) Covered Employees of National Oats. The Prior Plan
Benefit, as set forth in Section B.7., is the annual accrued
benefit, payable in the form of a straight life annuity as of
Normal Retirement Date, determined as of March 31, 1980, under the
Retirement Plan for Salaried Employees of National Oats, Inc.
(b) Covered Employees of Blevins Popcorn Company. No Prior
Plan Benefit is payable with respect to these Employees.
B.4. Early Retirement. In computing the Prior Plan Benefit of a
Participant who has elected early payment of his early retirement
benefit in accordance with Section 5.2 (Early Retirement Benefit),
the Prior Plan Benefit shown in Section B.7. shall be reduced by
five-twelfths of one percent (5/12%) for each full month by which
the Participant's benefit commencement date precedes age 60. In
computing the Prior Plan Benefit of a former Participant who has
elected early payment of his early retirement benefit in accordance
with Section 6.1 (Termination of Employment Before Retirement), the
Prior Plan Benefit shown in Section B.7. shall be reduced by
five-twelfths of one percent (5/12%) for each full month by which
the former Participant's benefit commencement date precedes age 65.
B.5. Normal Form of Payment. The Normal Form of payment of the
Prior Plan Benefit determined under this Schedule B shall be as
follows:
2
<PAGE>
B.6. Actuarial Factors
(a) Married Participants on Benefit Commencement Date. A
benefit reduced as determined in Section B.6. for the Participant's
life and after his death 50% of the reduced benefit to his spouse
for her remaining life.
(b) Unmarried Participants on Benefit Commencement Date. A
benefit reduced as determined in section B.6. for the Participant's
life but with 60 payments guaranteed.
(c) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, as determined in Section B.6., provided the requirements of
Sections 5.5(b) (Election of Optional Forms) and 5.5(f) (Changes in
Election) are met. The optional forms available are:
(1) Reduced benefit for the Participant's life and upon
his death 50%, 75%, or 100% of the reduced benefit
to his spouse for her remaining life;
(2) Reduced benefit for the Participant's life but with
120 payments guaranteed.
(3) A level income benefit determined under the
procedures of the Level Income Option described in
Section 5.5(c).
B.6. Actuarial Factors.
(a) Joint and Survivor Option. Joint and Survivor Factors to
convert a life annuity to an equivalent joint and survivor annuity
shall be determined by the following formulas:
3
<PAGE>
B.6. Actuarial Factors
(1) 100% Continuation: 75% plus 1% for each year the
joint annuitant is older than
the Participant or minus 1% for
each year the joint annuitant
is younger than the
Participant.
(2) 75% Continuation: 80% plus 3/4% for each year the
joint annuitant is older than
the Participant or minus 3/4%
for each year the joint
annuitant is younger than the
Participant.
(3) 50% Continuation: 86% plus 1/2% for each year the
(Normal or Early joint annuitant is older than
Retirement) the Participant or minus 1/2%
for each year the joint
annuitant is younger than the
Participant.
(4) 50% Continuation: 60% plus 3/4% for each year the
(Disability) joint annuitant is older than
the Participant or minus 3/4%
for each year the joint
annuitant is younger than the
Participant.
(5) The factor determined above in section 6(a) (1),
(2),or (3) shall be increased by adding .6% for
each year the Participant is under age 65.
(6) The factor determined above in Section 6(a) (4)
shall be increased by adding .6% for each year the
Participant is over age 50.
(c) Period Certain and Life Option Factors. Period Certain
and Life Factors to convert a life annuity to an equivalent period
certain and life annuity shall be determined from the following
table:
4
<PAGE>
B.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Period Certain
Age 10 Year
<S> <C>
55 .975
56 .972
57 .968
58 .965
59 .962
60 .957
61 .952
62 .947
63 .940
64 .933
65 .925
66 .916
67 .906
68 .895
69 .883
70 .872
</TABLE>
The reciprocals of these factors shall be used to convert
a period certain and life annuity to an equivalent life annuity.
(d) In General. For the purpose of this Section B.6. 'Age'
shall mean age on the birthday nearest to the date of retirement or
death and no interpolation shall be made from the factors in the
tables. All factors determined under this Section B.6. shall be
rounded to three decimal places. Any factors not included in this
Section B.6. shall be determined by using the 1971 Towers, Perrin,
Foster & Crosby Forecast Mortality Table and an interest rate of
7.5%.
B.7. Prior Plan Benefit. The following Employees in Covered Unit
B are entitled to receive a Prior Plan Benefit under this Schedule
B.
5
<PAGE>
B.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Albaugh, M. $ 686.00
Ames, G. 14,997.99
Arnold, H. 2,520.37
Balk, W. 1,754.02
Bittinger 4,155.07
Boeckman, R. 3,382.61
Brennan, D. 127.77
Bryant, D. 547.70
Busha, G. 453.75
Campbell, J. 2,451.10
Caruthers, T. 67.87
Clemmens, G. 3,256.06
Colleran, J. 298.12
Crowe, L. 2,068.62
Drennan, W. 3,517.05
Feil, J. 212.84
Forberg, B. 876.48
Garrett, P. 279.32
Gordon, R. 1,201.57
Grzeskowiak 1,420.30
Halliburton 2,515.58
Hamilton, M. 451.62
</TABLE>
6
<PAGE>
B.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Hand, J. 2,935.77
Hughes, D. 7,377.68
Kelly, J. 1,097.18
Linderkamp 367.93
Lubenkov, J. 963.98
MadIon, C. 1,199.26
Martin, J. 2,665.66
Mayne, C. 2,466.08
Mullin, W. 2,850.28
Musker, W. 3,596.59
Opatrny, C. 1,120.38
Peters, G. 312.50
Plantz, J. 331.52
Pratt, B. 61.25
Ranard, S. 280.83
Regan, J. 3,115.63
Rudin, E. 2,493.97
Ruedy, G. 4,700.16
Rummel, G. 1,708.90
Sabin, E. 787.96
Scanlan, D. 4,390.90
Schwartzko 778.92
Seibert, S. 2,937.24
Sheets, C. 2,356.42
Shore, L. 1,516.10
Simmons, R. 456.32
Smedley 9,145.65
Smith, R. 1,134.59
Struve, M. 665.17
Sweet, S. 617.91
Terbovic, R. 481.87
Vermeersch 11,566.39
</TABLE>
7
<PAGE>
B.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Wilcox, R. 600.01
Williams, R. 2,646.25
Wilson, W. 4,295.08
Wise, L. 4,556.12
Zachar, K. 2,876.60
Ziesmer, C. 6,100.65
Bugg, C. 2,192.76
Bynum, F. 903.12
Clay, J. 736.10
Counts, D. 2,058.66
Garwood 2,764.87
Hare, C. 2,248.10
Hartman, M. 1,353.50
Jatres, P. 1,209.75
Kacher, D. 1,938.05
Kruep, M. 1,131.69
Lockhart, T. 3,438.39
Martin, L. 3,491.45
McCormic, B. 3,139.58
Miller, F. 870.37
Sampson, N. 635.91
Schwab 794.00
Smith, J. 1,424.92
Smith, W. 2,686.31
Steele, L. 1,162.14
Swope, B. 2,307.16
White, W. 3,946.57
</TABLE>
8
<PAGE>
B.8. Disability Retirement
B.8.Disability Retirement.
(a) With respect to any Participant described in Section
B.1(a) (i) above, 'Disability' means a physical or mental condition
which entitles a Participant to disability insurance benefits under
Title Il of the Federal Social Security Act, as determined by the
Social Security Administration or a court of proper jurisdiction.
(b) If a Participant incurs a Disability as described in
Section B.8(a) before his Normal Retirement Age, he shall continue
as a Participant and an Employee until the earlier of the first
payment of benefits to him or his Normal Retirement Age. If he
continues to be disabled until his Normal Retirement Age, payment
of his benefit shall begin on his Normal Retirement Date. He may,
however, elect to receive payment of his benefit at any time after
age 55.
9
<PAGE>
C.1. Covered Employees
SCHEDULE C
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit C
C.1. Covered Employees. The following groups of Employees have
been designated as included in Covered Unit C:
(a) Nalley's Fine Foods.
(i) All salaried (exempt) employees of Nalley's Fine
Foods who were participants in Nalley's Retirement
Plan I as of March 31, 1977.
(ii) The Acquisition Date for purposes of Section
C.1(a)(i) is April 1, 1977.
(b) Adams Food Division.
(i) All salaried employees of Adams Food Division
of International Multi foods Corporation who
were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
C.1(b)(i) is December 19, 1986.
(c) Farman Brothers Pickle Company.
(i) All salaried employees of Farman Brothers
Pickle Company who were employed on the
Acquisition Date.
(ii) The Acquisition Date for purposes of Section
C.1(c)(i) is July 1, 1987.
C.2. Prior Vesting Service. Employees included in Covered Unit C
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
<PAGE>
all periods of employment with Nalley's Fine Foods, Adams Food
Division, or Farman Brothers Pickle Company, respectively.
C.3. Entitlement to Prior Plan Benefits.
(a) Covered Employees of Nalley's Fine Foods. The Prior Plan
Benefit, as set forth in Section C.7. is the annual accrued
benefit, payable in the form of a straight life annuity as of
Normal Retirement Date, determined as of March 31, 1977, under
Nalley's Retirement Plan I.
(b) Covered Employees of Adams Food Division. No Prior Plan
Benefit is payable with respect to these Employees.
(c) Covered Employees of Farman Brothers Pickle Company. No
Prior Plan Benefit is payable with respect to these Employees.
C.4. Early Retirement. In computing the Prior Plan Benefit of a
Participant or a former Participant who has elected early payment
of his early retirement benefit in accordance with Section 5.2
(Early Retirement Benefit) or Section 6.1 (Termination of
Employment Before Retirement), the Prior Plan Benefit shown in
Section C.7. shall be reduced by .005 for each full month by which
the Participant's benefit commencement date precedes age 65.
C.5. Normal Form of Payment. The Normal Form of payment of the
Prior Plan Benefit determined under this Schedule C shall be as
follows:
(a) Married Participants on Benefit Commencement Date. A
benefit reduced as determined in Section C.6. for the Participant's
life and after his death 50% of the reduced benefit to his spouse
for her remaining life.
2
<PAGE>
C.6. Actuarial Factors
(b) Unmarried Participants on Benefit Commencement Date. A
benefit for the Participant's life.
(c) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, as determined in Section C.6., provided the requirements of
Sections 5.5(b) (Election of Optional Forms) and 5.5(f) (Changes in
Election) are met. The optional forms available are:
(1) Reduced benefit for the Participant's life and upon
his death 50% or 100% of the reduced benefit to his
spouse for her remaining life;
(2) Reduced benefit for the Participant's life but with
120 payments guaranteed.
(3) A level income benefit determined under the
procedures of the Level Income Option described in
Section 5.5(c).
(4) A benefit for the Participant's life.
C.6. Actuarial Factors. Actuarially equivalent benefit amounts
shall be determined based on the 1971 Group Annuity Mortality Table
and an interest rate of 6.5%.
C.7. Prior Plan Benefit. The following Employees in Covered Unit
C are entitled to receive a Prior Plan Benefit under this schedule
C.
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Anderson, D. $1,908.72
Batey, D. 248.04
Brewer, R. 6,108.24
Bright, D. 3,419.64
</TABLE>
3
<PAGE>
C.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Carlsen, R. 3,110.76
Carnell, S. 228.84
Derosa, R. 3,261.84
Galka, J. 705.00
Jackson, R. 1,524.12
Kuper, F.R. 995.04
Landwehr, P. 491.28
Maxfield, B. 1,488.24
NcColley, M. 2,724.36
McDonald, D. 9,079.20
McEntee, J.R. 3,618.72
Mooney, D. 3,364.32
Myers, D. 1,505.64
Nylund, G. 1,278.36
Oliver, D. 5,857.92
Paronteau, G. 2,489.52
Reid, Graemf 3,627.72
Roof, D. 1,172.28
Sackman, W. 3,154.32
Stwestrom, R. 2,878.32
Sullins, R. 3,685.44
Swanson, R. 342.48
Tallariti, J. 3,476.40
Thomas, H. 2,951.76
Vandenberg, M. 1,250.16
Wise, L. 3,936.24
Atchison W. 5,356.32
Baldwin 125.40
Elvron, A. 1,721.88
Faker, H.L. 2,819.04
</TABLE>
4
<PAGE>
C.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Johnson, R.E. 3,798.24
Neikle, B. 953.88
Swier, O. 4,599.00
</TABLE>
5
<PAGE>
D.1. Covered Employees
SCHEDULE D
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit D
D.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit D:
(a) Colonial Provision Company, Inc.
(i) All salaried employees of Colonial Provision
Company, Inc. who were participants in Colonial
Provision Company, Inc. Salaried Employees'
Retirement Plan as of November 30, 1983.
(ii) The Acquisition Date for purposes of Section
D.1(a)(i) is December 1, 1983.
D.2. Prior vesting service. Employees included in Covered Unit D
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Colonial Provision Company, Inc.
D.3. Entitlement to Prior Plan Benefits.
(a) Covered Employees of Colonial Provision Company. The
Prior Plan Benefit, as set forth in Section D.7., is the annual
accrued benefit, payable in the form of a straight life annuity as
of Normal Retirement Date, determined as of November 30, 1983,
under the Colonial Provision, Inc. Salaried Employees' Retirement
Plan.
D.4. Early Retirement. In computing the Prior Plan Benefit of a
Participant or a former Participant who has elected early payment
of his early retirement benefit in accordance with Section 5.2
<PAGE>
D.5. Normal Form of Payment
(Early Retirement Benefit) or Section 6.1 (Termination of
Employment Before Retirement), the Prior Plan Benefit shown in
Section D.7. shall be reduced by 5/9 of 1% for each full month by
which the former Participant's benefit commencement date precedes
age 65.
D.5. Normal Form of Payment. The Normal Form of payment of the
Prior Plan Benefit determined under this Schedule D shall be as
follows:
(a) Married Participants on Benefit Commencement Date. A
benefit reduced as determined in Section D.6. for the Participant's
life and after his death 50% of the reduced benefit to his spouse
for her remaining life.
(b) Unmarried Participants on Benefit Commencement Date. A
benefit for the Participant's life.
(c) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, as determined in Section D.6., provided the requirements of
Sections 5.5(b) (Election of Optional Forms) and 5.5(f) (Changes in
Election) are met. The optional forms available are:
(1) Reduced benefit for the Participant's life and upon
his death 50%, 66-2/3%, or 100% of the reduced
benefit to his spouse for her remaining life;
(2) Reduced benefit for the Participant's life but with
guaranteed payments for a period not to exceed the
Participant's life expectancy.
2
<PAGE>
D.6. Actuarial Factors
(3) Reduced benefit for a period certain not longer
than the life expectancy of the Participant and his
designated beneficiary.
D.6. Actuarial Factors. Actuarially equivalent benefit amounts
shall be determined based on the 1971 Group Annuity Mortality Table
and an interest rate of 8%.
D.7. Prior Plan Benefit. The following Employees in Covered Unit
D are entitled to receive a Prior Plan Benefit under this Schedule
D.
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Robert F. Bertoncini $ 27.84
Theodore W. Brookner 2,063.40
Ronald E. Brousseau 1,004.04
Donald H. Brown 1,486.20
Samuel N. Bryant 2,040.12
Peter A. Calabraro, Jr. 43.68
John J. Cosgrave 319.32
Robert A. Degurski 798.00
Sidney A. Feldman 2,538.84
Arthur Gurney 1,102.08
William K. Hackett 953.16
Robert M. Heffernan 473.16
Thomas F. Hogan 1,183.68
Ralph King 618.84
Sumner I. Kruskall 1,723.20
Samuel S. Levy 1,423.56
Flagg D. Maloney 2,715.72
Peter K. McDonald 1,176.60
Eileen McGrady 2.04
</TABLE>
3
<PAGE>
D.7. Prior Plan Benefit
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Austin R. Overturf 1,176.60
Norman J. Pare 4,589.52
Henry P. Potvin 1,593.00
Joseph Ruffo 1,101.84
Donald S. Satter 2,912.52
Joel Satter 10,683.00
James H. Sheehan 1.80
David H. Shore 2,032.68
Edmond Stmichel 2,325.00
Jack W. Sullivan 4,036.56
Lorimer J. Trafton 1,442.40
Rudolph A. Tropeano 747.96
Oscar Valcourt 458.04
Harry Wentzell 350.04
</TABLE>
4
<PAGE>
E.1. Covered Employees
SCHEDULE E
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit E
E.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit E:
(a) Michigan Fruit Canners.
(i) All salaried employees of Michigan Fruit Canners
who were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
E.1(a)(i) is January 1, 1974.
(b) Wilderness Foods.
(i) All salaried employees of Wilderness Foods,
Naturally Good Foods, and Cerise Foods Divisions of
Cherry Central Cooperative, Inc., who were employed
on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
E.1(b)(i) is October 31, 1986.
E.2. Prior Vesting Service. Employees included in Covered Unit E
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Michigan Fruit Canners or Wilderness
Foods, respectively.
<PAGE>
F.1. Covered Employees
SCHEDULE F
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit F
F.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit F:
(a) Snyder's Potato Chips Division.
(i) All salaried employees of Snyder's Potato Chips
Division who were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
F.1(a)(i) is April 1, 1972.
(b) Snack Enterprises.
(i) All salaried employees of Snack Enterprises who
were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
F.1(b)(i) is October 1, 1976.
F.2. Prior Vesting Service. Employees included in Covered Unit F
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Snyder's Potato Chips Division or
Snack Enterprises, respectively.
<PAGE>
G.1. Covered Employees
SCHEDULE G
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit G
G.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit G:
(a) Comstock Foods Division.
(i) All salaried employees of Comstock Foods Division
who were employed on the Acquisition Date.
(ii) Acquisition Date for purposes of section G.1(a)(i)
is May 9, 1977.
(b) AMI Foods.
(i) All salaried employees of AMI Foods who were
employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
G.1(b)(i) is July 1, 1983.
G.2. Prior Vesting Service. Employees included in Covered Unit G
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Comstock Foods Division or AMI
Foods, respectively.
G.3. Entitlement to Prior Plan Benefits.
(a) Covered Employees of Comstock Foods Division. The Prior
Plan Benefit, as set forth in Section G.7, is the annual accrued
benefit, payable in the form of a straight life annuity as of
<PAGE>
G.3. Early Retirement
Normal Retirement Date, determined as of May 8, 1977, under the
Borden Plan.
(b) Covered Employees of AMI Foods. No Prior Plan Benefit is
payable with respect to these Employees.
G.4. Early Retirement. In computing the Prior Plan Benefit of a
Participant or a former Participant who has elected early payment
of his early retirement benefit in accordance with Section 5.2
(Early Retirement Benefit) or Section 6.1 (Termination of
Employment Before Retirement), the Prior Plan Benefit shown in
Section G.7. shall be determined in accordance with section 5.2(b)
(1) or Section 6.1(d) (1), as applicable.
G.5. Normal Form of Payment. The Normal Form of payment of the
Prior Plan Benefit determined under this Schedule G shall be as
follows:
(a) Married Participants on Benefit Commencement Date. A
benefit reduced as determined in Section G.6. for the Participant's
life and after his death 50% of the reduced benefit to his spouse
for her remaining life.
(b) Unmarried Participants on Benefit Commencement Date. A
benefit for the Participant's life.
(c) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, as determined in Section G.6., provided the requirements of
Sections 5.5(b) (Election of Optional Forms) and 5.5(f) (Changes in
2
<PAGE>
G.6. Actuarial Factors
Election) are met. The optional forms available are as described
in Section 5.5(c) (Options Available).
G.6. Actuarial Factors. Actuarially equivalent benefit amounts
shall be determined based on the 1971 TPF&C Forecast Mortality
Table, setback one year for participants and 5 years for
beneficiaries, and an interest rate of 7.5%.
G.7. Prior Plan Benefit. The following Employees in Covered Unit
G are entitled to receive a Prior Plan Benefit under this Schedule
G.
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Debra K. Bennett $ 420.00
John L. DeBoom 496.00
Susan A. Fuller 749.00
Richard H. Harvey 1,361.00
Carmilinda Krueger 434.00
Gerald M. Norsen 661.00
Elmer E. Praul 653.00
Robin R. Randolph 84.00
Nadelyn N. Scherer 168.00
Gail Schutt 203.00
Gilbert D. Scott 1,131.00
Deloris J. Siler 630.00
Barry M. Stevens 70.00
Marilyn K. Stone 1,344.00
W. Jeanne Surber 210.00
James C. Williams 1,009.00
Roger W. Wilson 1,722.36
</TABLE>
3
<PAGE>
H.1. Covered Employees
SCHEDULE H
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit H
H.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit H:
(a) National Brands Beverage Division.
(i) All salaried employees of National Brands Beverage
Division who were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
H.1(a)(i) is June 1, 1979.
(b) 7-Up Bottling Company of Binghamton.
(i) All salaried employees of 7-Up Bottling Company of
Binghamton who were employed on the Acquisition
Date.
(ii) The Acquisition Date for purposes of Section
H.1(b)(i) is February 1, 1984.
H.2. Prior Vesting Service. Employees included in Covered Unit H
on their Acquisition Date shall be credited with Vesting service
with respect to the period prior to their Acquisition Date based on
all periods of employment with National Brands Beverage Division or
7-Up Bottling Company of Binghamton, respectively.
<PAGE>
I.1. Covered Employees
SCHEDULE I
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit I
I.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit I:
(a) Southern Frozen Foods.
(i) All salaried employees of Southern Frozen Foods who
were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of section
I.1(a)(i) is November 1, 1981.
I.2. Prior Vesting Service. Employees included in Covered Unit I
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Southern Frozen Foods.
<PAGE>
J.1. Covered Employees
SCHEDULE J
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit J
J.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit J:
(a) Finger Lakes Packaging, Inc.
(i) All salaried employees of Finger Lakes Packaging
Inc. who were employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
J.1(a)(i) is January 1, 1986.
J.2. Prior Vesting ServIce. Employees included in Covered Unit J
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Finger Lakes Packaging, Inc.
J.3. Entitlement to Prior Plan Benefits.
(a) Covered Employees of Finger Lakes Packaging. The Prior
Plan Benefit, as set forth in Section J.7., is the annual accrued
benefit, payable in the form of a straight life annuity as of
Normal Retirement Date, determined as of December 31, 1985, under
the Borden Plan.
J.4. Early Retirement. In computing the Prior Plan Benefit of a
Participant or a former Participant who has elected early payment
of his early retirement benefit in accordance with Section 5.2
<PAGE>
J.5. Normal Form of Payment
(Early Retirement Benefit) or Section 6.1 (Termination of
Employment Before Retirement), the Prior Plan Benefit shown in
Section J.7. shall be determined in accordance with Section 5.2(b)
(1) or Section 6.1(d) (1), as applicable.
J.5. Normal Form of Payment. The Normal Form of payment of the
Prior Plan Benefit determined under this Schedule J shall be as
follows:
(a) Married Participants on Benefit Commencement Date. A
benefit reduced as determined in Section J.6. for the Participant's
life and after his death 50% of the reduced benefit to his spouse
for her remaining life.
(b) Unmarried Participants on Benefit Commencement Date. A
benefit for the Participant's life.
(c) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, as determined in Section J.6., provided the requirements of
Sections 5.5(b) (Election of Optional Form) and 5.5(f) (Changes in
Elections) are met. The optional forms available are as described
in Section 5.5(c) (Option Available).
J.6. Actuarial Factors. Actuarially equivalent benefit amounts
shall be determined based on the 1971 TPF&C Forecast Mortality
Table, set back one year for participants and 5 years for
beneficiaries, and an interest rate of 7.5%.
2
<PAGE>
J.7. Prior Plan Benefit
J.7. Prior Plan Benefit. The following Employees in Covered Unit
J are entitled to receive a Prior Plan Benefit under this Schedule
J.
<TABLE>
<CAPTION>
Prior Plan
Name Benefit
<S> <C>
Bennett, J.A. $1,807.08
Burt, F. 860.04
Freling, N. 720.00
Moulton, C.W. 800.76
Quinn, M. 551.16
Knapp. L.H. 1,693.80
Park, Z.H. 1,300.92
Serling, M. 69.96
</TABLE>
3
<PAGE>
K.1. Covered Employees
SCHEDULE K
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit K
K.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit K:
(a) Minister.
(i) All salaried employees of Minister who were
employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
K.1(a)(i) is April 1, 1985.
K.2. Prior Vesting Service. Employees included in Covered Unit K
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Minister.
<PAGE>
L.1. Covered Employees
SCHEDULE L
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit L
L.1. Covered Employees. The following group of Employees has been
designated as included in Covered Unit L:
(a) Smoke Craft Division.
(i) All salaried employees of Smoke Craft Division of
International Multi food Corporation who were
employed on the Acquisition Date.
(ii) The Acquisition Date for purposes of Section
L.1(a)(i) is December 23, 1986.
L.2. Prior Vesting Service. Employees included in Covered Unit L
on their Acquisition Date shall be credited with Vesting Service
with respect to the period prior to their Acquisition Date based on
all periods of employment with Smoke Craft Division.
<PAGE>
SCHEDULE M
CURTICE BURNS FOODS
MASTER SALARIED RETIREMENT PLAN
Covered Unit M
M.1. Covered Employees. The following groups of Employees have
been designated as included in Covered Unit M:
Lowrey's Meat Specialties, Inc. ('Lowrey's).
(a) All executive, managerial, technical, professional,
administrative, clerical and sales employees of Lowrey's
who were participants in the E-II Retirement Income Plan
as of December 31, 1988, or who were participants in the
Curtice Burns Lowrey's Retirement Income Plan between
January 1, 1989 and February 28, 1989.
(b) The Acquisition Date, for purposes of this Schedule M, is
March 1, 1989, the effective date of the merger of the
Curtice Burns Lowrey's Retirement Income Plan into the
Curtice Burns Foods Master Salaried Retirement Plan.
(The Acquisition Date of Lowrey's by Curtice Burns Foods,
Inc. was December 31, 1988.)
M.2. Prior Vesting Service. Employees included in Covered Unit M
on their Acquisition Date shall be credited with Vesting Service
under the Curtice Burns Foods Master Salaried Retirement Plan with
respect to the period prior to their Acquisition Date based on all
periods of employment with Lowrey's.
M.3. Entitlement to Prior Plan Benefits.
(a) For purposes of this Schedule M, the term 'Prior Plan'
shall refer to both the E-II Retirement Income Plan and the Curtice
Burns Lowrey's Retirement Income Plan. The term 'Prior Plan
<PAGE>
Benefit' shall refer to the benefits of Covered Unit M in the prior
Plan.
(b) The Prior Plan Benefit under the E-II Retirement Income
Plan shall be set forth in an exhibit to be attached to this
Schedule M stating the annual accrued benefit, payable in the form
of a straight life annuity as of Normal Retirement Date, determined
as of December 31, 1988. This exhibit shall be prepared as soon as
practicable after the actuaries of the E-II Retirement Income Plan
supply such accrued benefit information to Curtice Burns Foods.
(c) The Prior Plan Benefit under the Curtice Burns Lowrey's
Retirement Income Plan for participation between December 31, 1988
and February 28, 1989, shall be the annual accrued benefit, payable
in the form of a straight life annuity as of Normal Retirement
Date, determined under the provisions of such Plan.
M.4. Normal Retirement Pension. Under the Prior Plan, the Normal
Retirement Benefit shall be a monthly benefit commencing on Normal
Retirement Date equal to (a) plus (b) increased by (c) as follows
(all defined terms are in accordance with the Prior Plan):
(a) 1% of Final Average Monthly Earnings times years of
Benefit Service.
(b) The excess of (i) over (ii):
(i) .5% of Final Average Monthly Earnings multiplied by
years of Benefit Service, and
(ii) 1.5% of the Primary Insurance Amount multiplied by
years of Benefit Service (but not to exceed 50% of the Primary
Insurance Amount);
<PAGE>
(c) Increased by .5% for each full calendar month that actual
date of retirement follows the later of Normal Retirement Date or
March 1, 1979, except months during which the Participant receives
plan benefits.
M.5. Early Retirement. The following shall govern the
commencement of the Prior Plan Benefit on an early retirement
basis.
(a) Eligibility. Upon attaining age 55 with 5 or more years
of Vesting Service.
(b) Benefit Commencement. The first day of the month
following or coincident with the Participant's date of severance if
it occurs after his 60th birthday or if the date of severance is a
Formula 90 Date (as defined under the Prior Plan), and otherwise
the first day of the month following or coincident with the
Participant's 60th birthday. If early retirement benefits are
commenced prior to the aforementioned date such benefits shall be
reduced by .5% times the number of months by which the
Participant's benefit commencement date precedes the first day of
the month following or coincident with the Participant's 60th
birthday.
M.6. Deferred Vested Retirement Benefit. A Participant with a
Prior Plan Benefit shall be entitled to a deferred vested benefit,
if applicable, under the provisions of Section 6 of the Prior Plan.
M.7. Forms of Payment. The Normal Form of payment of the Prior
Plan Benefit determined under this Schedule M shall be as follows:
(a) Married Participants on Benefit Commencement Date. A
benefit determined in accordance with the actuarial factors
<PAGE>
determined under Section M.8. for the Participant's life and after
his death 50% of the determined benefit to his spouse for her
remaining life.
(b) Optional Forms. A Participant may elect to receive
payment of his Prior Plan Benefit in an actuarially equivalent
form, provided the requirements set forth in Section 8 of the
Curtice Burns Lowrey's Retirement Income Plan for electing optional
forms are met. The optional forms available are:
(i) A reduced benefit for the Participant's life and
upon his death 50%, or 75%, or 100% of the reduced
benefit to his joint pensioner for life; if the
joint pensioner survives.
(ii) A reduced benefit for the Participant's life but
with a specified number of monthly payments, not to
exceed the lesser of 180 or the number of months
through the month in which the Participant would
attain age 85, guaranteed.
(iii) A reduced benefit for the Participant's and joint
pensioner's lives identical to the forms provided
in (i) above, except that the number of monthly
payments is guaranteed at 120.
(iv) A single lump sum payment.
<PAGE>
M.8. Actuarial Factors.
The actuarial factors used in determining the Prior Plan
Benefit shall be those factors used in the Prior Plan.
<PAGE>
CURTICE BURNS FOODS
NON-QUALIFIED
PROFIT SHARING PLAN
EFFECTIVE SEPTEMBER 15, 1989
AS AMENDED MARCH 22, 1993
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C> <C>
ARTICLE I DEFINITIONS............................ 1
ARTICLE II PURPOSE AND TRUST FUND................. 6
2.01 Purpose................................ 6
ARTICLE III ELIGIBILITY FOR PARTICIPATION.......... 7
3.01 Eligibility............................ 7
3.02 Breaks in Eligibility Service.......... 7
3.03 Entry Date............................. 8
ARTICLE IV CONTRIBUTIONS.......................... 10
4.01 Employer Contributions................. 10
4.02 Voluntary Contributions by Employees... 11
ARTICLE V ACCOUNTS AND ALLOCATIONS............... 12
5.01 Individual Accounts.................... 12
5.02 Allocation of Contributions............ 12
5.03 Payment or Deferral of Contributions... 13
5.04 Allocation of Income and Expenses...... 13
5.05 Effect of Allocation................... 13
5.06 List of Participants................... 13
5.07 Valuation of Assets.................... 14
ARTICLE VI INVESTMENT OF ACCOUNTS................. 15
6.01 Earnings on Accounts.................. 15
6.02 Notice to Participants................. 15
6.03 Determinations Conclusive.............. 15
6.04 No Vesting From Allocation or
Credit to Accounts..................... 15
ARTICLE VII VESTING................................ 16
7.01 Vesting................................ 16
ARTICLE VIII PAYMENT OF BENEFITS.................... 17
8.01 Form of Benefit........................ 17
8.02 Time Payments Commence................. 17
8.03 Hardship Distributions
During Employment.......... 17
8.04 Regulatory Challenge................... 18
ARTICLE IX DISTRIBUTION ON DEATH OF PARTICIPANT... 19
9.01 Death Benefit.......................... 19
9.02 Form of Payment........................ 19
9.03 Designation of Beneficiary............. 19
ARTICLE X DISABILITY OF PARTICIPANTS.................. 20
10.01 Permanent Disability................... 20
10.02 Definition of Disability............... 20
</TABLE>
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ARTICLE XI TERMINATION OF PLAN AND TRUST.......... 21
11.01 Right to Terminate Plan................ 21
11.02 Distribution Upon Termination or
Discontinuance of Contributions........ 21
ARTICLE XII ADVISORY COMMITTEE..................... 22
12.01 Appointment of Committee............... 22
12.02 Powers of Committee.................... 22
12.03 Investment Manager..................... 23
12.04 Consultants............................ 23
12.05 Records................................ 23
12.06 Action................................. 23
ARTICLE XIII AMENDMENT.............................. 24
13.01 Amendment.............................. 24
ARTICLE XIV CLAIMS PROCEDURE....................... 25
14.01 Claims Procedure....................... 25
ARTICLE XV MISCELLANEOUS.......................... 27
15.01 Consolidation or Merger................ 27
15.02 Termination in Event of Merger, etc.... 27
15.03 Limitations on Consolidation, Merger
of Plan or Transfer of Plan Assets..... 27
15.04 Loans to Participants.................. 27
15.05 Trustee as Agent....................... 27
15.05 Performance of Acts.................... 28
15.07 Gender and Number...................... 28
15.08 Binding Effect......................... 28
15.09 Governing Law.......................... 28
15.10 Invalidity of Part of Plan............. 28
15.11 Headings............................... 28
15.12 Communication to Employees............. 28
15.13 Employment Rights...................... 28
15.14 Service of Process..................... 29
15.15 Spendthrift Provision.................. 29
</TABLE>
<PAGE>
ARTICLE I
DEFINITIONS
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1.01 The name of the Plan shall be known and designated as the
CURTICE BURNS FOODS NON-QUALIFIED PROFIT SHARING PLAN,
which shall hereinafter be referred to as the 'Plan'.
1.02 The effective date of the Plan shall be September 15,
1989.
1.03 'Account' shall mean the aggregate of the various
bookkeeping accounts maintained on behalf of each
Participant to record or accept contributions allocated
or made on behalf of such Participant.
1.04 'Adjustment Factor' shall mean the cost of living
adjustment factor prescribed by the Secretary of the
Treasury under Section 415(d) of the Code as applied to
such items and in such manner as the Secretary shall
provide.
1.05 'Affiliated Employer' shall mean the Employer and any
corporation which is a member of a controlled group of
corporations (as defined in Section 414(b) of the Code)
which includes the Employer; any trade or business
whether or not incorporated which is under common control
(as defined in Section 414(c) of the Code) with the
Employer; any organization whether or not incorporated
which is a member of an affiliated service group (as
defined in Section 414(m) of the Code) which includes the
Employer; and any other entity required to be aggregated
with the Employer pursuant to the regulations under
Section 414(o) of the Code.
1.06 'Board' shall mean the Board of Directors of the
Employer.
1.07 'Code' shall mean the Internal Revenue Code of 1986 and
amendments thereto.
1.08 'Committee' shall mean the Advisory Committee appointed
and acting in accordance with the terms of Article XII
hereof.
1.09 'Compensation' shall, for purposes of this Plan, mean in
the case of a salaried Employee the basic earnings of
such Employee including commissions but exclusive of
discretionary bonuses, commissions, and the payments
hereunder. For purposes of applying the limitations of
Section 415 of the Code, 'Compensation' shall have the
meaning contained in Section 415 and the regulations
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promulgated thereunder.
1.10 'Eligibility Computation Period' shall mean the twelve
consecutive month period commencing on the date an
Employee first renders an Hour of Service to the Employer
and successive anniversaries thereof.
1.11 'Employee' shall mean any person employed by the Employer
in a salaried exempt classification except those persons
constituting a unit of employees covered by a collective
bargaining agreement under which retirement benefits are
the subject of good-faith bargaining.
1.12 'Employer' shall mean CURTICE BURNS FOODS, INC. and any
other entity which may adopt this Plan, and any successor
of the Employer.
1.13 'Entry Date' shall mean the first day of the month
coincident with or next following the Employee's
satisfaction of the eligibility requirements set forth in
Section 3.01.
1.14 'ERISA' shall mean the 'Employee Retirement Income
Security Act of 1974.'
1.15 'Family Member' shall mean an individual described in
Section 414(q) of the Code.
1.16 'Highly Compensated Employee' shall mean an Employee who
is a highly compensated active Employee or a highly
compensated former Employee.
(a) A highly compensated active Employee includes
any Employee who performs service for the Employer during
the determination year and who, during the look-back
year: (i) received Compensation from the Employer in
excess of $75,000 (as adjusted pursuant to Section 415(d)
of the Code); (ii) received Compensation from the
Employer in excess of $50,000 (as adjusted pursuant to
Section 415(d) of the Code) and was a member of the top-
paid group for such year; or (iii) was an officer of the
Employer and received Compensation during such year that
is greater than 50 percent of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code. The term
Highly Compensated Employee also includes: (i) an
Employee who is both described in the preceding sentence
if the term 'determination year' is substituted for the
term 'look-back year' and is one of the one hundred
Employees who received the most Compensation from the
Employer during the determination year; and (ii)
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2
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Employees who are 5 percent owners at any time during the
look-back year or determination year. If no officer has
satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a
Highly Compensated Employee. For this purpose, the
determination year shall be the Plan Year. The look-back
year shall be the calendar year ending with or within the
applicable determination year (or, in the case of a
determination year that is shorter than twelve months,
the calendar year ending with or within the twelve month
period ending with the end of the applicable determina-
tion year).
(b) A highly compensated former Employee includes
any Employee who separated from service (or was deemed to
have separated) prior to the determination year, performs
no service for the Employer during the determination
year, and was a highly compensated active Employee for
either the separation year or any determination year
ending on or after the Employee's 55th birthday.
(c) If an Employee is, during a determination year
or look-back year, a family member of either a 5 percent
owner who is an active or former Employee or a Highly
Compensated Employee who is one of the ten most highly
compensated Employees ranked on the basis of compensation
paid by the Employer during such year, then the family
member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated. In such case,
the family member and 5 percent owner or top-ten highly
compensated Employee shall be treated as a single
Employee receiving Compensation and Plan contributions or
benefits equal to the sum of such Compensation and
contributions or benefits of the family member and 5
percent owner or top-ten highly compensated Employee.
For purposes of this section, 'family member' includes
the spouse, lineal ascendants and descendants of the
Employee or former Employee and the spouses of such
lineal ascendants and descendants.
(d) The determination of who is a Highly Compen
sated Employee, including the determinations of the
number and identity of employees in the top-paid group,
the top one hundred Employees, the number of Employees
treated as officers and the Compensation that is
considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
1.17 'Hour of Service' shall mean, and an Employee shall be
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3
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credited with:
(a) Each hour for which the Employee is either directly
or indirectly compensated by the Employer for performing
current duties for the Employer, and
(b) Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed
to by the Employer. Hours of Service for back pay shall
be credited to the Employee for the computation period or
periods to which the award or agreement pertained, rather
than the computation period in which the award, agreement
or payment is made, and
(c) Each hour for which an Employee is directly or
indirectly paid, or entitled to such payment, by the
Employer for reasons (such as vacation, sickness or
disability) other than for the performance of duties.
(d) 'Hours of Service' shall be computed and credited to
an Employee in accordance with DOL. Reg. Section
2530.200b2 generally, which is incorporated herein by
reference.
1.18 'Investment Manager' means a person or organization who
is appointed pursuant to Section 12.03 to direct the
investment of all or part of the Trust Fund, and who is
duly qualified, appointed, and acting as an Investment
Manager within the meaning of ERISA Section 3(38).
1.19 'Non-Highly Compensated Employee' shall mean an Employee
who is neither a Highly Compensated Employee nor a Family
Member.
1.20 'Normal Retirement Age' shall mean a Participant's sixty-
fifth birthday. 'Normal Retirement Date' shall mean the
first day of the month following or coincident with the
Participant's attainment of Normal Retirement Age.
1.21 'Participant' shall mean an Employee of the Employer who
has met the eligibility requirements of Section 3.01 and
who is actively participating in the Plan.
1.22 'Plan Administrator' shall be the Committee appointed in
accordance with Article XII.
1.23 'Plan Year' shall mean successive twelve consecutive
month period beginning on January 1.
</TABLE>
4
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1.24 'Profits' shall mean Earnings as defined in Section
4.01 (b) (1).
1.25 'Trust' or 'Trust Fund' shall mean the Trust Fund
referred to in Article II which may be established in
accordance with a trust agreement between the Employer
and a Trustee, or any successor trust agreement, and
shall consist of any and all payments made by the
Employer to the Trust Fund together with the net income
and gain produced by the investments of the Trust Fund,
which shall be added to the principal of the Trust Fund
by the Trustee. The fiscal year of the Trust shall
coincide with the Plan Year and shall change, if
necessary, so as to always conform to any changes in the
Plan Year.
1.26 'Trustee' shall mean the trustee designated in any trust
agreement governing the Trust which may be established by
the Employer to be a part of this Plan, or any successor
trustee, including successors by merger or consolidation.
1.27 'Year of Eligibility Service' shall mean an Eligibility
Computation Period during which an Employee completes at
least One Thousand (1000) Hours of Service.
</TABLE>
5
<PAGE>
ARTICLE II
PURPOSE AND TRUST FUND
<TABLE>
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2.01 Purpose.
(a) This Plan, and if established the Trust of
which it forms a part, is established for the purpose of
enabling the Employees of the Employer to share in the
profits of the Employer's business. Notwithstanding the
foregoing, the assets allocated either to Accounts or to
the Trust Fund shall remain the property of the Employer
until actually distributed to Participants (or Benefi-
ciaries) hereunder.
(b) If a Trust is established as part of this Plan,
contributions under this Plan may be paid to the Trustee
and deposited in the Trust Fund. If the Trustee
hereunder is a bank, the Trustee is specifically
authorized to invest all or part of the assets of the
Plan in certificates of deposit, savings accounts, or
other interest-bearing savings instruments of the
Trustee.
(c) It is the intent of the Employer that this Plan
shall constitute a 'top hat plan' for a select group of
management or highly compensated employees, as such term
is used in ERISA.
</TABLE>
6
<PAGE>
ARTICLE III
ELIGIBILITY FOR PARTICIPATION
<TABLE>
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3.01 Eligibility. Each Employee of the Employer shall
participate in the Plan who (a) is compensated on a
salary basis, a commission basis, or both a salary and
commission basis, (b) is not eligible for overtime
compensation under the provisions of the Fair Labor
Standards Act, (c) is not entitled to compensation from
the Employer or a subsidiary of the Employer for any
period subsequent to March 31, 1975 pursuant to a
collective bargaining agreement, (d) is a Highly
Compensated Employee, (e) is not a leased employee
(within the meaning of Section 414(n)(2) of the Code),
and (f) either participated in the Curtice-Burns, Inc.
Deferred Profit Sharing Plan on its termination date of
September 14, 1989 or, if not participating in such
terminated plan or if hired after September 14, 1989,
then upon attaining age 21 and completing one Year of
Eligibility Service with the Employer. Notwithstanding
the foregoing, no Employees shall be eligible to
participate in an allocation of an Employer contribution
in this Plan during any Plan Year in which such Employee
is eligible to participate in the Curtice Burns Foods
Deferred Profit Sharing Plan effective September 15,
1989, it being the intention of the Employer that this
Plan shall provide benefits only for those Highly
Compensated Employees of the Employer otherwise ineli-
gible to participate in such Curtice Burns Foods Deferred
Profit Sharing Plan.
3.02 Breaks in Eligibility Service.
(a) For purposes of Section 3.01, all Years of
Eligibility Service with the Employer adopting this Plan
(including service with a predecessor to any such
Employer) shall be taken into account in computing an
Employee's period of service for purposes of eligibility.
(b) A former Participant shall become a Participant
on the Entry Date next following or coincident with such
former Participant's date of rehire if the Participant's
aggregate number of Years of Eligibility Service before
such break equals or exceeds the greater of five, or the
Participant's number of consecutive one year Breaks in
Service.
If any Years of Eligibility Service are not required to
</TABLE>
7
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<S> <C>
be taken into account under this Subsection (b), then
such Years of Eligibility Service shall not be taken into
account for a subsequent period of Breaks in Service.
(c) In the case of each individual who is absent
from work for any period (i) by reason of the pregnancy
of the individual, (ii) by reason of the birth of a child
of the individual, (iii) by reason of the placement of
child with the individual in connection with the adoption
of such child by such individual, or (iv) for purposes of
caring for such child for a period beginning immediately
following such birth or placement, the Plan shall treat
as Hours of Service as the hours described in Subsection
(d) below.
(d) The hours described in this subsection are
(i)the Hours of Service which otherwise would normally
have been credited to such individual but for such
absence, or (ii) in any case in which the hours described
in (d)(i) cannot be determined, 8 hours per day of such
absence. Notwithstanding the foregoing, the total number
of hours treated as Hours of Service under this Section
by reason of any such pregnancy or placement shall not
exceed 501 hours.
(e) The hours described in Subsection (d) shall be
treated as Hours of Service as provided in this Section
(i) only in the year in which the absence from work
begins, if the Participant would then attain 1000 Hours
of Service in such year solely because the period of
absence is treated as Hours of Service as provided in
Subsection (c); or (ii) in any other case, the year
immediately following.
(f) For purposes of this Section, the term 'year'
means the Participant's Eligibility Computation Period.
(g) Notwithstanding any other provision of this
Section, no credit will be given pursuant to the
provisions of Subsections (c) through (f) of this Section
unless the individual furnishes to the Plan Administrator
such timely information as it shall reasonably require to
establish that the absence from work is for reasons
referred to in Subsection (c), and the number of days for
which there was such an absence.
3.03 Entry Date. An Employee who meets the eligibility
requirements set forth in Section 3.01 on the effective
date of the Plan shall participate in the Plan as of the
effective date and an Employee who thereafter meets the
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eligibility requirements set forth in Section 3.01 shall
commence participation in the Plan on the Entry Date next
following or coincident with the satisfaction of such
eligibility requirements; provided that the Employee is
still employed by the Employer on such Entry Date.
</TABLE>
9
<PAGE>
ARTICLE IV
CONTRIBUTIONS
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4.01 Employer Contributions.
(a) The Employer shall make a contribution to the
Plan for each fiscal year of the Employer determined in
the following manner:
(1) Seven percent (7%) of the Earnings of Curtice
Burns Foods, Inc. after deduction of seven percent
(7%) of Capital Employed by Curtice Burns Foods,
Inc., both determined in accordance with (b) below
shall be determined as a 'hypothetical contribu-
tion.'
(2) The hypothetical contribution shall be allo-
cated (the 'hypothetical allocation') to Par-
ticipants in the Curtice Burns Foods Deferred
Profit Sharing Plan (effective September 15, 1989)
in accordance with the provisions of such Plan
regarding allocations, and to those Employees who
are eligible to participate in this Plan, and who
are not eligible to participate in the Curtice
Burns Foods Deferred Profit Sharing Plan because
such Employees are Highly Compensated Employees, in
accordance with the allocation provisions of
Article V hereof.
(3) The portion of the hypothetical allocation for
Highly Compensated Employees shall be determined.
(4) The resultant amount determined in Paragraph
(3) above shall be the amount available for
contribution to this Plan, and such contribution
shall be allocated in accordance with Article V
hereof.
(b) The following terms shall have the following
meanings:
(1) 'Earnings' shall mean division earnings on the
Curtice Burns Foods, Inc. corporate income
statement less charitable contributions plus the
Springfield Bank for Cooperatives dividend, all as
computed in accordance with generally accepted
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10
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accounting principles consistently applied, as of
each fiscal year end. The exclusion of any
extraordinary charges or earnings shall be approved
by the Board of Directors of Curtice Burns Foods,
Inc.
(2) 'Capital Employed' shall mean all debt,
including long-term debt which is temporarily paid
seasonally, and equity of Curtice Burns Foods, Inc.
subject to interest or dividends as of fiscal year
end; provided, however, that the current portion of
long-term debt shall be excluded, short-term debt
shall be excluded, and any liability for unpaid
deferred compensation shall be excluded. All
equity is included except for Pro-Fac Cooperative
retains and Pro-Fac Cooperative earned surplus
which is less than five years old. The computation
of Capital Employed shall be in accordance with
generally accepted accounting principles
consistently applied.
(c) Notwithstanding the foregoing, in no event
shall the Employer contribution during any fiscal year
exceed fifteen percent (15%) of the aggregate compensa-
tion paid to Participants during such year.
(d) The Employer contribution amount shall be
determined by the public accountant regularly employed by
Curtice Burns Foods, Inc. and the certificate of such
accountant shall be conclusive and binding upon all
persons having or claiming an interest hereunder.
(e) The Employer contribution shall not be
increased or decreased by reason of any audit or change
made by the Internal Revenue Service or any other person
or agency subsequent to the date when the Employer
contribution is made for a year.
4.02 Voluntary Contributions by Employees. No voluntary
Employee contributions are permitted under the Plan.
</TABLE>
11
<PAGE>
ARTICLE V
ACCOUNTS AND ALLOCATIONS
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5.01 Individual Accounts. If no Trust is established as part
of this Plan, the Committee shall maintain an Account for
each Participant and former Participant having an amount
to his credit under this Plan. If a Trust is established
as part of this Plan, the Trustee shall maintain an
Account to which the Participant's share of the portion
of the Employer's contribution shall be credited.
5.02 Allocation of Contributions.
(a) Each Participant who is an Employee of the
Employer on the last day of the Employer's fiscal year
and each Participant who has died, become disabled or
retired during the Employer's fiscal year shall be
credited with that amount of the Employer contribution
for the Plan Year ending prior to the end of the
Employer's fiscal year in accordance with a fraction, the
numerator of which is the amount of the Participant's
Compensation (paid or accrued) for the calendar year
preceding the calendar year in which the Employer's
fiscal year ended, and the denominator of which is the
amount of all Compensation of all Participants for the
calendar year preceding the calendar year in which the
Employer's fiscal year ended. For purposes of
determining an Employee's Compensation for the calendar
year 1989, Compensation shall include the amount, if any,
which such Employee elected to defer pursuant to a non-
qualified deferral agreement with the Employer.
(b) The amount of each Participant's interest or
share in the Employer contribution shall be determined by
dividing the amount of the Employer Contribution for the
Employer's fiscal year by the total number of units of
all Participants as determined in Subsection (a) above,
and multiplying the quotient by the number of units with
which each such Participant was credited under Subsection
(a) above.
(c) Notwithstanding the provisions of subsection
(a), effective upon a change of control, as defined in
the Curtice Burns Foods Key Executive Severance Plan,
then for purposes of the Plan Year in which such change
of control occurs and for the following two Plan Years,
a Participant shall be entitled to an allocation of
contributions under this Plan regardless of whether the
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12
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Participant is an Employee of the Employer on the last
day of the Employer's fiscal year.
5.03 Payment or Deferral of Contributions.
(a) If a Participant has entered into a Profit
Sharing Award Deferral Agreement with the Employer which
is effective for the Employer's fiscal year for which an
allocation is determined for the Participant under
Section 5.02, then the Participant's allocation shall be
deferred in accordance with the elections made pursuant
to such Profit Sharing Award Deferral Agreement. Any
amount of such Participant's allocation which is not
deferred pursuant to such Profit Sharing Award Deferral
Agreement shall be paid to the Participant as a cash
bonus.
(b) If a Participant has not entered into a Bonus
Deferral Agreement with the Employer which is effective
for the Employer's fiscal year for which an allocation is
determined for the Participant under Section 5.02, then
the full amount of the Participant's allocation shall be
paid to the Participant as a cash bonus.
5.04 Allocation of Income and Expenses. As of the last day of
each Plan Year for which a Trust is in existence as a
part of this Plan, income of the Trust for such year
shall be credited to, and all losses and expenses of the
Trust for such year shall be charged to, the various
Accounts maintained by the Trustee for the Participants
and/or their beneficiaries, as the case may be. Such
credits and charges shall be made in proportion to the
value of the respective Accounts as of the preceding
Valuation Date after recording all credits and charges
required to be made as of such Valuation Date.
5.05 Effect of Allocation. No allocation or credit to any
Participant's Account shall operate to vest in such
Participant any right, title or interest to or in the
Account or any Trust Fund hereunder except at the time or
times and upon the terms and conditions set forth in this
Plan.
5.06 List of Participants. At the close of the Plan Year, the
Employer shall deliver to the Committee a list of all
Participants in the Plan, together with a statement of
the amount of Compensation paid by the Employer to each
during the Plan Year just ended. From time to time
thereafter as occasion shall arise, the Employer shall
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promptly notify the Committee in writing of all changes
respecting the identity or number of Participants and
their respective Compensation.
5.07 Valuation of Assets. On a periodic basis not less than
annually, and as of the last day of each Plan Year for
which a Trust is in existence hereunder, the Trustee
shall revalue the various Accounts maintained for the
Participants (and beneficiaries) such that the Parti-
cipant (and beneficiary) Accounts will reflect any
increase or decrease in fair market value of the assets
of the Trust as of such date. Any such increase or
decrease in market value shall be apportioned in the same
manner that income, expenses, and losses are to be
apportioned. The date as of which any such valuation is
made is sometimes herein referred to as the 'Valuation
Date'.
</TABLE>
14
<PAGE>
ARTICLE VI
INVESTMENT OF ACCOUNTS
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6.01 Earnings on Accounts.
(a) For Plan Years in which no Trust is in exis-
tence hereunder, the Accounts hereunder shall be credited with a
compounded interest adjustment. Such interest adjustment shall be
determined and allocated annually, at the close of each fiscal year
of the Employer. For purposes of this Plan, the interest
adjustment shall be computed by applying the average interest rate
paid for borrowed funds by the Employer during the applicable
fiscal year to the average daily balances of Participants' Accounts
reflected in the Employer's records during such fiscal year.
(b) For Plan Years in which a Trust is in existence
as part of this Plan, any actual earnings or loss of the
Trust Fund shall be allocated to the Accounts of Par-
ticipants (or Beneficiaries) in proportion to the ratio
of the value of each individual Account to the value of
all individual Accounts immediately before such
allocation. Such allocation shall occur not less
frequently than annually.
(c) Notwithstanding the foregoing, any interest
credited, or earnings or loss allocated, shall remain the
property of the Employer (or the Trust if earned on Plan
assets held in a Trust forming part of this Plan) until
distributed to Participants (or Beneficiaries) in
accordance with the terms of this Plan.
6.02 Notice to Participants. As soon as practicable after the
last day of each fiscal year, and on such interim dates
as selected by the Committee, the Committee or the
Trustee shall prepare, mail or deliver to each Parti-
cipant a report which shall reflect and identify the
adjustments in his Account resulting from the operations
of the Plan during such year, or interim period, and show
the total net credit to his Account as of the last day of
such year or interim period after such adjustment.
6.03 Determinations Conclusive. All determinations of the
Committee or Trustee with respect to allocations, credits
and valuations shall be binding and conclusive for all
purposes.
6.04 No Vesting from Allocation or Credit to Accounts. No
allocation or credit to any Participant's separate
investment fund shall operate to vest any right, title or
interest in such funds in such Participant except at the
time or times, and upon the terms and conditions set
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15
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forth in this Plan.
</TABLE>
ARTICLE VII
VESTING
<TABLE>
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7.01 Vesting. A Participant's Account under this Plan shall
be fully vested at all times.
</TABLE>
16
<PAGE>
ARTICLE VIII
PAYMENT OF BENEFITS
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8.01 Form of Benefit.
(a) The provisions of this Article VIII shall apply
to amounts deferred to Accounts hereunder, plus interest,
earnings, or losses allocated to such Accounts. Not-
withstanding any provision contained in this Plan to the
contrary, the normal form of benefit for any amount
deferred to an Account under this Plan by and for any
Participant shall be a lump sum payment equal to the
value of the Account at the time of payment.
(b) If a Participant has elected a form of benefits
other than a lump sum distribution in a Profit Sharing
Award Deferral Agreement with the Employer which is then
in effect, the terms of such Profit Sharing Award
Deferral Agreement shall control the form of payment.
8.02 Time Payments Commence. If practicable, upon a Par-
ticipant's attaining Normal Retirement Date, permanent
disability, death, retirement, resignation, discharge, or
termination, the Committee or the Trustee shall
distribute the benefits provided hereunder to the
Participant on or before April 1st of the calendar year
following such date. If a Participant dies after he has
become entitled to a distribution of his benefits
hereunder, but before he has received the total amount of
such distribution, any remaining benefit of such
Participant shall be paid in accordance with Article IX
hereof.
8.03 Hardship Distribution During Employment. Subject to such
uniform rules and regulations as may from time to time be
adopted by the Committee and subject to the terms of any
Profit Sharing Award Deferral Agreement then in effect
for the Participant, the Committee may (in its sole
discretion) distribute (or direct the Trustee to
distribute) all or a portion of the amount in the Account
of a Participant prior to the time designated in Section
8.02 above in the event of severe financial hardship to
the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent
of the Participant (as defined in Section 152(a) of the
Code), loss of the Participant's property due to
casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events
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17
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beyond the control of the Participant.
8.04 Regulatory Challenges. If the Internal Revenue Service
or any other taxing authority shall at any time interpret
the Plan, any Trust which is a part of the Plan, or any
Profit Sharing Award Deferral Agreement entered into
between the Employer and a Participant in the Plan, to be
ineffective in deferring the Participant's or designated
beneficiary's income until the time of actual payment in
cash and that interpretation becomes final or
unappealable, the Employer shall immediately pay over the
taxable amount in question to the Participant or
designated beneficiary. In addition, if the United
States Department of Labor or any similar regulatory
authority shall at any time determine that the
Participant is not part of the Employer's select group of
management or highly compensated employees described in
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or
that the entire Plan does not fall within those Sections,
and that determination becomes final and binding, or any
such agency issues regulations which legal counsel to the
Employer reasonably believes are of similar effect, the
Employer shall immediately pay over the entire amount
deferred under this Plan, plus interest or earnings
thereon computed in accordance with Section 5.01, to the
Participant or designated beneficiary. In the event of
any payment pursuant to this Section, the Employer shall
also indemnify and hold the Participant or designated
beneficiary harmless against any interest and/or
penalties which are imposed on the Participant or
designated beneficiary due to the ineffectiveness of
deferral and against any taxes imposed on the interest
and/or penalties indemnified, as well as against any
taxes pyramided thereon.
</TABLE>
18
<PAGE>
ARTICLE IX
DISTRIBUTION ON DEATH OF PARTICIPANT
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9.01 Death Benefit. If a Participant's death occurs at any
time prior to his termination of employment (or prior to
the payment of all benefits owed to a Participant), the
entire value of the balance in his Account shall be paid
as a death benefit to his designated beneficiary ('Bene-
ficiary'). If no designation of a Beneficiary is then in
place, such payments shall be made to the Participant's
estate. If a Beneficiary shall die before receiving all
payments due it hereunder, the balance of such payments
shall be made to the Beneficiary's estate in a single
lump sum payment.
9.02 Form of Payment. Any death benefit payable hereunder
shall be paid in a single lump-sum payment. If a
Participant has elected an alternate form of benefits in
accordance with Section 8.01(b) hereof, any death benefit
payable hereunder shall be paid in accordance with such
election.
9.03 Designation of Beneficiary.
(a) A Participant shall designate a Beneficiary to
receive death benefits payable under Section 9.01 on
forms provided by the Committee for that purpose, and
such a designation may be changed at any time. The
Beneficiary may be a natural person, trust or estate.
Any such designation of beneficiary shall be made in
accordance with the requirements of this Plan, and shall
be binding and conclusive on all persons claiming an
interest in or to any benefit otherwise payable under
Section 9.01.
(b) If a Participant fails to designate a Bene-
ficiary during his lifetime, or if no designated
Beneficiary survives the Participant, his death benefits
shall be paid to his surviving spouse, or, if he has no
surviving spouse, to his legal representative, in a
single lump-sum payment. If no legal representative is
appointed within sixty (60) days after his death and if
the death benefit otherwise payable hereunder does not
exceed One Thousand Dollars ($1,000.00), the Committee
may direct the Trustee to pay the Participant's death
benefit to the person or persons related to the Parti-
cipant either by blood or marriage as the Committee may
designate in its discretion. The Committee shall decide
what Beneficiaries, if any, shall have been validly
designated, and its decision shall be binding and
conclusive on all persons.
</TABLE>
19
<PAGE>
ARTICLE X
DISABILITY OF PARTICIPANTS
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10.01 Permanent Disability. If a Participant becomes perma-
nently disabled while employed by the Employer, the
entire value of the balance in his Account hereunder
shall be paid to him in accordance with the provisions of
Article VIII.
10.02 Definition of Disability. For purposes of this Plan, a
Participant will be deemed to be permanently and totally
disabled if a physician selected by or acceptable to the
Committee certifies in writing that such Participant is
unable to perform the duties of his present occupation by
reason of any injury or sickness which can be expected to
result in death or be of long, continued and indefinite
duration.
</TABLE>
20
<PAGE>
ARTICLE XI
TERMINATION OF PLAN AND TRUST
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11.01 Right to Terminate Plan. This Plan, and any Trust which
may be a part of the Plan, are purely voluntary on the
part of the Employer, and it may, by action of its Board,
terminate the Plan at any time. The Employer may also
discontinue contributions under the Plan at any time.
The Plan may also be terminated, either voluntarily or
involuntarily, without formal action by the Board or
notice to the Trustee, and in that event, the
Participants' benefits shall be held and distributed in
accordance with the provisions of Section 11.02 hereof.
11.02 Distribution Upon Termination or Discontinuance of
Contributions. Upon termination or partial termination
of the Plan, or at such time as the Participants (and
Beneficiaries) are not entitled to further payments
hereunder, or at such time as the Internal Revenue
Service determines any of the Profit Sharing Award
Deferral Agreements, the Plan, or any Trust which is a
part of the Plan to be ineffective to defer the taxation
of the Accounts until the Participants' (or
Beneficiaries') actual receipt of distributions
hereunder, the Committee may direct the Trustee of any
Trust which may then form a part of this Plan to dis-
tribute to the Participants their respective interests in
their Accounts. In such case, the Committee shall
determine the method of distribution of the Participant's
Account in accordance with the provisions of Article VIII
hereof. The Employer may elect to continue any such
Trust indefinitely for the purpose of distributing
benefits to the Participants and their Beneficiaries, in
accordance with the provisions of this Plan, generally
upon retirement, permanent disability, death, or
termination of employment. The election to continue any
such Trust shall be made in writing to the Trustee.
</TABLE>
21
<PAGE>
ARTICLE XII
ADVISORY COMMITTEE
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12.01 Appointment of Committee. The Employer shall appoint an
Advisory Committee of one or more persons to be known as
the 'Committee'. The Committee shall control and manage
the operation and administration of the Plan and shall be
appointed and serve at the pleasure of the Board. Any
member may resign by delivering his written resignation
to the Board and to the Committee. Vacancies arising by
virtue of resignation, death, removal or otherwise shall
be filled by the Board. The Secretary or any other
officer of the Employer shall give the Trustee, if any,
a certified copy of each Board resolution appointing or
removing a member of the Committee. Until it receives
written notice that a person is no longer a member of the
Committee, the Trustee shall be fully protected in
assuming that the person is still a member of the
Committee. When the Secretary or other corporate officer
delivers to the Trustee a certified copy of a resolution
of the Board appointing a member of the Committee, he
shall also deliver a specimen signature of that member.
If at any time, no members are currently serving as the
Committee, or if no Committee is appointed, the Board
shall be deemed to be the Committee.
12.02 Powers of Committee. The Committee shall administer the
Plan in accordance with its terms, and shall have all
powers necessary to carry out its provisions, including
the power to determine all questions arising in connec-
tion with the administration, management, interpretation
and application of the Plan. The Committee shall also
have the power to allocate fiduciary responsibilities for
the operation and management of the Plan (other than
those of the Trustee, if any, with respect to control of
the assets of the Plan) including the power to allocate
fiduciary responsibilities (other than Trustee respon-
sibilities) among named fiduciaries, and to designate
persons other than named fiduciaries to carry out
fiduciary responsibilities (other than Trustee respon-
sibilities) under the Plan. Any such delegation shall be
in writing and may be made to the officers and employees
of the Employer, or to any other individual, all of whom
shall serve at the pleasure of the Committee and, if a
full-time employee of the Employer, without
compensation. Any person who accepts such delegation may
resign by delivering a written resignation to the
Committee.
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22
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12.03 Investment Manager. The Committee may retain an
Investment Manager to advise and direct the Committee in
carrying out its responsibilities and functions. The
Committee may delegate to the Investment Manager the sole
responsibility for the management of the assets of the
Plan, including the power to direct the acquisition and
disposition of any assets of the Plan, or any specified
portion thereof; and the Investment Manager shall be
authorized to hire and consult with accountants,
actuaries, and other professional help in the discharge
of his duties. The Investment Manager shall serve at the
pleasure of the Committee and may resign by written
resignation submitted to the Committee.
12.04 Consultants. The Committee may retain and appoint legal
counsel, specialists, accountants, actuaries, and other
persons it deems necessary and desirable in connection
with the administration of this Plan.
12.05 Records. The Committee and those to whom it has
delegated fiduciary duties shall keep a record of all of
their proceedings and actions, and shall maintain all
books or accounts, records, and other data as shall be
necessary for the proper administration of the Plan and
to meet the applicable reporting and disclosure require-
ments of ERISA, if any.
12.06 Action. The Committee shall act by a majority of its
members, either by vote at a meeting or in writing
without a meeting. The Committee may authorize any one
or more of its members to execute any document on behalf
of the Committee, in which event the Committee shall
notify the members so designated, and the Trustee of the
members who are so authorized to act on behalf of the
Committee. Any Trustee serving any Trust which is part
of the Plan may rely and will be fully protected in
relying on any written communications signed by a
majority of the members of the Committee as being
authorized by and reflecting the action of the Commit-
tee. If the Trustee is advised in writing by a majority
of the members of the Committee that future communica-
tions may be signed by a lesser number of members of the
Committee and giving the number and names of members of
the Committee who may sign future communications, the
Trustee may rely on communications signed by the lesser
number of members as being authorized by, and reflecting
the actions of, the Committee.
</TABLE>
23
<PAGE>
ARTICLE XIII
AMENDMENT
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13.01 Amendment. The Employer, upon authorization by its
Board, shall have the right at any time, and from time to
time, to amend, retroactively if necessary, any or all of
the provisions of this Plan or any Trust which is a part
of this Plan. Any amendment shall be effective as of the
effective date stated in the amendment. No such
amendment shall serve to reduce the amount held in any
Participant's (or Beneficiary's) Account as of the date
such amendment is adopted. Notwithstanding the foregoing,
effective upon a change of control, as defined in the
Curtice Burns Foods Key Executive Severance Plan, then
for purposes of the Plan Year in which such change of
control occurs and for the two following Plan Years, the
Employer shall have no right to amend the provisions of
Section 5.02(c), as amended herein, and provided further
that if the Employer amends the provisions of Section
5.02(c) and within one year of the date upon which such
amendment becomes effective, a change of control occurs,
then the provisions of such amendment shall be
automatically revoked without further action by the
Employer and the provisions of Section 5.02(c), as in
effect immediately prior to such amendment shall
thereupon be effective.
</TABLE>
24
<PAGE>
ARTICLE XIV
CLAIMS PROCEDURE
<TABLE>
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14.01 Claims Procedure.
(a) A written request for a Plan benefit made by
an employee is a Claim; the person making such claim is
a Claimant.
(b) Each Claim shall be filed with the Committee
which shall, within 30 days from its receipt, either
accept it or deny it (wholly or partially), and within
that time notify the Claimant of acceptance or of
denial. The 30 days may be extended for another 90 day
period if it is found that special circumstances require
an extension of time for processing. In this case, the
Claimant will be informed in writing of the reasons for
such extension, and the date on which a final decision is
expected, prior to the expiration of the initial 30 day
period.
If a Claim is wholly or partially denied, a Claimant
shall be furnished with a written notice setting forth in
a manner calculated to be understood by the Claimant: (1)
the specific reason(s) for denial; (2) specific
reference(s) to pertinent Plan provisions on which any
denial is based; (3) a description of any additional
material or information necessary for the Claimant to
perfect the Claim, if any, and an explanation of why such
material or information is necessary; and (4) an
explanation of the Plan's review procedures.
(c) If a Claimant does not receive notification of
acceptance, denial or extension within 30 days from
submission of his Claim, he may request review as if his
Claim had been entirely denied.
(d) Upon a denial, the Claimant is entitled, either
in person or by his duly authorized representative, to:
(1) request a review of the Claim by the Committee for
this purpose upon written application for review made to
the Committee; (2) review pertinent documents relating to
the denial; and (3) submit issues and comments in
writing. In the case of a denial as to which written
notice of denial has been given to the Claimant, any
request for review of the Claim pursuant to Subsection
(d)(i) must be made within 60 days after receipt by the
Claimant of such notice.
</TABLE>
25
<PAGE>
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(e) The Committee shall make its decision with
respect to a Claim review promptly, but not later than 60
days after receipt of the request. Such 60-day period
may be extended for another period of 60 days if the
Committee reviewing the Claim finds that special circum-
stances require an extension of time for processing. In
this case the Claimant will be informed in writing of the
reasons for such extension prior to the expiration of the
initial 60 day period. The final decision of the
Committee shall be in writing, give specific reasons for
the decision and make specific references to the
pertinent Plan provisions on which the decision is based.
</TABLE>
26
<PAGE>
ARTICLE XV
MISCELLANEOUS
<TABLE>
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15.01 Consolidation or Merger. No provision of this Plan shall
prevent the consolidation or merger of the Employer with
or into any corporation, or prevent the sale or transfer
by the Employer of its property or any part thereof. The
successor corporation resulting from any consolidation,
merger, or transfer shall succeed the Employer and become
a party hereto. The Employer agrees to notify the
Participants (and Beneficiaries) in writing of the terms
of any such merger, consolidation, or transfer prior to
its consummation and upon the consummation of such
merger, consolidation, or transfer shall require its
successor to expressly acknowledge and assume, in
writing, the Employer's obligations under this Plan.
15.02 Termination in Event of Merger, etc. If the Employer
merges or consolidates with another corporation, or sells
or transfers all or substantially all of its assets, and
if the successor corporation refuses to succeed the
Employer and become a party to this Agreement, the
Participants (and Beneficiaries) of the Plan shall be
entitled to all legal and equitable remedies, including
injunctive relief and other equitable relief to prevent
the transfer of all or substantially all of the
Employer's assets.
15.03 Limitations on Consolidation, Merger of Plan or Transfer
of Plan Assets. In the event of this Plan's merger or
consolidation with, or transfer of assets or liabilities
to, any other plan, each Participant in the Plan (if the
Plan then terminates) shall be entitled to receive a
benefit immediately after such merger, consolidation or
transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before
the merger, consolidation or transfer (if the Plan had
then terminated).
15.04 Loans to Participants. No loans from the Plan to any
Participant shall be permitted.
15.05 Trustee as Agent. The Employer or anyone acting on its
behalf may at any time employ any Trustee hereunder in
its corporate (and not its fiduciary) capacity as agent
to perform any act or to keep any records in connection
with the Employer's administration of the Plan. Any such
agency relationship shall be established by a separate
written agreement between the Employer and the Trustee
and the existence of such arrangement shall not affect
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27
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its responsibilities or liabilities as Trustee under this
Agreement.
15.06 Performance of Acts. All parties affected by this Plan,
or claiming any interest hereunder, agree to perform any
and all acts and execute any and all documents and papers
which are necessary or desirable for carrying out this
Plan or any of its provisions.
15.07 Gender and Number. Wherever any words are used herein in
the masculine, they shall be construed as though they
were in the feminine in all cases where they could so
apply. Words in the singular shall be read and construed
as though in the plural in all cases where they would so
apply.
15.08 Binding Effect. This Plan shall extend to, and be
binding upon the heirs, executors, administrators,
successors and assigns of any party affected thereby, the
Participants and their beneficiaries. This Plan may be
executed in any number of counterparts, each of which
shall be deemed an original hereof.
15.09 Governing Law. This Plan has been executed in the State
of New York and all questions pertaining to its validity,
construction and administration shall be determined in
accordance with the laws of New York or, if applicable,
the provisions of ERISA.
15.10 Invalidity of Part of Plan. In case any provision of
this Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining parts of this Plan, but this Plan shall be
construed and enforced as if the illegal and invalid
provisions had never been inserted herein.
15.11 Headings. The headings in this Plan have been inserted
for convenience of reference only and are to be ignored
in construction of the provisions thereof.
15.12 Communication to Employees. Notice of the existence and
provisions of the Plan, together with any amendments
hereto shall be communicated by the Employer to all of
its affected Employees.
15.13 Employment Rights. It is understood that the estab-
lishment of this Plan and any Trust which is a part of
this Plan gives no rights whatever to a Participant to be
retained in the employment or service of the Employer,
and all Participants shall remain subject to discharge to
the same extent as if this instrument had never been
executed. Nothing contained herein shall be construed as
</TABLE>
28
<PAGE>
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a contract of employment.
15.14 Service of Process. In any action involving the Plan,
the Committee shall be the agent for service of process
upon the Plan.
15.15 Spendthrift Provision. The interest of a Participant in
any Trust Fund which is part of the Plan shall not be
subject to assignment or transfer or otherwise alienable,
either by voluntary or involuntary act of such Parti-
cipant or by operation of law, nor subject to attachment,
execution, garnishment, sequestration or other seizure
under any legal, equitable or other process.
</TABLE>
29
<PAGE>
CURTICE BURNS FOODS, INC.
EXCESS BENEFIT RETIREMENT PLAN
March 1994
<PAGE>
CURTICE BURNS FOODS
EXCESS BENEFIT RETIREMENT PLAN
PREAMBLE
The principal objective of the Curtice Burns Foods Excess Benefit Retirement
Plan is to ensure the payment of a competitive level of retirement income in
order to attract, retain and motivate selected employees. The plan is designed
to protect the benefit which certain employees would have accrued under the
Curtice Burns Foods Master Salaried Retirement Plan except for changes in that
plan's benefit accrual formula required in order to comply with requirements of
the Internal Revenue Code of 1986 and for the limit on compensation as allowable
under Section 401(a) (17) of the Internal Revenue Code. This plan was effective
first on January 1, 1992. The restatement of the plan is effective March 24,
1994.
<PAGE>
-1-
SECTION I
DEFINITIONS
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<C> <S>
1.1 'Basic Plan' means the Curtice Burns Foods Master Salaried Retirement Plan.
1.2 'Committee' means the Human Resources Committee of the Board of Directors of the Company, which has been
given authority by the Board of Directors to administer this Plan.
1.3 'Company' means Curtice Burns Foods, Inc.
1.4 'Participant' means an employee of the Company having a benefit under the Plan in accordance with Section
III herein, with the exception of participants in the Company's Supplemental Executive Retirement Plan.
1.5 'Plan' means the Company's Excess Benefit Retirement Plan.
1.6 'Straight Life Annuity' means retirement income in the form of monthly payments for life with no surviving
spouse's benefit.
1.7 'Surviving Spouse Annuity' means retirement income in the form of monthly payments for life, with 50% of the
participant's benefit payable in monthly payments to the surviving spouse, as defined in the Basic Plan, for
the rest of her life. Reductions, if any, to the participants monthly benefit payment under this option are
determined in accordance with Section 5.5(a), Normal Form of Payment, of the Basic Plan.
1.8 'Termination' means the termination of a participant's employment with the Company.
1.9 The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the
singular may include plural, unless the context clearly indicates the contrary.
</TABLE>
SECTION II
ELIGIBILITY FOR BENEFITS
<TABLE>
<C> <S>
2.1 Each participant is eligible to receive a benefit under this Plan effective as of the date the participant
is eligible to receive a benefit under the Basic Plan, in accordance with the terms of the Basic Plan as now
in effect or as hereafter amended. Such date is referred to herein as the participant's actual retirement
date.
2.2 Anything herein to the contrary notwithstanding, if a participant who is receiving, or may be entitled to
receive, a benefit hereunder engages in competition with the Company (without prior authorization given by
the Committee in writing) or is discharged for cause, or performs acts of willful malfeasance or gross
negligence in a matter of material importance to the Company, payments thereafter payable hereunder to such
participant
</TABLE>
<PAGE>
-2-
<TABLE>
<C> <S>
or such participant's surviving spouse will, at the discretion of the Committee, be forfeited and the
Company will have no further obligation hereunder to such participant or spouse. For purposes of this
Section 2.2, the term 'discharged for cause' shall mean termination by the Company as a result of (a) the
conviction of the participant by a court of competent jurisdiction of a crime which constitutes a felony
under any state or federal law, (b) an act by the participant which in the opinion of the Board of Directors
of the Company constitutes a theft of the Company's property, or (c) the insubordination, gross negligence
or willful misconduct of the participant (such finding having been initially made by the Board of Directors
of the Company). 'Competition with the Company' shall occur if, before or after termination of employment,
the participant, directly or indirectly, comes to own, manage, operate, control, be employed by or
participate in the ownership, management, operation or control of, or be connected in any other manner with,
any business which, in the judgment of the Board of Directors of the Company, is in substantial competition
with the Company (unless the participant has first obtained the Board's prior written consent).
</TABLE>
SECTION III
AMOUNT AND FORM OF RETIREMENT BENEFIT
<TABLE>
<C> <S>
3.1 The annual retirement benefit payable hereunder shall be determined using the formulas under the Basic Plan
and shall equal the excess, if any, of
(a) over (b).
(a)The participant's retirement benefit determined using the benefit formulas and eligibility requirements
in effect immediately prior to the adoption of the Fourth Amendment to the Basic Plan as annexed hereto as
Exhibit A and compensation defined as Basic Earnings excluding overtime premium and bonuses received by
the Company during the calendar year without regard to the compensation limits under Sections 401(a)(17)
of the Internal Revenue Code.
(b) The participant's retirement benefit determined under the greater of the Final Average Pay Formula or
the Career Average Benefit Formula in effect at the participant's actual retirement date, as defined in the
Basic Plan.
For purposes of this section, the retirement benefit shall be expressed as a Normal Form of Payment as
defined in the Basic Plan, determined on the first day of the calendar month coincident with or next
following the participant's actual retirement date, regardless of the actual form of payment for such
benefits.
</TABLE>
<PAGE>
-3-
<TABLE>
<C> <S>
3.2 The retirement benefit determined under this Plan shall be payable as a Straight-Life Annuity or a Surviving
Spouse Annuity and shall commence on the date the participant's retirement benefits under the Basic Plan
commence, provided, however that the company may accelerate payment of such benefits if the annual amount of
the annuity is $5,000 or less. If the single sum equivalent of the participant's retirement benefit on the
date of termination from the company is less than $5,000, or if the single sum equivalent of the surviving
spouse's benefit as described in Section IV is less than $5,000, such benefit shall be paid immediately upon
termination or death of the participant in the form of a single sum. The single sum equivalent will be
calculated using the same actuarial factors and assumptions as used for the Basic Plan.
3.3 The annual benefit payable at an Early Retirement Date as defined in the Basic Plan will be reduced using
the same factors and assumptions as used for the Basic Plan.
</TABLE>
SECTION IV
DEATH BENEFITS PAYABLE
<TABLE>
<C> <S>
4.1 If a participant should die before commencing benefits hereunder, the participant's surviving spouse shall
receive a benefit determined in accordance with Section III, as if the participant had retired and commenced
receiving a benefit on the first of the month coincident with or next following the date of his death, and
had elected a Surviving Spouse Annuity.
</TABLE>
SECTION V
DISABILITY BENEFITS PAYABLE
<TABLE>
<C> <S>
5.1 In the event the Committee determines that a participant has become and remains totally disabled, the
participant's actual retirement date shall be the date upon which the participant commences to receive
benefits under the Basic Plan.
5.2 The annual disability benefit will equal the retirement benefit that would be payable under Section III of
this Plan, determined as of the participant's actual retirement date.
5.3 The Committee may require, no more frequently than once in any calendar year, that a disabled participant
submit medical evidence of disability satisfactory to the Committee. The Committee will have sole discretion
to discontinue eligibility for a disability benefit based on a consideration of such evidence or lack
thereof.
</TABLE>
<PAGE>
SECTION VI
MISCELLANEOUS
<TABLE>
<C> <S>
6.1 The committee may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to
time, in whole or in part. No termination, suspension, or amendment of the Plan will affect a retired
participant's right or the right of a surviving spouse to continue to receive a benefit in accordance with
this Plan as in effect on the date such participant commenced to receive a benefit under this Plan. In
addition, no termination, suspension, or amendment of the Plan will, without the affected participant's
consent, or the consent of such participant's surviving spouse, reduce the benefit hereunder of a
participant who has completed five (5) years of service with the Company. The provisions of this Section 7.1
shall be subordinate to the provisions of Section 2.2 concerning the forfeiture of benefits.
6.2 Nothing contained herein will confer upon any participant the right to be retained in the service of the
Company to discharge or otherwise deal with participants without regard to the existence of this Plan.
6.3 This Plan is unfunded, and the Company will make Plan benefit payments solely on a current disbursement
basis.
6.4 To the maximum extent permitted by law, no benefit under this Plan shall be assignable or subject to any
manner to alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind.
6.5 The Committee may adopt rules and regulations to assist it in the administration of the Plan.
6.6 Each participant shall receive a copy of this Plan and the Committee will make available for inspection by
any participant a copy of the rules and regulations used by the Committee in administering the Plan.
6.7 This Plan is established under and will be construed according to the laws of the State of New York.
</TABLE>
<PAGE>
AGREEMENT
AGREEMENT, dated as of September 27, 1994 (the 'Agreement'), among Pro-Fac
Cooperative, Inc., a New York cooperative corporation ('Pro-Fac'), PF
Acquisition Corp., a New York corporation and a wholly owned subsidiary of
Pro-Fac ('Buyer'), and Agway Holdings, Inc., a Delaware corporation ('Agway'),
and a wholly owned subsidiary of Agway Inc., a Delaware corporation.
WHEREAS, Pro-Fac, Buyer, and Curtice Burns Foods, Inc., a New York
corporation (the 'Company'), propose to enter into an Agreement and Plan of
Merger dated the date hereof (the 'Acquisition Agreement') which provides, among
other things, that Buyer shall commence an offer (the 'Offer', which term shall
include any amendment thereof not in violation of the Acquisition Agreement) to
purchase any and all of the issued and outstanding shares of the Company's Class
A Common Stock, par value $.99 per share ('Class A Common Stock'), and Class B
Common Stock ('Class B Common Stock'), par value $.99 per share, and shall merge
with and into the Company (the 'Merger'), in each case upon the terms and
subject to the conditions set forth in the Acquisition Agreement (any term used
herein without definition shall have the definition ascribed thereto in the
Acquisition Agreement);
WHEREAS, Agway owns 899,447 shares of Class A Common Stock and 2,036,643
shares of Class B Common Stock (the 'Agway Shares');
WHEREAS, as a condition to the willingness of Pro-Fac and Buyer to enter
into the Acquisition Agreement, and as an inducement to them to do so, Agway has
agreed for the benefit of Pro-Fac and Buyer to tender the Agway Shares, and any
other shares of Class A Common Stock or Class B Common Stock at any time during
the term of this Agreement held by Agway, in response to the Offer on the terms
and conditions contained in this Agreement; and
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Acquisition Agreement, the Offer and the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties hereby agree as
follows:
ARTICLE I
TENDER OFFER AND OPTION
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by the Buyer of the Offer, Agway shall tender to the depositary
(the 'Depositary') designated in the Offer to Purchase (the 'Offer to Purchase')
distributed by the Buyer in connection with the Offer (i) a letter of
transmittal with respect to the Agway Shares and any other shares of Class A
Common Stock or Class B Common Stock held by Agway (whether or not currently
held by Agway, the Agway Shares and such other shares being referred to herein
as the 'Shares'), complying with the terms of the Offer to Purchase, together
with instructions directing the Depositary to make payment for such Shares
directly to Agway (but if such Shares are not accepted
<PAGE>
for payment and are to be returned pursuant to the Offer to Purchase, to return
such Shares to Agway), (ii) the certificates representing the Shares and (iii)
all other documents or instruments required to be delivered pursuant to the
terms of the Offer to Purchase (such documents in clauses (i) through (iii)
collectively being hereinafter referred to as the 'Tender Documents').
(b) Agway will not, subject to applicable law, withdraw the tender effected
in accordance with Section 1.1(a); provided, however, that (i) Agway may decline
to tender, or may withdraw, any and all Shares if (A) the amount or form of
consideration to be paid for such Shares is less than cash in the amount of
$19.00 per Share, net to Agway or (B) the Acquisition Agreement is terminated
and (ii) Agway shall give Buyer at least one business day's prior notice of any
withdrawal of Shares.
SECTION 1.2. Option. (a) Agway hereby irrevocably grants Buyer an option
(the 'Option'), exercisable only upon the events and subject to the conditions
set forth herein, to purchase all the Shares at a purchase price of $19 per
Share, net to Agway.
(b) Subject to the conditions set forth in Section 1.3, Buyer may exercise
the Option in whole at any time or from time to time on or after the date (if
any) on which Agway withdraws any or all of the Shares from the tender made
pursuant to Section 1.1 hereof. Buyer shall exercise the Option by delivering
notice thereof to Agway, specifying the date, time and place for the closing of
such purchase. The closing of the purchase of Shares pursuant to this Section
1.2 (the 'Closing') shall take place on the date, at the time and at the place
specified in such notice; provided, that if at such date any of the conditions
specified in Section 1.3 shall not have been satisfied (or waived), Buyer may
postpone the Closing until a date within five business days after such
conditions are satisfied.
(c) At the Closing, Agway will deliver to Buyer (in accordance with Buyer's
instructions) the certificates representing the Shares being purchased pursuant
to Section 1.2(b), duly endorsed or accompanied by stock powers duly executed in
blank. At such Closing, Buyer shall deliver to Agway a certified or bank
cashier's check payable to or upon the order of Agway in an amount equal to the
number of Shares being purchased at such Closing multiplied by $19.
(d) The Option will terminate upon termination of the Acquisition
Agreement.
SECTION 1.3. Conditions. The obligation of Agway to sell Shares at the
Closing is subject to the following conditions:
(a) Buyer shall, on or prior to the date of such Closing, have accepted or
simultaneously be accepting for payment at least 44% of the shares of Class A
Common Stock outstanding at the time of such acceptance (not including any
shares of Class A Common Stock held by Agway) pursuant to the Offer;
(b) such Shares shall have been withdrawn from the tender made pursuant to
Section 1.1; provided that Buyer shall have no Option with respect to Shares
withdrawn pursuant to Section 1.1(b)(i);
2
<PAGE>
(c) all waiting periods under the HSR Act applicable to such exercise shall
have expired or been terminated; and
(d) there shall be no preliminary or permanent injunction or other
order, decree or ruling issued by any Governmental Entity, nor any statute,
rule, regulation or order promulgated or enacted by any Governmental Entity
prohibiting, or otherwise restraining, such exercise of the Option.
SECTION 1.4. No Purchase. Buyer may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
Purchase, and may allow the Option to terminate without purchasing all or any
Shares pursuant to the exercise thereof. If any Shares are not accepted for
payment in accordance with the terms of the Offer to Purchase or purchased
pursuant to the Option, they shall be returned to Agway, whereupon they shall
continue to be held by Agway subject to the terms and conditions of this
Agreement.
ARTICLE II
CONSENT AND VOTING
Agway hereby revokes any and all previous proxies granted with respect to
the Shares. By entering into this Agreement, Agway hereby consents to the
Acquisition Agreement and the transactions contemplated thereby, including the
Merger (as defined in the Acquisition Agreement). So long as the Acquisition
Agreement is in effect, Agway hereby agrees to vote all Shares now or hereafter
owned by Agway in favor of the Acquisition Agreement, the Merger and the
transactions contemplated thereby.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF AGWAY
Agway represents, warrants and covenants to Pro-Fac and the Buyer that:
SECTION 3.1. Ownership. Agway is the sole, true, lawful and beneficial
owner of the Shares with no restrictions on voting rights or rights of
disposition pertaining to the Shares. Agway will convey good and valid
title to the Shares being purchased pursuant to the Offer, the Merger or
the Option, as the case may be, free and clear of any and all claims,
liens, charges, encumbrances and security interests. None of the Shares is
subject to any voting trust or other agreement or arrangement with respect
to the voting of such Shares. Until this Agreement is terminated, Agway
shall not, directly or indirectly, sell, exchange, encumber, assign or
otherwise transfer or dispose of, or agree to or solicit any of the
foregoing, or grant any right or power to any person which limits Agways
sole power to vote, sell, assign, transfer, encumber or otherwise dispose
of the Shares or otherwise directs Agway with respect to the Shares. Agway
agrees to notify
3
<PAGE>
Pro-Fac and Buyer promptly and to provide all details requested by
Pro-Fac or Buyer if Agway or any of its affiliates shall be approached or
solicited, directly or indirectly, by any person with respect to any of the
foregoing.
SECTION 3.2. Non-Contravention. The execution, delivery and
performance by Agway of this Agreement and the consummation of the
transactions contemplated hereby (i) are within Agway's powers, have been
duly authorized by all necessary action (including any consultation,
approval or other action by or with any other person), (ii) require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority (except as may be required under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 or the Securities Exchange
Act of 1934), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of Agway or to a loss of any
benefit of Agway under, any provision of applicable law or regulation or of
any agreement, judgment, injunction, order, decree, or other instrument
binding on Agway or result in the imposition of any lien on any asset of
Agway.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by Agway and is the valid and binding agreement of Agway,
enforceable against it in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors rights generally.
SECTION 3.4. Total Shares. The Agway Shares are the only Shares
beneficially owned as of the date hereof by Agway and Agway owns no option
to purchase or right to subscribe for or otherwise acquire any securities
of the Company and has no other interest in or voting rights with respect
to any securities of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Buyer or the Company in respect of
this Agreement based upon any arrangement or agreement made by or on behalf
of Agway, except as otherwise provided in the Acquisition Agreement.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PRO-FAC AND BUYER
Pro-Fac and Buyer represent, warrant and covenant to Agway:
SECTION 4.1. Corporate Power and Authority. Pro-Fac and Buyer have all
requisite corporate power and authority to enter into this Agreement and to
perform their obligations hereunder. The execution, delivery and
performance by Pro-Fac and Buyer of this Agreement and the consummation by
Pro-Fac and Buyer of the transactions contemplated hereby have been duly
authorized by the board of directors of Pro-Fac and Buyer and no other
corporate action on the part of Pro-Fac or Buyer is necessary to authorize
the execution, delivery or performance by Pro-Fac or
4
<PAGE>
Buyer of this Agreement and the consummation by Pro-Fac and Buyer of
the transactions contemplated hereby.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by Pro-Fac and Buyer and is a valid and binding agreement of
Pro-Fac and Buyer, enforceable against each of them in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Buyer's Account. Any Shares to be
acquired upon consummation of the Offer or upon exercise of the Option will
be acquired by Buyer for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with
the Securities Act of 1933.
SECTION 4.4. Release of Claims. From and after the Effective Time of
the Merger (as defined in the Acquisition Agreement) or, if earlier, the
purchase of Shares pursuant to the Offer or the Option, Pro-Fac and Buyer
shall and, after the Merger, shall cause the Surviving Corporation and the
Company (each a 'Releasor') to, release and discharge Agway, Agway Inc. and
each director, officer, employee, agent and advisor of Agway or Agway Inc.
(each a 'Releasee') from any and all claims, demands, causes of action,
actions, suits, proceedings and liabilities of any nature whatsoever
(collectively, 'Claims') that may exist at such time in favor of any such
Releasor against any such Releasee to the extent arising out of or based
upon (a) the Integrated Agreement, including the write-down by the Company
of certain assets at the end of fiscal 1993 and in the first half of fiscal
1995, the actions by the Company in connection with the termination by
Pro-Fac in March 1994 of certain crops, the management by the Company of
the business of Pro-Fac prior to the date hereof or the inclusion of
certain 'change-of-control' expenses in the profits of the Company for
fiscal 1994 to be shared with Pro-Fac pursuant to the Integrated Agreement,
or (b) the transactions leading up to the Acquisition Agreement (including,
but not limited to, the auction process); provided, however, that the
foregoing release shall not apply to any Claim to the extent such Claim (i)
arises after the date of this Agreement, (ii) either (A) is based upon
behavior of the applicable Releasee that is not generally consistent with
the behavior of such Releasee prior to the date hereof or (ii) is based
upon any action taken by such Releasee, or failure by such Releasee to take
any action, with intentional disregard for what such Releasee in good faith
believes to be the rights of Pro-Fac under the Integrated Agreement (it
being agreed that any action or failure to take action consistent with such
Releasees understanding of the advice (written or oral) of counsel shall be
deemed to have been without intentional disregard for what such Releasee in
good faith believes to be the rights of Pro-Fac), and (iii) is made in
writing by Pro-Fac to such Releasee promptly upon Pro-Fac or Buyer becoming
aware of facts giving rise to such Claim if they so became aware prior to
the purchase of the Shares (whether or not pursuant to the Merger, the
Offer or the Option), it being acknowledged by Pro-Fac and Buyer that
neither Agway nor any Releasee concedes that a Claim made that is
consistent with this proviso is necessarily a valid claim against any
Releasee, none of whom is a party to the Integrated Agreement. In addition,
each Releasor promises and agrees that, to the extent within its control
and except as may be required by law, such Releasor will not initiate or
participate in any claim, complaint, or litigation arising out of or in
connection with any Claim released hereby.
5
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Agreements of Agway. Agway hereby covenants and agrees that,
so long as the Acquisition Agreement is in effect:
(a) No Shopping. Agway shall not directly or indirectly (i) solicit,
initiate or encourage (or authorize any person to solicit, initiate or
encourage) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company or any direct or
indirect subsidiary thereof, or any acquisition of a substantial equity
interest in, or a substantial amount of the assets of, the Company or any
direct or indirect subsidiary thereof, whether by merger, purchase of
assets, tender offer or other transaction or (ii) participate in any
discussion or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or encourage any effort or attempt by any other
person to do or seek any of the foregoing, except as such participation or
cooperation shall be required as a result of the exercise by the Board of
Directors of the Company of its fiduciary duty consistent with and the
terms of the Acquisition Agreement. Agway shall promptly advise the Company
of the terms of any communications it or any of its affiliates may receive
relating to any of the foregoing.
(b) Adjustment Upon Changes in Capitalization or Merger. In the event
of any change in the Company's capital stock by reason of stock dividends,
stock splits, mergers, consolidations, recapitalizations, combinations,
conversions, exchanges of shares, extraordinary or liquidating dividends,
or other changes in the corporate or capital structure of the Company which
would have the effect of diluting or changing the Buyers rights hereunder,
the number and kind of shares or securities subject to this Agreement and
the purchase price per Share (but not the total purchase price) shall be
appropriately and equitably adjusted so that the Buyer shall receive
pursuant to the Offer or the Option the number and class of shares or other
securities or property that the Buyer would have received in respect of the
Shares purchasable pursuant to the Offer or the Option if such purchase had
occurred immediately prior to such event. Agway shall request the Company
to take, and shall use reasonable efforts to take, such steps in connection
with such consolidation, merger, liquidation or other such action as may be
necessary to assure that the provisions hereof shall thereafter apply as
nearly as possible to any securities or property thereafter deliverable
pursuant to the Offer or the Option.
SECTION 5.2. Agreement of Buyer. Buyer covenants and agrees that if it
accepts any Shares pursuant to the Offer, it shall accept for payment under
the Offer at least 44% of the shares of Class A Common Stock (not including
Shares owned by Agway) outstanding at the time of such acceptance.
6
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. Pro-Fac, Buyer and Agway will each execute
and deliver or cause to be executed and delivered all further documents and
instruments and use its best efforts to secure such consents and take all such
further action as may be reasonably necessary in order to consummate the
transactions contemplated hereby and by the Acquisition Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations and
which may be required under any agreements, contracts, commitments, instruments,
understandings, arrangements or restrictions of any kind to which such party is
a party or by which such party is governed or bound, to consummate and make
effective the transactions contemplated by this Agreement.
SECTION 6.4. Specific Performance. Each party hereto agrees that the other
parties hereto may be irreparably damaged if for any reason such party failed to
perform any of its obligations under this Agreement, and that the non-breaching
party would not have an adequate remedy at law for money damages in such event.
Accordingly, each party shall be entitled to specific performance and injunctive
and other equitable relief to enforce the performance of this Agreement by each
other party. This provision is without prejudice to any other rights that a
party may have against any other party for any failure to perform its
obligations under this Agreement.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares.
SECTION 6.7. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto. This Agreement will terminate
upon the termination of the Acquisition Agreement in accordance with its terms.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided, however, that Buyer may assign its
rights and obligations to another wholly owned subsidiary of Pro-Fac who is the
assignee of Buyer's rights under the Acquisition Agreement and provided,
further, that except as set forth in the prior clause, a party may not assign,
delegate or
7
<PAGE>
otherwise transfer any of its rights or obligations under this Agreement without
the consent of the other parties hereto.
SECTION 6.9. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of New York without giving effect to the principles
of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. 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.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRO-FAC COOPERATIVE, INC.
By: /s/ ROY A. MYERS
.....................................
ROY A. MYERS
Title: General Manager
.....................................
90 Linden Place
Rochester, New York 14603
PF ACQUISITION CORP.
By: /s/ ROY A. MYERS
.....................................
ROY A. MYERS
Title: President
.....................................
90 Linden Place
Rochester, New York 14603
AGWAY HOLDINGS INC.
By: /s/ PETER J. O'NEILL
.....................................
PETER J. O'NEILL
Title: Senior Vice President
.....................................
c/o Agway Inc.
333 Butternut Drive
DeWitt, New York 13214
Attention: Peter J. O'Neill
Senior Vice President
8
<PAGE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FOR THE THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------
JUNE 25, 1994 SEPT. 24, 1994
JUNE 29, JUNE 28, JUNE 26, JUNE 26, -------------------- SEPT. 23, --------------------
1990 1991 1992 1993 ACTUAL PRO FORMA 1993 ACTUAL PRO FORMA
--------- --------- --------- --------- -------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Excess/(deficiency)
of revenues before
taxes, dividends
and allocation of
net proceeds....... $ 14.8 $ 8.3 $ 12.8 ($ 17.5) $ 23.7 $ 3.9 $ 3.7
Income (loss) before
taxes and
cumulative effect
of an accounting
change............. $ 12.9 $ 1.8
Equity in
undistributed
earnings of
Springfield Bank
for Cooperatives... (0.8) (0.7) (1.1) (1.5) (1.5) (1.5)
-------------------------------------------------------------------------------------------------
Adjusted earnings
(loss)............. 14.0 7.6 11.7 (19.0) 22.2 11.4 3.9 3.7 1.8
-------------------------------------------------------------------------------------------------
Fixed charges:
Interest expense
and
amortization
of debt issue
costs......... 19.6 20.3 17.2 13.8 11.6 37.2 3.2 2.9 9.9
Rentals (A)..... 0.8 0.2
-------------------------------------------------------------------------------------------------
Total fixed
charges... 19.6 20.3 17.2 13.8 11.6 38.0 3.2 2.9 10.1
-------------------------------------------------------------------------------------------------
Adjusted earnings
(loss) and fixed
charges............ $ 33.6 $ 28.6 $ 30.0 ($ 3.7 ) $ 35.3 $ 38.0 $ 7.1 $ 6.6 $ 10.1
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Ratio of earnings to
fixed charges...... 1.71 1.41 1.74 (B) 3.04 1.00 2.22 2.2 1.00
8
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(A) Rentals deemed representative of the interest factor included in rent
expense.
(B) As a result of the restructuring charge incurred by Curtice-Burns Foods,
Inc. during fiscal 1993, earnings did not cover fixed charges by $19.9
million. The Integrated Agreement with Curtice-Burns included a 50%
profit/loss sharing provision whereby Pro-Fac shared in Curtice-Burns'
earnings and losses. Excluding such charges the ratio would have been 1.84.
<PAGE>
CURTICE-BURNS FOODS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
FISCAL YEAR ENDED -------------------
-------------------------------------------------------------------------------------------------
JUNE 25, 1994
JUNE 29, JUNE 28, JUNE 26, JUNE 26, -------------------- SEPT. 23, SEPT. 24, 1994
1990 1991 1992 1993 ACTUAL PRO FORMA 1993 ACTUAL PRO FORMA
--------- --------- --------- --------- -------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income
(loss)
before
taxes and
cumulative
effect of
an
accounting
change.... $ 12.5 $ 6.9 $ 10.9 ($ 19.9 ) $ 18.8 $ 6.8 $ 3.1 $ 1.7 $ 1.0
Equity in
undistributed
earnings
of
Springfield
Bank for
Cooperatives... ($ 1.5 )
-------------------------------------------------------------------------------------------------
Adjusted
earnings
(loss).... $ 12.5 $ 6.9 $ 10.9 ($ 19.9 ) $ 18.8 $ 5.3 $ 3.1 $ 1.7 $ 1.0
-------------------------------------------------------------------------------------------------
Fixed
charges:
Interest
expense
and
amortization
of
debt
issue
costs... 25.9 26.1 22.8 19.6 18.2 37.2 4.8 5.1 9.9
Rentals
(A)....... 1.0 0.8 1.0 0.9 0.8 0.8 0.2 0.2 0.2
-------------------------------------------------------------------------------------------------
Total fixed
charges... 26.9 26.9 23.8 20.5 19.0 38.0 5.0 5.3 10.1
-------------------------------------------------------------------------------------------------
Adjusted
earnings
(loss) and
fixed
charges... $ 39.4 $ 33.8 $ 34.7 $ 0.6 $ 37.8 $ 43.3 $ 8.1 $ 7.0 $ 11.1
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Ratio of
earnings
to fixed
charges... 1.47 1.26 1.46 (B) 1.98 1.14 1.62 1.3 1.10
2
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(A) Rentals deemed representative of the interest factor included in rent
expense.
(B) As a result of the restructuring charge incurred during fiscal 1993,
earnings did not cover fixed charges by $19.9 million. Excluding such
charge, the ratio is 1.52 for the year ended June 26, 1993.
<PAGE>
Exhibit 21.1
Curtice-Burns Foods, Inc.
Subsidiaries
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
<S> <C>
Curtice-Burns Express, Inc. New York
Finger Lakes Packaging Company, Inc. New York
Snyder's Potato Chips, Inc. Pennsylvania
Quality Snacks, Inc. Pennsylvania
La Restaurante of Altoona, Inc. Pennsylvania
Curtice Burns Meat Snacks, Inc. Delaware
Quality Snax of Maryland, Inc. Maryland
Kennedy Endeavors, Incorporated Washington
Husman Snack Foods Co., Inc. Ohio
Seasonal Employers, Inc. New York
Curtice Burns Export Corp. Virgin Islands
Nalley's Canada Limited Canada
Comstock Michigan Fruit Company of Canada, Ltd. Canada
Pro-Fac Holding Company of Iowa, Inc. New York
</TABLE>
4.1.2-1
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Curtice-Burns Foods, Inc. of our
report dated September 28, 1994 (which report contains an explanatory
paragraph relative to disputes between Curtice-Burns Foods, Inc. and
Pro-Fac Cooperative, Inc.) relating to the financial statements of
Pro-Fac Cooperative, Inc. which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
PRICE WATERHOUSE LLP
1900 Chase Square
Rochester, NY 14604
November 14, 1994
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-4 of Curtice-Burns Foods, Inc.
of our report dated August 10, 1994 (except as to Note 3, which is
as of September 22, 1994 and which report contains an explanatory
paragraph relative to disputes between Curtice-Burns Foods, Inc.
and Pro-Fac Cooperative, Inc.) relating to the consolidated financial
statements of Curtice Burns Foods, Inc. which appears in such
Prospectus. We also consent to the reference to us under the heading
'Experts' in such Prospectus.
Price Waterhouse LLP
PRICE WATERHOUSE LLP
1900 Chase Square
Rochester, NY 14604
November 14, 1994
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (b) (2)
------------------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5375195
(Jurisdiction of Incorporation or Organization (I.R.S. Employer
if not a U.S. national bank) Identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
</TABLE>
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, Address and Telephone Number of Agent for Service)
CURTICE-BURNS FOODS, INC.
(Exact name of obligor as specified in its charter)
See Table of Guarantors on Schedule 1 hereto
<TABLE>
<S> <C>
New York 16-0845824
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
90 Linden Place
P.O. Box 681 14603
Rochester, N.Y.
(Address of principal executive office) (zip code)
</TABLE>
------------------
12 1/4% Senior Subordinated Notes Due 2005
(Title of Indenture Securites)
<PAGE>
Schedule 1
TABLE OF GUARANTORS
<TABLE>
<CAPTION>
Exact Name of State or Other
Guarantor Jurisdiction of
Specified in its Incorporation or I.R.S. Charter
Charter Organization Identification No.
<S> <C> <C>
Pro-Fac Cooperative, Inc. New York 16-6036816
Curtice-Burns Express, Inc. New York 16-1198316
Curtice Burns Meat Snacks, Inc. Delaware 13-3346668
Finger Lakes Packaging Company Inc. New York 16-1262806
Husman Snack Foods Company Incorporated Ohio 31-1308171
Kennedy Endeavors, Incorporated Washington 91-1350382
Nalley's Canada Limited Canada N/A
Quality Snax of Maryland,Inc. Maryland 52-0911948
Seasonal Employers, Inc. New York 16-1375253
Pro-Fac Holding Company New York 16-1335217
of Iowa,Inc.
</TABLE>
<PAGE>
- 2 -
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is
subject.
New York State Banking Department,
Two Rector Street, New York, New
York
Federal Deposit Insurance
Corporation Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate
trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
(See Note on Page 7)
Item 3. Voting securities of the trustee.
Furnish the following information as to each class
of voting securities of the trustee:
<TABLE>
<S> <C>
Col. A Col. B
Title of class Amount Outstanding
Not Applicable
</TABLE>
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another
indenture under which any other securities, or
certificates of interest or participation in
any other securities, of the obligor are
outstanding, furnish the following
information:
<PAGE>
-3-
(a) Title of the securities outstanding under each such other indenture
Not Applicable
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310 (b)
(1) of the Act arises as a result of the trusteeship under any
such other indenture, including a statement as to how the indenture
securities will rank as compared with the securities issued under
such other indenture.
Not Applicable
Item 5. Interlocking directorates and similar relationships with the
obligor or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the
obligor, identify each such person having any such connection and
state the nature of each such connection.
Not Applicable
Item 6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of
the trustee owned beneficially by the obligor and each director,
partner, and executive officer of the obligor:
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities repre-
sented by
amount given
in Col. C
Not Applicable
</TABLE>
Item 7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of
the trustee owned beneficially by each underwriter for the obligor
and each director, partner and executive officer of each such
underwriter:
<PAGE>
- 4 -
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities repre-
sented by
amount given
in Col. C
Not Applicable
</TABLE>
Item 8. Securities of the obligor owned or held by the trustee
Furnish the following information as to securities of
the obligor owned beneficially or held as collateral security
for obligations in default by the trustee:
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Title of Class Whether the secur- Amount owned bene- Percent of class
ities are voting ficially or held represented
or nonvoting as collateral sec- by amount
securities urity for obligations given in Col. C
in default
Not Applicable
</TABLE>
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security
for obligations in default any securities of an underwriter
for the obligor, furnish the following information as
to each class of securities of such underwriter any of which
are so owned or held by the trustee:
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Title of Issuer Amount Outstanding Amount owned bene- Percent of class
and title of ficially or held represented
class as collateral sec- by amount
urity for obligations given in Col. C
in default by trustee
Not Applicable
</TABLE>
Item 10. Ownership or holdings by the trustee of voting securities
of certain affiliates or securityholders of the obligor.
<PAGE>
- 5 -
If the trustee owns beneficially or holds as collateral
security for obligations in default voting securities of
a person who, to the knowledge of the trustee (1) owns 10
percent or more of the voting securities of the obligor
or (2) is an affiliate, other than a subsidiary, of the
obligor, furnish the following information as to the
voting securities of such person:
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Title of Issuer Amount Outstanding Amount owned bene- Percent of class
and title of class ficially or held represented
as collateral sec- by amount
urity for obligations given in Col. C
in default by trustee
Not Applicable
</TABLE>
Item 11. Ownership or holdings by the trustee of any
securities of a person owning 50 percent or
more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral
security for obligations in default any securities of a person who, to
the knowledge of the trustee, owns 50 percent or more of the voting
securities of the obligor, furnish the following information as to each
class of securities of such person any of which are so owned or held by
the trustee:
<TABLE>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Title of Issuer Amount Outstanding Amount owned bene- Percent of class
and title of ficially or held represented
Class as collateral sec- by amount
urity for obligations given in Col. C
in default by trustee
Not Applicable
</TABLE>
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
<TABLE>
<S> <C> <C>
Col. A Col. B Col. C
Nature of Amount Date
Indebtedness Outstanding Due
Not Applicable
</TABLE>
<PAGE>
- 6 -
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default
with respect to the securities under this
indenture. Explain the nature of any such
default.
Not Applicable
(b) If the trustee is a trustee under another
indenture under which any other securities, or
certificates of interest or participation in
any other securities, of the obligor are
outstanding, or is trustee for more than one
outstanding series of securities under the
indenture, state whether there has been a
default under any such indenture or series,
identify the indenture or series affected, and
explain the nature of any such default.
Not Applicable
Item 14. Affiliations with the Underwriters
If any underwriter is an affiliate of the
trustee, describe each such affiliation.
Not Applicable
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which
the foreign trustee is authorized to act as
sole trustee under indentures qualified or to
be qualified under the Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this
statement of eligibility.
<TABLE>
<S> <C>
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the
Trustee to Commence Business (Included in Exhibit I
above).
</TABLE>
<PAGE>
- 7 -
<TABLE>
<S> <C>
*3. A copy of the Authorization of the Trustee to exercise
Corporate Trust Powers, as amended to date (See Exhibit 4 to
Form T-1, Securities and Exchange Commission File No. 22-
19146).
*4. A copy of the existing By-Laws of the Trustee, as amended to
date (See Exhibit 4 to Form T-1, Securities and Exchange
Commission File No. 22-19146).
5. A copy of each Indenture referred to in Item 4, if the Obligor
is in default. Not Applicable.
6. The consent of the United States institutional trustee
required by Section 321(b) of the Act. (See Exhibit 6)
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority. (See Exhibit 7)
</TABLE>
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its directors
or officers, the trustee has relied upon information furnished to it by
the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answers to said Item are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1,
2 and 16 of this form since to the best knowledge of the trustee as
indicated in Item 13, the obligor is not in default under any indenture
under which the applicant is trustee.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, IBJ Schroder Bank & Trust Company, a corporation
organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility & qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 16th day of November, 1994.
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ Thomas J. Bogert
Thomas J. Bogert
Assistant Vice President
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, IBJ Schroder Bank & Trust Company, a corporation
organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility & qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 16th day of November, 1994.
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ Thomas J. Bogert
Thomas J. Bogert
Assistant Vice President
<PAGE>
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, as amended, in connection with the issue by Curtice-
Burns Foods, Inc., of 12 1/4% Senior Subordinated Notes due 2005, we hereby
consent that reports of examinations by Federal, State, Territorial, or
District authorities may be furnished by such authorities to the Securities
and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Thomas J. Bogert
Thomas J. Bogert
Assistant Vice President
Dated: November 16, 1994
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
of New York, New York
And Foreign and Domestic Subsidiaries
Report as of June 30, 1994
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin................. $ 31,700
Interest-bearing balances.......................................... 306,648
Securities: Held to Maturity.................................... 60,194
Available-for-sale.................................. 30,643
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank...................... 2,129,234
Loans and lease financing receivables:
Loan and leases, net of unearned income.................... 2,557,212
LESS: Allowance for loan and lease losses............... 52,611
Loans and leases, net of unearned income, allowance, and
reserve............................................................ 2,504,601
Assets held in trading accounts...................................... 1,751,574
Premises and fixed assets............................................ 10,536
Other real estate owned.............................................. 449
Customers' liability to this bank on acceptances outstanding......... 510
Intangible assets.................................................... 66,996
Other assets......................................................... 205,542
----------
TOTAL ASSETS......................................................... $ 7,098,627
-----------
-----------
LIABILITIES
Deposits:
In domestic offices............................................ $ 544,073
Noninterest-bearing.................................. 134,515
Interest-bearing..................................... 409,558
In foreign offices, Edge and Agreement subsidiaries,
and IBFs....................................................... 714,496
Noninterest-bearing................................... 9,930
Interest-bearing..................................... 704,566
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank.................. 3,213,044
Demand notes issued to the U.S. Treasury............................. 95,000
Trading Liabilities.................................................. 786,023
Other borrowed money................................................. 587,115
Mortgage indebtedness and obligations under capitalized
leases......................................................... 9,892
Bank's liability on acceptances executed and outstanding............. 510
Other liabilities.................................................... 802,875
-----------
TOTAL LIABILITIES.................................................... $6,753,028
-----------
-----------
EQUITY CAPITAL
Perpetual preferred stock............................................ 50,000
Common Stock......................................................... 41,473
Surplus.............................................................. 282,945
Undivided profits and capital reserves............................... (28,801)
Net unrealized holding (losses) on available for sale securities..... (18)
-----------
TOTAL EQUITY CAPITAL................................................. 345,599
-----------
TOTAL LIABILITIES AND EQUITY CAPITAL................................. $ 7,098,627
-----------
-----------
</TABLE>
I, Alastair G.C. Merrick, CFO of the above named bank do hereby declare that
this Report of Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the State
Banking Authority and is true to the best of my knowledge and belief.
ALASTAIR G.C. MERRICK
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the State
Banking Authority and is true and correct.
DONALD H. McCREE, Jr.
EISUKE KANO Directors
YUJI SUZUKI
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-24-1995
<PERIOD-END> SEP-24-1994
<CASH> 113
<SECURITIES> 0
<RECEIVABLES> 52069
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 88572
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 338134
<CURRENT-LIABILITIES> 88549
<BONDS> 0
<COMMON> 10183
0
65590
<OTHER-SE> 46366
<TOTAL-LIABILITY-AND-EQUITY> 338134
<SALES> 37657
<TOTAL-REVENUES> 44547
<CGS> 37657
<TOTAL-COSTS> 40818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2939
<INCOME-PRETAX> 3729
<INCOME-TAX> 25
<INCOME-CONTINUING> 3704
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3704
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-24-1995
<PERIOD-END> SEP-24-1994
<CASH> 7293
<SECURITIES> 0
<RECEIVABLES> 65946
<ALLOWANCES> 826
<INVENTORY> 222440
<CURRENT-ASSETS> 321667
<PP&E> 345781
<DEPRECIATION> 185493
<TOTAL-ASSETS> 524366
<CURRENT-LIABILITIES> 219934
<BONDS> 0
<COMMON> 22874
0
0
<OTHER-SE> 57019
<TOTAL-LIABILITY-AND-EQUITY> 524366
<SALES> 176847
<TOTAL-REVENUES> 176847
<CGS> 126844
<TOTAL-COSTS> 126844
<OTHER-EXPENSES> 41669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5071
<INCOME-PRETAX> 1770
<INCOME-TAX> 1437
<INCOME-CONTINUING> 333
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 333
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
