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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): Janurary 24, 1997
JOHN B. SANFILIPPO & SON, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-19681 36-2419677
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2299 Busse Road, Elk Grove Village, Illinois 60007
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(Address of Principal Executive Offices) (Zip Code)
(847) 593-2300
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(Registrant's Telephone Number, including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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John B. Sanfilippo & Son,, Inc. (the "Registrant") submits the following
information:
ITEM 5. OTHER EVENTS
BACKGROUND. As previously reported by the Registrant, the
Registrant was not in compliance with the fixed charge coverage
ratio covenants as of the end of the third quarter of 1996 under
each of its credit facilities: (i) the Credit Agreement in the
amount of $60.0 million dated as of March 27, 1996 (as amended,
the "Bank Credit Facility") among the Registrant, the Lenders
party thereto and Bank of America, as agent (collectively, the
"Lenders"); (ii) the Amended and Restated Note Purchase and
Private Shelf Agreement in the aggregate amount of $35.0 million
dated as of October 19, 1993 (as amended, the "Long-Term
Financing Facility") between the Registrant and The Prudential
Insurance Company of America ("Prudential"); and (iii) the Note
Purchase Agreement in the aggregate amount of $25.0 million dated
as of August 30, 1995 (as amended, the "Additional Long-Term
Financing") between the Registrant and Teachers Insurance and
Annuity Association of America ("Teachers"). As previously
reported, the violations also caused cross-defaults under each
credit facility. Despite the defaults, the Lenders, Prudential
and Teachers waived any event of default arising from these
violations.
As of October 30, 1996, as was reported on the Registrant's Form
10-Q for the quarterly period ended September 26, 1996, the
Registrant entered into Amendment No. 2 and Waiver to Credit
Agreement ("Amendment No. 2") under the Bank Credit Facility. Amendment
No. 2 waived the Registrant's non-compliance with the fixed charge
coverage ratio covenant, and also required the Registrant to amend
the Bank Credit Facility to, among other things: (i) convert the
fixed charge coverage ratio covenant from a most recent four
quarter calculation to an individual quarter calculation,
beginning with the quarter ending December 31,1996 and continuing
for each of the next four quarters; (ii) decrease the annual
capital expenditure limitation in 1997; (iii) increase the
aggregate amount outstanding limitation under the Bank Credit
Facility's "clean down covenant"; and (iv) grant by November 27, 1996:
(a) a first priority perfected security interest and lien in substantially
all of the Registrant's assets to secure the obligations under
the Bank Credit Facility, the Long-Term Financing Facility and
the senior portion of the Additional Long-Term Financing; and (b)
a junior security interest in the Registrant's assets to secure
the obligations under the subordinated portion of the Additional
Long-Term Financing. The date for granting the security interest
was first extended to December 6, 1996 and was subsequently
extended to December 20, 1996 and then to January 1997.
Agreements affecting the credit facilities. On January 24, 1997,
the Registrant granted the above-described security interests,
and the following agreements were entered into: (i) Amendment No.
3 to Credit Agreement ("Amendment No. 3") under the Bank Credit
Facility; (ii) Second Amendment and Restated Note Agreement
("Long-Term Financing Facility Amendment") under the Long-Term
Financing Facility; and (iii) Amendment No. 2 to Note Purchase
Agreement dated as of August 30, 1995 ("Additional Long-Term
Financing Amendment") under the Additional Long-Term Financing.
Amendment No. 3, among other things, effected the above-described
changes to the Bank Credit Facility. The Long-Term Financing
Facility Amendment, among other things, modified financial and
other covenants to match those contained in the Bank Credit Facility,
including those described above. The Additional Long-Term Financing
Amendment replaced the fixed charge coverage ratio covenant for the
quarter ending December 31,1996 and for the three subsequent quarters.
However, on January 1, 1998, the terms of the fixed charge
coverage ratio covenant revert back to the terms contained in the
original Additional Long-Term Financing. The Additional Long-
Term Financing Amendment also requires the Registrant to achieve
specified levels of consolidated operating income and to not
exceed specified levels of interest expense for those fiscal
quarters ending December 1996 through June 1997.
For additional information reference is made to Amendment No. 3,
the Long-Term Financing Facility Amendment and the Additional
Long-Term Financing Amendment filed herewith as exhibits.
EXHIBITS
The exhibits required by Item 601 of Regulation S-K and filed
herewith are listed in the Exhibit Index which follows the signature
page and immediately precedes the exhibits filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JOHN B. SANFILIPPO & SON, INC.
Date: February 28, 1997 By: /s/ Gary P. Jensen
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Executive Vice President of Finance
and Chief Financial Officer
JOHN B. SANFILIPPO & SON, INC.
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit Number Description and Page Total Pages
- -------------------- ---------------------- -----------
(1) None
(2) None
(4) None
(16) None
(17) None
(20) None
(23) None
(24) None
(27) None
(99) Amendment No. 3 to Credit Agreement 23
dated January 24, 1997 to that certain
Credit Agreement in the amount of $60
million dated as of March 27, 1996 among
the Registrant, the Lenders party thereto
and Bank of America, as agent amended by
that certain Amendment No. 1 and Waiver
to Credit Agreement dated as of August 1,
1996 and that certain Amendment No. 2
and Waiver to Credit Agreement dated as of
October 30, 1996.
(99) Second Amendment and Restated Note 84
Agreement dated January 24, 1997 to that
certain Amended and Restated Note
Purchase and Private Shelf Agreement in
the aggregate amount of $35 million dated
as of October 19, 1993 between the
Registrant and The Prudential Insurance
Company of America.
(99) Amendment No. 2 to Note Purchase 14
Agreement dated as of January 24, 1997
to that certain Note Purchase Agreement
in the aggregate amount of $25 million dated
as of August 30, 1995 between the Registrant
and Teachers Insurance and Annuity
Association of America.
AMENDMENT NO. 3 TO CREDIT AGREEMENT
This Amendment No. 3 is dated as of January 24, 1997 by and
among John B. Sanfilippo & Son, Inc. (the "Borrower"), the Lenders
parties hereto and Bank of America Illinois, as Agent for the
Lenders ("Amendment No. 3").
W I T N E S S E T H;
WHEREAS, the Borrower, the Lenders and the Agent are parties
to that certain Credit Agreement dated as of March 27, 1996, as
amended by that certain Amendment No. 1 and Waiver to Credit
Agreement dated as of August 1, 1996 and that certain Amendment No.
2 and Waiver to Credit Agreement dated as of October 30, 1996 (the
"Credit Agreement");
WHEREAS, the Borrower and the other Obligors are concurrently
pledging substantially all their assets to secure, inter alia,
their Obligations arising under or in connection with the Credit
Agreement; and
WHEREAS, the Borrower and the Lenders desire to amend the
Credit Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Each capitalized term used herein but not otherwise
defined herein shall have the meaning ascribed to such term in the
Credit Agreement.
2. Amendments to Credit Agreement. Subject to the terms and
conditions set forth in Section 5 of this Amendment No. 3, the
Credit Agreement is hereby amended as follows:
(a) The following definitions are inserted into Section 1.1
of the Credit Agreement in appropriate alphabetical order:
""Collateral Agent" means Bank of America Illinois, as
collateral agent for the Secured Lenders, and the successors
and assigns thereof as collateral agent for the Secured
Lenders.
"Collateral Documents" means the Security Agreement, the
Collateral Agency Agreement and other Collateral Documents (as
such term is defined in the Collateral Agency Agreement).
"Collateral Agency Agreement" means that certain
Intercreditor and Collateral Agency Agreement dated as of
January 23, 1997 among Bank of America Illinois, as Collateral
Agent, Agent, Lenders, Prudential and Teachers, as from time
to time amended, restated, supplemented or otherwise modified.
"Quantz" means Quantz Acquisition Co., Inc., a Delaware
corporation and a wholly-owned subsidiary of Borrower.
"Security Agreement" means that certain Security
Agreement dated as of January 23, 1997 among Borrower,
Sunshine, Quantz, and Bank of America Illinois, as Collateral
Agent for the Lenders, Prudential and Teachers, as from time
to time amended, restated, supplemented or otherwise modified.
"Teachers" means Teachers Insurance and Annuity
Association of America."
(b) The following definitions in Section 1.1 of the Credit
Agreement are amended and restated in their entirety as follows:
""Fixed Asset Advance" means, for each calendar
month, the greater of:
(i) the sum of (a) 60% of the appraised orderly
liquidation value of certain equipment on a list to be
provided to the Agent by the Borrower less prior liens if
any and (b) 60% of the appraised market value of certain
real estate on a list to be provided to the Agent by the
Borrower less prior liens if any, provided that (A) any
appraisals shall be performed by professionals engaged by
Agent and (B) Borrower shall have obtained title
insurance policies and surveys for all appraised real
estate; and
(ii) the amount shown in the table below for the
applicable month:
Calendar Month Fixed Asset Advance
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January $20,000,000
February $20,000,000
March $20,000,000
April $15,000,000
May $15,000,000
June $10,000,000
July $10,000,000
August $10,000,000
September $10,000,000
October $15,000,000
November $20,000,000
December $20,000,000
provided that in no event shall the Fixed Asset Advance for
any calendar month exceed the sum of the total principal
amounts then outstanding under the Prudential Senior Notes and
the Teachers Senior Notes.
"Fixed Charge Coverage Ratio" means the ratio, as
measured at the end of each Fiscal Quarter for the applicable
Fiscal Quarter, of (i) the sum of(a) EBIT, plus (b) Rental
Payments to (ii) the sum of(y) Consolidated Interest Expense,
plus (z) Rental Payments.
"Letter of Credit Availability" means, at any time, the
lesser of
(a) the excess of
(i) the then Total Commitment Amount (subject
to the limit with respect to aggregate Credit
Extensions under Section 8.2.15)
over
(ii) the sum of (x) the then aggregate
outstanding principal amount of all Loans and
Acceptance Obligations and (y) the then aggregate
outstanding Letter of Credit Outstandings
and
(b) the excess of
(i) $3.5 million
over
(ii) the then aggregate outstanding Letter of
Credit Outstandings, not including the outstanding
amount of the Bainbridge IRB Letter of Credit."
(c) The word "or" is deleted from the end of subparagraph (a)
of the definition of "Change of Control" in Section 1.1 of the
Credit Agreement and the following text is added to the end of such
definition:
"or;
(c) the failure of the Borrower to own, directly and
beneficially, 100% of Quantz's outstanding shares of common
stock of all classes."
(d) The word "or" is deleted from the end of subparagraph (i)
of the definition of "Eligible Inventory" in Section 1.1 of the
Credit Agreement and the following text is added to the end of such
definition:
";
(h) on or after March 23, 1997, none of such Inventory is
stored with a bailee, warehouseman or similar person, or is
otherwise located on premises not owned or leased by Borrower
or any of its Subsidiaries, unless a satisfactory bailee
letter has been delivered to Collateral Agent; and
(i) none of such Inventory is placed on consignment.
(e) Section 8.1.1(c) of the Credit Agreement is amended and
restated in its entirety as follows:
"(c) as soon as available and in any event within 30 days
after the end of each Fiscal Month, a certificate in the form
of Exhibit E hereto (a "Compliance Certificate"), executed by
the chief financial Authorized Officer of the Borrower, (i)
showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to
the Agent) compliance with covenants contained in Sections
8.2.1, 8.2.2, 8.2.4, 8.2.6, 8.2.7, 8.2.10, 8.2.11, 8.2.12,
8.2.14, 8.2.15 and 8.2.16 of the Credit Agreement, paragraphs
6B, 6C, 6F, 6H, 6K, 6M, 6N, 6O, 6Q, 6R, 6S of the Prudential
Note Agreement, and Sections 8.7, 8.8, 8.9, 8.11, 9.1, 9.2,
9.3, 9.4 and 9.5 of the Teachers Note Agreement and (ii)
certifying that (A) no Event of Default has occurred and is
continuing pursuant to Section 9.1.2, 9.1.7. 9.1.8 or 9.1.11
of the Credit Agreement, (B) no "Event of Default" (as such
term is used in the Prudential Agreement) has occurred and is
continuing pursuant to paragraph 7(a) (iv), (viii), (ix), (x),
(xvii) or (xviii) of the Prudential Agreement, and (C) no
"Event of Default" (as such term is used in the Teachers
Agreement) has occurred and is continuing pursuant to Section
__ of the Teachers Agreement."
(f) Section 8.1.1(e) of the Credit Agreement is amended and
restated in its entirety as follows:
"(e) as soon as possible and in any event no later than
30 days following the end of each Fiscal Month, reports in
respect of (i) the aging of Accounts by Account Debtor, (ii)
accounts payable, and (iii) Inventory by type and location.
Such reports shall be in such form and in such detail as the
Agent shall reasonably require;"
(g) The phrase "or any substantial dispute between Borrower
or any of its Subsidiaries and any governmental authority," is
inserted after the second reference to "Section 7.7" in Section
8.1.1(h) of the Credit Agreement.
(h) The last sentence of Section 8.1.7 of the Credit
Agreement is deleted and replaced with the following:
"Borrower shall pay costs and expenses incurred in connection
with two such audits per Fiscal Year in an amount not to
exceed an aggregate of $15,000 per Fiscal Year. In addition,
all costs and expenses incurred in connection with any audit
shall be paid by the Borrower if a Default pursuant to Section
9.1.8 shall have occurred and be continuing."
(i) Section 8.2.2(g) is amended and restated in its entirety
as follows:
"(g) Indebtedness of Sunshine from time to time owing to
the Borrower and incurred in the ordinary course of business
on account of the Borrower's payment of ordinary course
payables of Sunshine and on account of Sunshine's properly
allocable share of ordinary course overhead expenses incurred
and paid by the Borrower on behalf of Sunshine, provided that
the aggregate amount of such Indebtedness shall not exceed
$30,000,000 outstanding at any one time, and provided further
such Indebtedness shall not be evidenced at any time by a
promissory note or other written instrument."
(j) The following text shall be inserted as Section 8.2.3(i)
of the Credit Agreement:
"(i) Liens granted pursuant to the Collateral Documents."
(k) Subsection 8.2.4(d) of the Credit Agreement is deleted in
is entirety and replaced with the following:
"(d) The Fixed Charge Coverage Ratio to be less than the
following amounts during the following periods:
Minimum Fixed Charge For the
Coverage Ratio Quarter Ended
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1.00 December 31, 1996
0.50 March 27, 1997
1.00 June 26, 1997
1.75 September 25, 1997
2.00 December 31, 1997"
(l) Subsection 8.2.4(f) of the Credit Agreement is deleted in
its entirety.
(m) Section 8.2.5(e) of the Credit Agreement is deleted in its
entirety and replaced with the following:
"(e) [Intentionally deleted];"
(n) Section 8.2.7 of the Credit Agreement is amended and
restated in its entirety as follows:
"SECTION 8.2.7. Capital Expenditures, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, make
Capital Expenditures in any Fiscal Years, except (a) Capital
Expenditures incurred before December 31, 1996 related to
acquisitions for the Fisher Nut Co. business, (b) other
Capital Expenditures incurred during Fiscal Year 1996 not
exceeding $8,200,000 in the aggregate on a consolidated basis,
(c) Capital Expenditures incurred during Fiscal Year 1997 not
exceeding $7,200,000 in the aggregate on a consolidated basis,
and (d) Capital Expenditures in subsequent Fiscal Years that
do not exceed in the aggregate for each such Fiscal Year
$10,000,000."
(o) The reference in Section 8.2.8 of the Credit Agreement to
"$500,000" as the maximum aggregate amount of Rental Obligations
for any Fiscal Year is hereby deleted and replaced with a reference
to "$650,000."
(p) The following text is added to the end of Section 8.2.12
of the Credit Agreement:
"Without limiting the foregoing, Borrower will not
consent to or permit any amendment, supplement or other
modification which has the effect of (i) increasing the
interest rate or fees under such agreement, (ii) increasing
the amount of obligations of Borrower or any Subsidiary under
such agreement, (iii) amending the financial covenants
contained in such agreement or (iv) permitting any prepayment
of obligations under such agreement."
(q) The reference to "$25,000,000" as the Maximum Permitted
Amount of Credit Extensions for the period August through September
is hereby deleted from the chart in Section 8.2.15 of the Credit
Agreement and replaced with a reference to "$40,000,000".
(r) The following text is inserted as Section 9.1.11 of the
Credit Agreement:
"SECTION 9.1.11. Impairment of Liens. Collateral Agent
shall cease to have a first priority perfected security
interest and lien (subject to liens permitted pursuant to
Section 8.2.3) in substantially all of the property of the
Borrower, Sunshine and Quantz pursuant to the Collateral
Documents."
(s) The following text is inserted as Section 9.1.12 of the
Credit Agreement:
"SECTION 9.1.12. Breach of Certain Teachers Covenants.
Borrower (a) shall breach any of the covenants set forth in
Sections 9.1 or 9.2 of the Teachers Note Agreement and such
breach shall have continued for a period of more than 15 days
after any Authorized Officer has actual knowledge thereof or
the Borrower receives written notice thereof from the Agent or
any holder of a "Senior Note" as such term is defined in the
Teachers Note Agreement or (b) shall breach any of the
covenants set forth in Sections 10.1 or 10.2 of the Teachers
Note Agreement and such breach shall have continued for a
period of more than 30 days after any Authorized Officer has
actual knowledge thereof or the Borrower receives written
notice thereof from the Agent or any holder of a Subordinated
Note as such term is defined in the Teachers Note Agreement."
(t) The last sentence of Section 11.3 of the Credit Agreement
is amended and restated in its entirety as follows:
"The Borrower also agrees to reimburse the Agent upon demand
for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by the Agent or
such Lender in connection with (x) the negotiations of any
restructuring or "work-out", whether or not consummated, of
any Obligations, (y) the enforcement of any Obligations, and
(z) costs and expenses incurred pursuant to Section 10 of the
Security Agreement."
(u) Exhibit E to the Credit Agreement is amended in its
entirety to read as provided in Schedule I hereto.
(v) Exhibit F to the Credit Agreement is amended in its
entirety to read as provided in Schedule II hereto.
3. Limited Waivers. Subject to the terms and conditions set
forth in Section 5 of this Amendment No. 3:
(a) The Agent and the Lenders hereby waive compliance with
Section 8.2.4(d) of the Credit Agreement (as in effect before the
execution of this Amendment No. 3) solely for the Fiscal Quarter
ending December 31, 1996.
(b) The Agent and the Lenders hereby waive any default
pursuant to Section 9.1.5 of the Credit Agreement that may result
from the Obligors' failure to comply with Sections 5L and 6N of the
Prudential Note Agreement and Sections 9.1 and 10.1 of the Teachers
Note Agreement, solely for the Fiscal Quarter ending December 31,
1996, which compliance is being waived by Prudential and Teachers
pursuant to the amendments to the Prudential Note Agreement and
Teachers Note Agreement, respectively, each dated as of the date
hereof.
(c) The Agent and the Lenders hereby waive compliance with
Section 8.2.12 of the Credit Agreement only to the extent necessary
to allow the Borrower to execute amendments to the Teachers Note
Agreement and Prudential Agreement pursuant to Section 5(a)(ii) of
this Amendment No. 3.
4. The Borrower represents and warrants that:
(a) after giving effect to this Amendment No. 3, (i) no
Default or Event of Default exists and is continuing under the
Agreement and (ii) no breach or other default exists under either
the Teachers Note Agreement or the Prudential Note Agreement.
(b) the execution, delivery and performance by Borrower of
this Amendment No. 3 are within its corporate powers, have been
duly authorized by all necessary corporate action (including,
without limitation, any necessary shareholder approval), have
received all necessary governmental approval (if any shall be
required), and do not and will not contravene or conflict with any
provision of law applicable to Borrower, the Certificate of
Incorporation or Bylaws of Borrower, or any order, judgment or
decree of any court or other agency of government or any
contractual obligation binding upon Borrower; and the Credit
Agreement as amended as of the date hereof is the legal, valid and
binding obligation of Borrower enforceable against Borrower in
accordance with its terms.
(c) This Amendment No. 3 does not contain any misstatement of
a material fact or fail to state a material fact necessary to make
the statement or statements of Borrower contained herein not
misleading, and Borrower has disclosed to Agent all facts or
circumstances of which Borrower is aware following due and diligent
inquiry, which are material to, or could adversely affect in any
way, the purposes or subject matter of this Amendment No. 3 and/or
consummation of the terms and conditions hereof.
(d) Since the financial statements dated September 26, 1996,
there has been no material adverse change in the assets or the
financial condition of the Borrower and its Subsidiaries taken as
a whole.
(e) The warranties and representations of Borrower contained
in this Amendment No. 3, the Credit Agreement, as amended hereby,
and the Collateral Documents, shall be true and correct as of the
date hereof, with the same effect as though made on such date,
except to the extent that such warranties and representations
expressly relate to an earlier date, in which case such warranties
and representations shall have been true and correct as of such
earlier date.
5. This Amendment No. 3 shall become effective as of January
24, 1997 upon satisfaction of the following conditions:
(a) Required Documents. Agent shall have received the
documents listed below on or prior to the date hereof, each duly
executed, in form and substance satisfactory to Agent and in
quantities specified by Agent:
(i) Amendment. This Amendment No. 3 among the Borrower,
Sunshine, the Agent and each of the Lenders.
(ii) Teachers and Prudential Amendments and Guaranties.
A copy of an Amendment to the Teachers Note Agreement and an
Amendment to the Prudential Note Agreement, each of even date
herewith, each such amendment to be acceptable to Collateral
Agent and to include a consent to this Amendment No. 3, and
copies of the guaranties executed by Quantz in favor of each
of Prudential and Teachers, each of even date herewith.
(iii) Collateral Agency Agreement. That certain
Intercreditor and Collateral Agency Agreement of even date
herewith among Agent, as Collateral Agent, Lenders, and the
holders of promissory notes under the Prudential Note
Agreement and the Teachers Note Agreement.
(iv) Security Agreement. That certain Security Agreement
of even date herewith made by Obligors in favor of Collateral
Agent.
(v) Security Interests and UCC filings. Evidence
satisfactory to Collateral Agent that Collateral Agent has a
valid and perfected first priority security interest (subject
to Liens permitted under the Credit Agreement) in the
Collateral, including (A) such documents duly executed by
Obligors (including financing statements under the UCC and
other applicable documents under the laws of any jurisdiction
with respect to the perfection of Liens) as Collateral Agent
may request in order to perfect its security interests in the
Collateral and (B) copies of UCC search reports listing all
effective financing statements that name any Obligor, as
debtor, together with copies of such financing statements,
none of which shall cover the Collateral.
(vi) Stock Pledge Agreement; Stock Certificates. (A)
That certain Stock Pledge Agreement of even date herewith made
by Borrower in favor of Collateral Agent relating to all of
the stock of Sunshine and Quantz Acquisition Co., Inc. and (B)
for the Pledged Stock (as such term is defined in the Stock
Pledge Agreement), stock certificates with negotiable stock
powers endorsed in blank.
(vii) Mortgages. Mortgages covering the real estate in
Gustine, California, Garysburg, North Carolina and Selma,
Texas (collectively, the "Mortgaged Properties"), together
with (a) copies of existing title insurance policies, as-built
surveys, zoning letters and certificates of occupancy, the
contents of which are satisfactory to Collateral Agent in its
sole discretion; (b) evidence that counterparts of the
Mortgages have been recorded in all places to the extent
necessary or desirable, in the judgment of Collateral Agent,
to create a valid and enforceable first priority lien on each
Mortgaged Property in favor of Collateral Agent; and (c) an
opinion of counsel in each state in which any Mortgaged
Property is located in from and substance and from counsel
satisfactory to Collateral Agent.
(viii) Leasehold Mortgages. Leasehold Mortgages covering
the leased real estate in Elk Grove Village, Illinois (Busse
Road property) and Des Plaines, Illinois (the "Mortgaged
Leasehold Properties"), together with (a) copies of all leases
related to the Mortgaged Leasehold Properties and (b) as
deemed appropriate by Collateral Agent in its sole discretion,
a consent by the holder of any mortgage on either Mortgaged
Leasehold Property.
(ix) Collateral Assignment of Copyrights, Patents,
Trademarks and Licenses. That certain Collateral Assignment
of Copyrights, Patents, Trademarks and Licenses of even date
herewith made by Obligors in favor of Collateral Agent.
(x) Reaffirmation of Sunshine Guaranty. Reaffirmation
of Guaranty by Sunshine, of even date herewith.
(xi) Guaranty by Quantz Acquisition Co., Inc. A Guaranty
executed and delivered by Quantz Acquisition Co., Inc.,
substantially in the form of the Sunshine Guaranty.
(xii) Obligors' Bylaws, Resolutions and Incumbency. A
certificate from each Obligor's corporate secretary certifying
as to (A) attached resolutions of such Obligor's board of
directors authorizing the execution, delivery and performance
of this Amendment No. 3 and the other documents to be executed
by such Obligor pursuant hereto, (B) attached by-laws of such
Obligor and (C) the officers of such Obligor executing this
Amendment No. 3 and the other documents to be executed by such
Obligor pursuant hereto are authorized to execute such
documents on behalf of such Obligor.
(xiii) Articles of Organization. For each Obligor, a
charter or certificate of incorporation and all amendments
thereto, each to be dated a recent date prior to the date
hereof and certified by the applicable Secretary of State or
other authorized governmental entity.
(xiv) Good Standing/Existence. For each Obligor, copies
of good standing certificates and certificates of existence
(including verification of tax status, where available), as
applicable, from (A) each such Obligor's state of
incorporation or formation, (B) the state in which each such
Obligor's principal place of business is located and (C) all
states in which the laws thereof require such Obligor to be
qualified to do business, each to be dated a recent date prior
to the date hereof and certified by the applicable Secretary
of State or other authorized governmental entity.
(xv) Officers' Certificates. A certificate from the each
Obligor's chief financial Authorized Officer certifying that
on the date hereof and after giving effect to this Amendment
No. 3, (A) no Default or Event of Default has occurred and is
continuing and that (B) the representations and warranties of
such Obligor are true and correct.
(xvi) Opinion of Counsel. Duly executed originals of
opinion of Jenner & Block, counsel for Borrower, in form and
substance satisfactory to Agent and its counsel, dated the
Closing Date, and accompanied by a letter addressed to such
counsel from Borrower, authorizing and directing such counsel
to address its opinion to Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect
that Agent and Lenders are authorized to rely on such opinion.
(xvii) Insurance Policies. Copies of insurance policies
and loss payable endorsements required by the Security
Agreement.
(xviii) Other Documents. Such other documents as Agent may
reasonably request.
(b) Representations and Warranties. The warranties and
representations of Borrower contained in this Amendment No. 3
shall be true and correct as of the date hereof.
(c) Fees and Expenses. The Borrower shall have paid the
outstanding fees and out-of-pocket costs and expenses of
counsel for the Agent and the additional fees and out-of-
pocket costs and expenses incurred in connection with the
negotiation, preparation, execution and delivery of this
Amendment No. 3.
(d) Field Review Audit Expenses. The Borrower shall have paid
the outstanding costs and expenses of the Agent incurred in
connection with a field review audit performed earlier this
year pursuant to Section 8.1.7 of the Credit Agreement.
6. Except as specifically set forth in this Amendment No. 3,
the Credit Agreement and the other Loan Documents shall remain
unaltered and in full force and effect and the respective terms,
conditions and covenants thereof are hereby ratified and confirmed
in all respects.
7. The Agent and Lenders are not aware of any default or
event of default in existence on the date hereof after giving
effect to this Amendment No. 3.
8. The execution, delivery and effectiveness of this
Amendment No. 3 shall not operate as a waiver of any right, power
or remedy of Agent or any Lender under the Credit Agreement or any
Loan Document, nor constitute a waiver of any provision of the
Credit Agreement or any Loan Document, except as expressly set
forth herein. Upon the effectiveness of this Amendment No. 3, each
reference in the Credit Agreement to "this Agreement", "hereof",
"herein" or "hereunder" or words of like import, and all references
to the Credit Agreement in any other Loan Documents shall mean and
be a reference to the Credit Agreement as amended hereby.
9. This Amendment No. 3 may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
10. THIS AMENDMENT NO. 3 SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
[signature pages follow]
Document Number: 0139931.17
2-27-97/:43a<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 3 to Credit Agreement as of the date first above
written.
JOHN B. SANFILIPPO & SON, INC.
By: /s/ Gary P. Jensen
------------------
Title: Executive Vice President and
Chief Financial Officer
BANK OF AMERICA ILLINOIS, in its capacity
as Agent
By: /s/ David L. Graham
---------------------
Title: Agency Management Services
Senior Agency Officer
BANK OF AMERICA ILLINOIS, in its capacity
as a Lender, Issuing Lender and Issuer
By: /s/ Lynn Simmons
----------------
Title: Vice President
THE NORTHERN TRUST COMPANY, in its
capacity as a Lender
By: /s/ Arthur J. Fogel
-------------------
Title: Vice President
NATIONAL CITY BANK, in its capacity as a
Lender
By: /s/ Diego Tobon
---------------
Title: Vice President
The undersigned acknowledges
receipt of a copy of the foregoing
Amendment No. 3 and Waiver,
consents to the terms thereof,
and ratifies and confirms its Guaranty,
dated as of March 27, 1996, in favor
of the Lenders, and all documents,
instruments and agreements executed
in connection therewith.
SUNSHINE NUT CO.
By: /s/ John C. Taylor
------------------
Title: President
Schedule I to Amendment No. 3 to Credit Agreement
EXHIBIT E
COMPLIANCE CERTIFICATE
To Bank of America, as Agent, and
to all financial institutions
parties to the Credit Agreement.
Re: Credit Agreement, dated as of March __, 1996 (herein,
together with all amendments, if any, thereafter from
time to time made thereto, called the "Credit
Agreement"), among John B. Sanfilippo & Son, Inc., a
Delaware corporation (herein called "Borrower"), the
various financial institutions as are parties thereto,
and Bank of America Illinois, as Agent.
Gentlemen/Ladies:
Borrower hereby certifies and warrants that as of
________________, 199__ (herein called the "Computation Date"):
(a) the Tangible Net Worth was (and in any event
was not less than) $__________________, as computed on
Attachment 1 hereto;
(b) the ratio of Senior Funded Indebtedness to
Total Capitalization was (and in any event was not more
than) ____%, as computed on Attachment 2 hereto;
(c) the ratio of Funded Indebtedness to Total
Capitalization was (and in any event was not more than)
____%, as computed on Attachment 3 hereto;
(d) the Fixed Charge Coverage Ratio was (and in
any event was not less than) ____%, as computed on
Attachment 4 hereto;
(e) the Current Ratio was (and in any event was
not less than) ___%, as computed on Attachment 5
hereto; and
(f) except as set forth in Attachment 6 hereto, no
Default had occurred and was continuing.
Borrower further certifies and warrants that as of the
Computation Date:
(a) Borrower is in compliance with the covenants
contained in each of the following sections of the
Credit Agreement:
Section 8.2.2 Indebtedness
Section 8.2.4 Financial Condition
Section 8.2.6 Restricted Payment, etc
Section 8.2.7 Capital Expenditures, etc
Section 8.2.10 Consolidation, Merger, etc
Section 8.2.11 Dispositions of Assets
Section 8.2.12 Modification of Certain
Agreements
Section 8.2.14 Negative Pledges, Restrictive
Agreements, etc
Section 8.2.15 Clean Down
Section 8.2.16 Subsidiary Debt
(b) Borrower is in compliance with each of the
covenants contained in each of the following paragraphs
of the Prudential Note Agreement:
Paragraph 6B Indebtedness and Liabilities
Paragraph 6C Consolidations, Mergers
Paragraph 6F Disposal of Property
Paragraph 6H Distributions
Paragraph 6K Other Business
Paragraph 6M Amendments to Certain
Documents
Paragraph 6N Capital Expenditures
Paragraph 6O Teachers Notes
Paragraph 6Q Negative Pledges, Restrictive
Agreements
Paragraph 6R Financial Covenants
Paragraph 6S Subsidiary Indebtedness
(c) Borrower is in compliance with each of the
covenants contained in each of the following sections
of the Teachers Note Agreement:
Section 8.7 Current Ratio
Section 8.8 Subsidiary Debt
Section 8.9 Restricted Payments and
Restricted Investments
Section 8.11 Lines of Business
Section 9.1 Financial Tests
Section 9.2 Consolidated Tangible Net
Worth
Section 9.3 Indebtedness
Section 9.4 Consolidation, Merger or
Disposition of Substantially
All Assets
Section 9.5 Disposition of Assets
(d) no Event of Default has occurred and is
continuing pursuant to any of the following sections of
the Credit Agreement:
Section 9.1.2 Breach of Warranty
Section 9.1.7 Change in Control
Section 9.1.8 Bankruptcy, Insolvency, etc.
Section 9.1.11 Impairment of Liens
(e) no "Event of Default" (as such term is used in
the Prudential Agreement) has occurred and is
continuing pursuant to any of the following paragraphs
of the Prudential Agreement:
Paragraph 7A(iv) False or misleading
representation or warranty
Paragraph 7A(viii) Bankruptcy or similar event
Paragraph 7A(ix) Voluntary bankruptcy or
similar event
Paragraph 7A(x) Involuntary bankruptcy or
similar event
Paragraph 7A(xvii) Change of control
Paragraph 7A(xviii) Impairment of liens
(f) no "Event of Default" (as such term is used in
the Teachers Agreement) has occurred and is continuing
pursuant to any of the following sections of the
Teachers Agreement:
Section 12.1(D) False or misleading warranty
Section 12.1(H) Bankruptcy or similar event
Section 12.1(I) Voluntary bankruptcy or
similar event
Section 12.1(J) Involuntary bankruptcy or
similar event
Section 12.1(Q) Impairment of liens.
IN WITNESS WHEREOF, the Borrower has caused this Certificate
to be executed and delivered by its duly Authorized Officer
this_____ day of ______________, ____.
JOHN B. SANFILIPPO & SON, INC.
By:________________________________
Title:__________________________
ATTACHMENT 1
(to __/__/ __ Compliance
Certificate)
TANGIBLE NET WORTH
ON _______________, _____
COMPUTATION DATE
On a Consolidated basis for Borrower and its Subsidiaries:
Tangible Net Worth as of ___/____/____ $____________
(Not permitted to be less than $55,000,000 plus 50% of
cumulative net income (excluding losses))
ATTACHMENT 2
(to __/__/__ Compliance
Certificate)
SENIOR FUNDED INDEBTEDNESS RATIO
ON ____________, ____
COMPUTATION DATE
On a Consolidated basis for Borrower and its Subsidiaries:
1. Senior Funded Indebtedness.................$_________
2. Total Capitalization.......................$_________
3. Ratio of Item 1 to Item 2..........................____%
(Line 3 is not permitted to be more than 57%).
ATTACHMENT 3
(to __/__/__ Compliance
Certificate)
FUNDED INDEBTEDNESS RATIO
ON ___________, ____
COMPUTATION DATE
On a Consolidated basis for Borrower and its Subsidiaries:
1. Funded Indebtedness.................$___________
2. Total Capitalization................$___________
3. Ratio of Item 1 to Item 2......................_____%
(Line 3 is not permitted to be more than 60%).
ATTACHMENT 4
(to __/__/__ Compliance
Certificate)
FIXED CHARGE COVERAGE RATIO
ON __________, ____
COMPUTATION DATE
On a Consolidated basis for Borrower and its Subsidiaries:
1. Consolidated Net Income.................$___________
2. Aggregate Consolidated Interest Expense
deducted in calculation of Consolidated
Net Income..............................$___________
3. Aggregate amount deducted in respect of
Federal, state, local and foreign income
taxes in calculation of Consolidated
Net Income..............................$___________
4. Sum of Item 1, Item 2 and Item 3........$___________
5. Aggregate non-cash gains arising other
than in the ordinary course of business.$___________
6. EBIT: Subtract Item 5 from Item 4.......$___________
7. Rental Payments.........................$___________
8. Sum of Item 6 and Item 7................$___________
9. Consolidated Interest Expense...........$___________
10. Sum of Item 7 and Item 9................$___________
11. Fixed Charge Coverage Ratio: Ratio of
Item 8 to Item 10..............................____%
(Fixed Charge Coverage Ratio is not permitted to be less than the
following amounts during the following periods:
Minimum Fixed Charge For the
Coverage Ratio Quarter Ended
-------------------- -------------
1.00 December 31, 1996
0.50 March 27, 1997
1.00 June 26, 1997
1.75 September 25, 1997
2.00 December 31, 1997)
ATTACHMENT 5
(to __/__/__ Compliance
Certificate)
CURRENT RATIO
ON _________, ____
COMPUTATION DATE
On a consolidated basis for Borrower and its Subsidiaries:
1. All current assets . . . . . . . . . . . . $___________
2. All current liabilities (except current
liabilities with respect to deferred
taxes) . . . . . . . . . . . . . . . . . $___________
3. Current Ratio: Ratio of Item 1 to Item 2 . . . . . . . ____%
(Line 3 is not permitted to be less than 1.25 to 1.0)
JOHN B. SANFILIPPO & SON, INC.
SECOND AMENDED AND RESTATED
NOTE AGREEMENT
$4,000,000 7.87% Series A Senior Notes
Due August 15, 2004
$6,000,000 8.22% Series B Senior Notes
Due August 15, 2004
$4,000,000 8.22% Series C Senior Notes
Due August 15, 2004
$3,000,000 8.33% Series D Senior Notes
Due August 15, 2004
$8,000,000 6.49% Series E Senior Notes
Due August 15, 2004
$10,000,000 8.31% Series F Senior Notes
Due May 15, 2006
Dated as of January 24, 1997
TABLE OF CONTENTS
(Not Part of Agreement)
Page
---------
1. [Intentionally Omitted 1
2. PURCHASE AND SALE OF NOTES 1
3. [Intentionally Omitted] 1
4. PREPAYMENTS 1
5. AFFIRMATIVE COVENANTS 4
6. NEGATIVE COVENANTS 9
7. EVENTS OF DEFAULT 18
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 22
9. REPRESENTATIONS OF EACH PURCHASER 25
10. DEFINITIONS 26
11. MISCELLANEOUS 39
LIST OF ATTACHMENTS
PURCHASER SCHEDULE
EXHIBIT A -- [INTENTIONALLY OMITTED]
EXHIBIT B -- [INTENTIONALLY OMITTED]
EXHIBIT C -- [INTENTIONALLY OMITTED]
EXHIBIT D -- [INTENTIONALLY OMITTED]
EXHIBIT E -- [INTENTIONALLY OMITTED]
EXHIBIT F -- LIST OF SUBSIDIARIES
EXHIBIT G -- LIST OF AGREEMENTS RESTRICTING INDEBTEDNESS
EXHIBIT H -- [INTENTIONALLY OMITTED]
EXHIBIT I -- INDEBTEDNESS EXISTING AS OF MARCH 27, 1996
EXHIBIT J -- LIST OF INVESTMENTS AS OF MARCH 27, 1996
EXHIBIT K -- [INTENTIONALLY OMITTED]
EXHIBIT L -- [INTENTIONALLY OMITTED]
EXHIBIT M -- FORM OF COMPLIANCE CERTIFICATE
SCHEDULE 6J -- LEASES
JOHN B. SANFILIPPO & SON, INC.
2299 Busse Road
Elk Grove Village, Illinois 60007
As of January 24, 1997
The Prudential Insurance Company
of America ("Prudential")
Each Prudential Affiliate which
becomes bound by this Agreement
as hereinafter provided (together
with Prudential, "Purchasers")
c/o Prudential Capital Group
Two Prudential Plaza
Chicago, Illinois 60601
Attention: Managing Director
Ladies and Gentlemen:
The undersigned, John B. Sanfilippo & Son, Inc., a Delaware
corporation (herein called the "Company"), hereby agrees with you
as set forth below. Reference is made to paragraph 10 hereof for
definitions of capitalized terms used herein and not otherwise
defined.
1. [Intentionally Omitted]
2. PURCHASE AND SALE OF NOTES.
2A. Purchase and Sale of Notes. The Company has previously
issued and sold, and Prudential has previously purchased, the
Notes.
2B. [Intentionally Omitted]
3. [Intentionally Omitted]
4. PREPAYMENTS. The Notes shall be subject to prepayment
with respect to the required prepayments specified in paragraph 4A
and the optional prepayments permitted by paragraph 4B.
4A(1). Required Prepayment of Notes. Until the Notes shall
be paid in full, the Company shall apply to the prepayment of the
Notes, without a Yield-Maintenance Amount, the principal amounts
specified below at the times specified below:
(i) with respect to the Series A Notes, the Company
shall apply to the prepayment of the Series A Notes the sum of
$200,000 semi-annually on each February 15th and August 15th
of each year commencing on February 15, 1995 continuing to and
including August 15, 2004 with any then unpaid balance due on
August 15, 2004;
(ii) with respect to the Series B Notes, the Company
shall apply to the prepayment of the Series B Notes the sum of
$300,000 semi-annually on each February 15th and August 15th
of each year commencing on February 15, 1995 continuing to and
including August 15, 2004 with any then unpaid balance due on
August 15, 2004;
(iii) with respect to the Series C Notes, the Company
shall apply to the prepayment of the Series C Notes the sum of
$200,000 semi-annually on each February 15th and August 15th
of each year commencing on February 15, 1995 continuing to and
including February 15, 2004 with any then unpaid balance due
on August 15, 2004;
(iv) with respect to the Series D Notes, the Company
shall apply to the prepayment of the Series D Notes the sum of
$150,000 semi-annually on each May 15th and November 15th of
each year commencing on May 15, 1995 continuing to and
including May 15, 2004 with any then unpaid balance due on
August 15, 2004;
(v) with respect to the Series E Notes, the Company
shall apply to the prepayment of the Series E Notes the sum of
$400,000 semi-annually on each February 15th and August 15th
of each year commencing on February 15, 1995 continuing to and
including August 15, 2004 with any then unpaid balance due on
August 15, 2004; and
(vi) with respect to the Series F Notes, the Company
shall apply to the prepayment of the Series F Notes the sum of
(a) $525,000 semi-annually on each May 15th and November 15th
of each year commencing on May 15, 1997 continuing to and
including November 15, 1999, (b) $500,000 semi-annually on
each May 15th and November 15th of each year commencing on May
15, 2000 continuing to and including May 15, 2002, and (c)
$475,000 semi-annually on each May 15th and November 15th of
each year commencing on November 15, 2002 continuing to and
including November 15, 2005 with any unpaid balance due on May
15, 2006.
4A(2). Prepayment with Yield-Maintenance Amount Pursuant
to Collateral Agency Agreement and Other Agreements. If amounts
are to be applied to the principal of the Notes pursuant to the
terms of the Collateral Agency Agreement or the Security Agreement,
or pursuant to paragraph 6F(iii), interest owing thereon and to the
prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note shall be due and payable on such date. Any
partial prepayment of the Notes pursuant to this paragraph 4A(2)
shall be applied in satisfaction of required prepayments of
principal in inverse order of their scheduled maturity dates.
4B. Optional Prepayment with Yield-Maintenance Amount.
Subject to the limitations set forth below, the Notes shall be
subject to prepayment, in whole at any time or from time to time in
part (in $500,000 increments and not less than $1,000,000 per
occurrence), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and
the Yield-Maintenance Amount, if any, with respect to each Note so
prepaid. Any partial prepayment of the Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required payments
of principal in the inverse order of their scheduled due dates.
All prepayments shall be applied ratably to any Series of Notes
then outstanding.
4C. Notice of Optional Prepayment. The Company shall give to
the holder of each Note of a Series irrevocable written notice of
any optional prepayment pursuant to paragraph 4B with respect to
such Series not less than 30 days prior to the prepayment date,
specifying (i) such prepayment date, (ii) the aggregate principal
amount of the Notes of such Series to be prepaid on such date,
(iii) the principal amount of the Notes of such holder to be
prepaid on that date, and (iv) stating that such optional
prepayment is to be made pursuant to paragraph 4B. Notice of
optional prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together with
interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, with respect thereto, shall
become due and payable on such prepayment date.
4D. Partial Payments Pro Rata. In the case of each
prepayment pursuant to paragraphs 4A or 4B of less than the entire
unpaid principal amount of all outstanding Notes of any Series, the
amount to be prepaid shall be applied pro rata to all outstanding
Notes of such Series (including, for the purpose of this paragraph
4D only, all Notes of such Series prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates other than by prepayment pursuant to
paragraphs 4A or 4B) according to the respective unpaid principal
amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than (i) by prepayment pursuant to paragraphs 4A or
4B or (ii) upon acceleration of such final maturity pursuant, to
paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise
retire or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes held by
each other holder of Notes at the time outstanding upon the same
terms and conditions. Any Notes so prepared or otherwise retired
or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company agrees to observe and perform for the benefit
of the holders of the Notes each of the affirmative covenants set
forth below:
5A. Financial Statements. The Company covenants that it
will deliver to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within
thirty (30) days following the end of each calendar month,
statements of income and cash flows of the Company and its
Subsidiaries for such month and for the period from the
beginning of the then current fiscal year to the end of such
month and a balance sheet of the Company and its Subsidiaries
as of the end of such month, setting forth in each case, in
comparative form, on a consolidated and consolidating basis,
figures for the corresponding periods in the preceding fiscal
year, all in reasonable detail and certified as accurate by
the Chief Financial Officer or Treasurer of the Company,
subject to changes resulting from normal year-end adjustments;
(ii) [Intentionally Omitted]
(iii) as soon as practicable and in any event within
ninety (90) days after the end of each fiscal year, statements
of income and cash flows of the Company and its Subsidiaries
for such year, and a balance sheet of the Company and its
Subsidiaries as of the end of such year, setting forth in each
case, on a consolidated and consolidating basis or on a
combined or combining basis, in comparative form,
corresponding figures for the period covered by the preceding
annual audit and as of the end of the preceding fiscal year,
all in reasonable detail and satisfactory in scope to the
Required Holders (of all Notes) and examined and certified by
independent public accountants selected by the Company and
reasonably satisfactory to the Required Holders (of all
Notes), whose opinion shall be unqualified in scope and
satisfactory in substance to the Required Holders (of all
Notes), which opinion shall be delivered together with a
reliance or privity letter in favor of the holders of the
Notes in form and substance reasonably acceptable to the
Required Holders (of all Notes);
(iv) [Intentionally Omitted]
(v) as soon as practicable and in any event within ten
(10) days of delivery to the Company, a copy of any letter
issued by the Company's independent public accountants or
other management consultants with respect to the Company's or
any Subsidiary's financial or accounting systems or controls,
including all so-called "management letters";
(vi) as soon as practicable (but in any event not more
than three (3) Business Days after an officer or director of
the Company or any of its Subsidiaries obtains knowledge of
the occurrence of a Default or an Event of Default), notice of
any and all Defaults or Events of Default hereunder;
(vii) promptly upon their becoming available, the
Company shall deliver to each Significant Holder copies of all
financial statements sent by the Company or any of its
Subsidiaries to shareholders (other than the Company or any of
its Subsidiaries) and all reports, notices and proxy
statements sent by the Company or any Subsidiary to its
shareholders, and all regular and periodic reports and
registration statements filed by the Company or any Subsidiary
with any securities exchange or with the Securities and
Exchange Commission or its successor, and all press releases
and other statements made available generally by the Company
or any Subsidiary to the public concerning material
developments in the business of the Company and its
Subsidiaries;
(viii)(a) promptly, and in any event within three (3)
Business Days of the Company's becoming aware thereof, notice
of any "Event of Default" or "Default" under either the Bank
Agreement or the Teachers Note Agreement, provided that the
Company shall immediately furnish the holder(s) of the Notes
with any notice of any such "Default" or "Event of Default"
received from any holder of any Indebtedness issued under
either such agreement and (b) as soon as practicable and in
any event within ten (10) days of the execution thereof by the
Company or any Subsidiary, or any Affiliate of the Company, a
copy of any amendment or modification to the Bank Agreement or
the Teachers Note Agreement or any document, instrument or
agreement executed in connection with such agreements;
(ix) with reasonable promptness, such other business or
financial data as the Required Holders (of all Notes) may
reasonably request;
(x) as soon as available and in any event within 30
days after the end of each fiscal month, a certificate in the
form of Exhibit M hereto (a "Compliance Certificate"),
executed by the chief financial Authorized Officer of the
Company, (a) showing (in reasonable detail and with
appropriate calculations and computations in all respects
satisfactory to Prudential) compliance with covenants
contained in Sections 8.2.1, 8.2.2, 8.2.4, 8.2.6, 8.2.7,
8.2.10, 8.2.11, 8.2.12, 8.2.14, 8.2.15 and 8.2.16 of the Bank
Agreement, paragraphs 6B, 6C, 6F, 6H, 6K, 6M, 6N, 6O, 6Q, 6R
and 6S of this Agreement, and Sections 8.7, 8.8, 8.9, 8.11,
9.1, 9.2, 9.3, 9.4 and 9.5 of the Teachers Note Agreement and
(b) certifying that (A) no Event of Default (as defined in the
Bank Agreement) has occurred and is continuing pursuant to
Section 9.1.2, 9.1.7, 9.1.8 or 9.1.11 of the Bank Agreement,
(B) no Event of Default has occurred and is continuing
pursuant to paragraph 7(a) (iv), (viii), (ix), (x), (xvii) or
(xviii) hereof and (C) no Event of Default (as defined in the
Teachers Note Agreement) has occurred and is continuing
pursuant to Section 12.1(D), (H), (I), (J) or (Q) of the
Teachers Note Agreement.
(xi) concurrently upon delivery to the Bank Agent, a
copy of the borrowing base certificate and any projections or
budgets required to be delivered to the Bank Agent under the
Bank Agreement; and
(xii) within ninety days (90) days after the end of the
1996 Fiscal Year, an Officer's Certificate in form and
substance satisfactory to the Required Holders demonstrating
the compliance or non-compliance by the Company with the tests
set forth in clauses (i), (ii) and (iii) of paragraph 11R for
the 1995 and 1996 Fiscal Years.
All financial statements delivered to the Significant Holders
pursuant to the requirements of this Agreement (except where
otherwise expressly indicated) shall be prepared in accordance with
Generally Accepted Accounting Principles, consistently applied.
Any proposed change in the Company's accounting policies within the
parameters of Generally Accepted Accounting Principles,
consistently applied, shall have been concurred with by the
Company's independent certified public accountants in writing and
shall not be permitted to amend or distort any financial covenant
herein contained. Together with each delivery of financial
statements required by paragraph 5A(i) and (iii) above, the Company
shall deliver to the Significant Holders an Officer's Certificate
stating that there exists no Default or Event of Default, or, if
any Default or Event of Default exists, specifying the nature
thereof, the period of existence thereof and what action the
Company proposes to take with respect thereto. Together with each
delivery of financial statements required by paragraph 5A(iii)
above, the Company shall deliver to the Significant Holders a
certificate of the accountants who performed the audit in
connection with such statements permitting the Significant Holders
to rely on such financial statements and stating that in making the
audit necessary to the issuance of a report on such financial
statements, they have obtained no knowledge of any Default or Event
of Default, or, if such accountants have obtained knowledge of a
Default or Event of Default, specifying the nature and period of
existence thereof. Such accountants shall not be liable by reason
of any failure to obtain knowledge of any Default or Event of
Default which would not be disclosed in the ordinary course of an
audit. The holders of the Notes shall use their best efforts to
keep such information, and all information acquired as a result of
any inspection conducted in accordance with paragraph 5B below,
confidential, provided that the holders of the Notes may
communicate such information (a) to any other Person in accordance
with the customary practices of commercial lenders relating to
routine trade inquiries, (b) to any regulatory authority having
jurisdiction over any holder (including, without limitation, the
National Association of Insurance Commissioners or any similar
organization), (c) to any other Person in connection with any
holder's sale of any participations or assignments in the Notes,
(d) to any other Person in connection with the exercise of any
holder's rights hereunder or under any of the other Ancillary
Agreements or (e) to any other Person to which such delivery or
disclosure may be necessary or appropriate (1) in compliance with
any law, rule, regulation or order applicable to such holder, or
(2) in response to any subpoena or other legal process. The
Company authorizes the holders of the Notes to discuss the
financial condition of the Company with the Company's independent
public accountants and agrees that such discussion or communication
shall be without liability to the holders of the Notes or the
Company's independent public accountants. The Company shall
deliver a letter addressed to such accountants authorizing them to
comply with the provisions of this paragraph 5A but the failure to
deliver such letter shall not impair or otherwise diminish the
rights granted to the holders of the Notes pursuant to the
preceding sentence.
5B. Inspections and Audits. Prudential and any Person
designated by any Significant Holder in writing, shall have the
right, from time to time hereafter, to call at the Company and its
Subsidiaries' places of business (or any other place where the
Collateral or any information relating thereto is kept or located)
during reasonable business hours, and, without hindrance or delay,
(i) to inspect, audit, check and make copies of and extracts from
the Company and its Subsidiaries' books, records, journals, orders,
receipts and any correspondence and other data relating to the
Company and its Subsidiaries' business or to any transactions
between the parties hereto, and (ii) to discuss the affairs,
finances and business of the Company and its Subsidiaries with
their respective officers, employees or directors.
5C. Conduct of Business; Compliance With Laws. The Company
shall, and shall cause each of its Subsidiaries to, maintain its
corporate existence, shall maintain in full force and effect all
licenses, bonds, franchises, leases, patents, contracts and other
rights necessary or desirable to the profitable conduct of their
respective business and comply with all applicable laws, rules,
regulations and orders of any federal, state or local governmental
authority, except for such laws, rules and regulations the
violation of which would not, in the aggregate, have a material
adverse effect on its financial condition, results of operations or
business.
5D. Claims and Taxes. (1) The Company agrees to indemnify
and hold each of the holders of the Notes harmless from and against
any and all claims, demands, obligations, losses, damages,
penalties, costs, and expenses (including reasonable attorneys'
fees and allocated costs of internal counsel) asserted by any
Person (other than the Company) in connection with this Agreement
or the other Ancillary Agreements or asserted by any Person and
relating to or in any way arising out of the possession, use,
operation or control of any of the Company's or its Subsidiaries'
assets by any Person. The Company and its Subsidiaries will file
all tax and information returns and reports required by and
prepared in accordance with applicable law and shall pay or cause
to be paid all license fees, bonding premiums and related taxes and
charges, and shall pay or cause to be paid all real and personal
property taxes, assessments and charges and franchise, income,
unemployment, use, excise, old age benefit, withholding, sales and
other taxes and other governmental charges assessed against the
Company or any of its Subsidiaries, or payable by the Company or
any of its Subsidiaries, at such times and in such manner as to
prevent any penalty from accruing or any lien or charge from
attaching to property of the Company or any of its Subsidiaries,
provided that the Company and its Subsidiaries shall have the right
to contest in good faith, by an appropriate proceeding promptly
initiated and diligently conducted, the validity, amount or
imposition of any such tax, assessment or charge, and upon such
good faith contest to delay or refuse payment thereof (i) so long
as no lien is filed or recorded with respect thereto (except such
liens as may exist by operation of law and so long as the property
subject thereto is not subject to foreclosure during the period of
such good faith contest), and (ii) so long as such contest does not
have a material adverse effect on the financial condition of the
Company or any of its Subsidiaries taken as a whole or the ability
of the Company to pay or perform any of the obligations to any of
the holders of the Notes.
(2) The Company shall notify the Significant Holders promptly
(and in no event later than five (5) Business Days) after receipt
of notice from the Internal Revenue Service (the "Service") of a
material deficiency assessment, and shall promptly (and in no event
later than five (5) Business Days after receipt) send the
Significant Holders copies of any notices of proposed deficiency
and any notices of deficiency received from the Service. If the
Required Holders (of all Notes) so request, the Company shall take
all reasonable actions necessary to contest such claimed deficiency
and shall appoint outside tax counsel acceptable to the Required
Holders (of all Notes) to contest such claims of deficiency and
shall direct such counsel to consult with the Required Holders (of
all Notes) and to provide the Significant Holders with periodic
status reports and assessments of the legal merits of the contest.
At the Required Holders' (of all Notes) request, such contest
shall continue through the appropriate administrative and court
procedures including appeals therefrom until such outside tax
counsel informs the Significant Holders that it is of the opinion
that further contest would be inadvisable taking into account all
factors (including any proposed settlement or compromise by the
Service).
5E. Liability Insurance. The Company shall, and the Company
shall cause each of its Subsidiaries to, maintain, at their
respective expense, such public liability, product liability and
third party property damage insurance in such amounts and with such
deductibles as are customary for similarly situated companies.
5F. Property Insurance. The Company shall, and the Company
shall cause each of its Subsidiaries to, at their respective
expense, keep and maintain its assets insured against loss or
damage by fire, theft, explosion, spoilage and all other hazards
and risks ordinarily insured against by other owners or users of
such properties in similar businesses in an amount at least equal
to the replacement cost thereof, and subject to reasonable
deductibles and co-insurance provisions.
5G. Pension Plans. The Company shall, and the Company shall
cause each of its Subsidiaries to (i) keep in full force and effect
any and all Plans which are presently in existence or may, from
time to time, come into existence under ERISA, unless such Plans
can be terminated without material liability to the Company and its
Subsidiaries in connection with such termination (as distinguished
from any continuing funding obligation); (ii) make contributions to
all of the Company's and its Subsidiaries' Plans in a timely manner
and in a sufficient amount to comply with the requirements of
ERISA; (iii) comply with all material requirements of ERISA which
relate to such Plans so as to preclude the occurrence of any
Reportable Event, Prohibited Transaction or material "accumulated
funding deficiency" as such term is defined in ERISA; and (iv)
notify the Significant Holders immediately upon receipt of any
notice of the institution of any proceeding or other action which
may result in the termination of any Plan and deliver to the
Significant Holders, promptly after the filing or receipt thereof,
copies of all reports or notices which the Company or any of its
Subsidiaries files or receives under ERISA with or from the
Internal Revenue Service (involving or potentially involving
amounts of $100,000 or more), the Pension Benefit Guaranty
Corporation, or the U.S. Department of Labor.
5H. Notice of Suit or Adverse Change in Business. The
Company shall, as soon as possible, and in any event within three
(3) Business Days after the Company learns of the following, give
written notice to the Significant Holders of (i) any material
proceeding(s) being instituted or threatened to be instituted by or
against the Company or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign), including,
without limitation, any proceeding with respect to any
environmental matter and (ii) any material adverse change in the
business, prospects, operations, assets or condition, financial or
otherwise, of the Company or any of its Subsidiaries.
5I. Maximum Obligations under Bank Agreement. The Company
will not permit the aggregate amount of Credit Extensions (as
defined in Bank Agreement) at any one time outstanding to exceed
the following amounts during the following periods:
Period Maximum Permitted Amounts
------ -------------------------
January through March $60,000,000
April through May $50,000,000
June through July $40,000,000
August through September $40,000,000
October through December $50,000,000
5J. [Intentionally Omitted]
5K. [Intentionally Omitted]
5L. [Intentionally Omitted]
5M. [Intentionally Omitted]
5N. [Intentionally Omitted]
5O. Covenant to Secure Note Equally. The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph
6A (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured so long as any such Indebtedness
shall be so secured.
6. NEGATIVE COVENANTS. So long as any Note shall remain
unpaid, the Company agrees to observe and perform for the benefit
of the holders of the Notes each of the negative covenants set
forth below:
6A. Encumbrances. The Company will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, Lien, levy,
assessment, attachment or other encumbrance of any nature
whatsoever on any of its assets (whether or not provision is made
for the equal and ratable securing of the Notes in accordance with
the provisions of paragraph 50 hereof) other than the following
"Permitted Liens":
(a) Liens granted to secure payment of Indebtedness in
an aggregate principal amount not to exceed $2,000,000 at any
time outstanding which is incurred by the Company or any of
its Subsidiaries to a financial institution or a vendor of any
assets permitted to be acquired hereunder to finance its
acquisition of such assets and which cover only those assets
acquired with the proceeds of such Indebtedness;
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being diligently contested in good
faith by appropriate proceedings and for which adequate
reserves in accordance with Generally Accepted Accounting
Principles shall have been set aside on its books;
(c) Growers Liens and Liens of carriers, warehousemen,
mechanics, materialmen and landlords incurred in the ordinary
course of business for sums not overdue or being diligently
contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with Generally Accepted
Accounting Principles shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(e) judgment Liens in existence less than 30 days after
the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance maintained with
responsible insurance companies;
(f) Liens arising under the Collateral Documents;
(g) Liens granted prior to March 27, 1996 to secure
payment of Indebtedness of the type permitted and described in
paragraph 6B(2)(ii); and
(h) Liens incurred by the Company or any Subsidiary in
addition to those described in clauses (a) through (g) above;
provided that at the time of the creation of any such Lien and
after giving effect thereto, Priority Debt shall not exceed
15% of Consolidated Tangible Net Worth.
6B. Indebtedness and Liabilities. (1) [Intentionally
Omitted]
(2) The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness except:
(i) Indebtedness under the Bank Agreement;
(ii) Indebtedness existing as of March 27, 1996
which is identified in Exhibit I hereof (exclusive of
Indebtedness of the Company's ubsidiaries owing to the
Company);
(iii) Indebtedness in an aggregate principal amount
not to exceed $2,000,000 at any time outstanding which
is incurred by the Company or any of its Subsidiaries to
a financial institution or a vendor of any assets
permitted to be acquired hereunder to finance its
acquisition of such assets;
(iv) unsecured Indebtedness incurred in the
ordinary course of business (including open accounts
extended by suppliers on normal trade terms in
connection with purchases of goods and services, but
excluding Indebtedness incurred through the borrowing of
money or Contingent Liabilities);
(v) Indebtedness in respect of Capital Lease
Obligations to the extent permitted in paragraph 6N;
(vi) Indebtedness of Sunshine from time to time
owing to the Company and incurred in the ordinary course
of business on account of the Company's payment of
ordinary course payables of Sunshine and on account of
Sunshine's properly allocable share of ordinary course
overhead expenses incurred and paid by the Company on
behalf of Sunshine, provided that the aggregate amount
of such Indebtedness shall not exceed $30,000,000
outstanding at any one time, and provided further such
Indebtedness shall not be evidenced at any time by a
promissory note or other written instrument;
(vii) Indebtedness secured by Growers Liens; or
(viii) Indebtedness under the Notes.
provided, however, that no Indebtedness otherwise permitted by
clause (iii), (iv), (v) or (vi) shall be permitted if, after giving
effect to the incurrence thereof, any Default or Event of Default
shall have occurred and be continuing.
6C(1). Consolidation, Merger, etc. The Company shall not,
and shall not permit any of its Subsidiaries to, liquidate or
dissolve, consolidate with, or merge into or with, any other
corporation, or purchase or otherwise acquire all or substantially
all of the assets of any Person (or of any division thereof)
except:
(a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Company or
any other Subsidiary, and the assets or stock of any
Subsidiary may be purchased or otherwise acquired by the
Company or any other Subsidiary; and
(b) the Company or any of its Subsidiaries may
consummate a merger in connection with an Acquisition
permitted by paragraph 6D(f) provided that the Company or such
Subsidiary is the surviving Person in such merger.
6C(2). [Intentionally Omitted]
6D. Permitted Investments. The Company shall not, and shall
not permit any of its Subsidiaries to, make, incur, assume or
suffer to exist any Investment in any other Person, except:
(a) Investments existing on March 27, 1996 and
identified in Exhibit J;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to paragraph 6B;
(d) without duplication, Investments permitted as
Capital Expenditures pursuant to paragraph 6N;
(e) [Intentionally deleted]
(f) investments incurred in order to consummate
Acquisitions otherwise permitted herein, provided that (i)
excluding shares of stock, the total consideration paid by the
Company or any of its Subsidiaries in connection with
Acquisitions (1) made during the period from March 27, 1996
through the date of termination of the Bank Agreement shall
not exceed $5,000,000 and (2) made after the date of
termination of the Bank Agreement, taken together with all
consideration paid or to be paid in connection with other
Acquisitions during the twelve months preceding the date of
any such Acquisition, shall not exceed $10,000,000 in the
aggregate in any twelve month period, (ii) such Acquisitions
are undertaken in accordance with all applicable laws; (iii)
the prior, effective written consent or approval to such
Acquisition of the board of directors or equivalent governing
body of the acquiree is obtained; and (iv) on a pro forma
basis after giving effect to such Acquisition (including any
Indebtedness to be incurred in connection therewith), no
Default or Event of Default will exist; and
(g) other Investments in an aggregate amount at any one
time not to exceed $500,000;
provided, however, that
(h) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
(i) no Investment otherwise permitted by clause (e) or
(g) shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default or Default
shall have occurred and be continuing.
6E. [Intentionally Omitted]
6F. Disposal of Property. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly,
sell, lease or otherwise dispose of (collectively, a "Disposition")
any of its assets unless, after giving effect to such proposed
Disposition, (A) the aggregate net book value of all assets that
were the subject of a Disposition during the twelve-month period
ending on the date of such Disposition does not exceed 15% of
Consolidated Tangible Assets as of the end of the Fiscal Year of
the Company immediately preceding the date of such Disposition, and
(B) no Default or Event of Default shall have occurred and be
continuing. Any Disposition of shares of stock of any Subsidiary
shall, for purposes of this Section, be valued at an amount that
bears the same proportion to the total assets of such Subsidiary as
the number of such shares bears to the total number of shares of
stock of such Subsidiary. Notwithstanding the foregoing, the
following Dispositions shall not be taken into account under this
paragraph 6F:
(i) any Disposition of assets by the Company or a
Subsidiary to the Company or a wholly-owned Subsidiary
of the Company;
(ii) any Disposition in the ordinary course of the
Company's or any of its Subsidiary's business of
inventory, or materials or equipment which is no longer
required in the operation of the Company's or such
Subsidiary's business or is uneconomic or obsolete; and
(iii) any Disposition the net proceeds of which are
applied within 180 days of such Disposition to (x) the
acquisition of fixed assets that are used in the
Company's or any of its Subsidiary's business or (y)
repayment on a pro rata basis of Senior Funded
Indebtedness, together with the Yield-Maintenance Amount
with respect to the Notes so repaid.
6G. [Intentionally Omitted]
6H. Distributions. On and at all times after March 27, 1996
the Company shall not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of
any class of capital stock (now or hereafter outstanding) of the
Company or on any warrants, options or other rights with respect to
any shares of any class of capital stock (now or hereafter
outstanding) of the Company(other than dividends or distributions
payable in its common stock or warrants to purchase its common
stock or split-ups or reclassifications of its stock into
additional or other shares of its common stock) or apply, or permit
any of its Subsidiaries to apply, any of its funds, property or
assets to the purchase, redemption, sinking fund or other
retirement of, or agree or permit any of its Subsidiaries to
purchase or redeem, any shares of any class of capital stock (now
or hereafter outstanding) of the Company, or warrants, options or
other rights with respect to any shares of any class of capital
stock (now or hereafter outstanding) of the Company; provided, that
so long as no Event of Default or Default has occurred and is
continuing and it is reasonably foreseeable that, after giving
effect to such distribution, the Company will continue to be in
compliance with the financial ratios set forth in paragraph 6R of
this Agreement, the Company may (i) pay dividends to its common
stockholders in an aggregate amount not to exceed 25% of
consolidated net earnings, on a cumulative basis, commencing
January 1, 1996 or (ii) purchase or redeem any shares of any class
of capital stock (now or hereafter outstanding) of the Company in
an amount not to exceed $1,000,000.
6I. Change of Fiscal Year. The Company shall not, and shall
not permit any of its Subsidiaries to change its fiscal year end
without the prior written consent of the Required Holders (of all
Notes), which consent shall not be unreasonably withheld.
6J. Transactions with Affiliates. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any
transaction including, without limitation, the purchase, lease,
sale or exchange of any property to, from or with, or the rendering
or purchase of any service to or from, any Affiliate except (i) in
the ordinary course of and pursuant to the reasonable requirements
of any of the Company's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's length transaction with an
unaffiliated Person and (ii) as to the leases set forth on Schedule
6J in accordance with the terms hereof in effect on the date
hereof.
6K. Other Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business unrelated
to their current businesses, engage in any transaction out of the
ordinary course of business, or engage in any transaction which
materially and adversely affects the ability of the Company to pay
and discharge its liabilities and obligations to the holders of the
Notes.
6L. Leases. The Company shall not, and shall not permit any
of its Subsidiaries to, enter into at any time any Rental
Obligation, except an aggregate amount of Rental Obligations of the
Company and its Subsidiaries incurred after December 31, 1995 of
less than (excluding escalations resulting from a rise in the
consumer price or similar index) $650,000 for any Fiscal Year;
provided, however, that any calculation made for purposes of this
paragraph shall exclude any amounts required to be expended for
maintenance and repairs, insurance, taxes, assessments, and other
similar charges.
6M. Amendments to Certain Documents. The Company will not
consent to or permit any amendment, supplement or other
modification of any of the terms or provisions contained in, or
applicable to, the Teachers Note Agreement, the Bank Agreement or
any document or instrument evidencing or applicable to any
Subordinated Debt, other than any amendment, supplement or other
modification (certified copies of which have been delivered to
Prudential) which (i) extends the date or reduces the amount of any
required repayment or redemption or (ii) causes the terms and
provisions of such agreement, document or instrument to conform to
and in any case not conflict with the terms and provisions
hereunder, without the consent of the Required Holders, which
consent shall not be unreasonably withheld or delayed. Without
limiting the foregoing, the Company will not consent to or permit
any amendment, supplement or other modification which has the
effect of (i) increasing the interest rate or fees under such
agreement, (ii) increasing the amount of obligations of the Company
or any Subsidiary under such agreement, (iii) amending the
financial covenants contained in such agreement or (iv) with
respect to the Teachers Note Agreement, permitting any prepayment
of obligations under such agreement.
6N. Capital Expenditures. The Company shall not, and shall
not permit any of its Subsidiaries to, make Capital Expenditures in
any Fiscal Years, except (a) Capital Expenditures incurred before
December 31, 1996 related to acquisitions for the Fisher Nut Co.
business, (b) other Capital Expenditures incurred during Fiscal
Year 1996 not exceeding $8,200,000 in the aggregate on a
consolidated basis, (c) Capital Expenditures incurred during Fiscal
Year 1997 not exceeding $7,200,000 in the aggregate on a
consolidated basis, and (d) Capital Expenditures in subsequent
Fiscal Years that do not exceed in the aggregate for each such
fiscal year $10,000,000.
6O. Teachers Notes. (1) Neither the Company nor any
Subsidiary shall make after October 1, 1995 any payment or
prepayment (whether optional or scheduled) of principal, interest
or other amounts with respect to the Teachers Subordinated Notes or
the other Subordinated Indebtedness (as defined in the Teachers
Note Agreement), except that the Company may make scheduled
payments to the extent such payments do not conflict with any terms
of subordination applicable thereto; purchase any Indebtedness or
take any other action with respect to the Teachers Indebtedness in
contravention of the Teachers Note Agreement, including, without
limitation, the subordination provisions thereof; take or omit to
take any action whereby the subordination of the Indebtedness or
any part thereof evidenced by Teachers Subordinated Notes to the
Notes and obligations under this Agreement might be terminated,
impaired or adversely affected (except for conversion of the
Teachers Subordinated Notes into capital stock of the Company), or
omit to give the holder(s) of the Notes prompt written notice of
any notice received from any holder of any Teachers Indebtedness,
including, without limitation, any notice received of any default
under any agreement or instrument relating to any Teachers
Indebtedness by reason whereof such indebtedness might become or be
declared to be due or payable. The Required Holder(s) may from
time to time give such notices to Teachers as are contemplated by
the subordination provisions of the Teachers Note Agreement.
(2) Neither the Company nor any Subsidiary shall make any
optional prepayment of principal with respect to the Teachers
Senior Notes without providing the holders of the Notes written
notice thereof at the same time as notice is given to Teachers with
respect to such prepayment (which notice in any case shall not be
given less than ten (10) Business Days or more than sixty (60) days
prior to such proposed date of prepayment). Such notice shall
contain an offer by the Company to the holders of Notes to purchase
on a date (the "Prepayment Date") no later than the date that the
Teachers Senior Notes are scheduled to be prepaid that outstanding
principal amount of Notes which bears the same proportion to the
aggregate principal amount of Notes then outstanding as the
outstanding principal amount of Teachers Senior Notes being
prepaid bears to the aggregate principal amount of Senior Teachers
Notes then outstanding. If a holder accepts such offer, the
Company shall on the Prepayment Date purchase (and each such holder
thereof shall sell) such holder's pro rata share (based on the
proportion of the outstanding principal amount of all Notes held
by such holder) of the principal amount of Notes that the Company
is offering to purchase hereunder at a purchase price equal to the
aggregate outstanding principal amount thereof, together with
interest thereon to the date of purchase and the Yield-Maintenance
Amount, if any, with respect thereto (calculated as if the purchase
of such Notes were an optional prepayment thereof as provided in
paragraph 4B hereof); provided, however, if a holder notifies the
Company prior to the proposed Prepayment Date that such holder is
rejecting the Company's offer to purchase such holder's Notes, the
Company shall not be obligated to purchase, and such holder shall
not be obligated to sell, such holder's Notes under this paragraph
6O(2). For purposes of this paragraph 6O(2), a holder's failure
prior to the Prepayment Date to reject in writing any offer made by
the Company under this paragraph to purchase such holder's Notes
shall be deemed an acceptance of such offer. No holder of any such
Note shall be required to make any representation or warranty in
connection with such sale, other than with respect to its ownership
of its Notes. All purchases of any holder's Notes pursuant to
this paragraph 6O(2) shall be applied ratably to any Series of
Notes then outstanding held by such holder. Any partial prepayment
of the Notes pursuant to this paragraph 6O(2) shall be applied in
satisfaction of required prepayments of principal in inverse order
of their scheduled maturity dates. Notwithstanding the foregoing,
if the holders of the Teachers Senior Notes waive the payment of
any Make-Whole Amount (as defined in the Teachers Note Agreement)
with respect to any optional prepayment of the Teachers Senior
Notes, and no other prepayment fee or similar amount is payable in
connection therewith, the Company shall not be obligated with
respect to such optional prepayment to purchase under this
paragraph 6O(2) all or any portion of the Notes of a holder that
has accepted the Company's offer to purchase made in connection
with such optional prepayment, unless such holder waives in writing
prior to or on the Prepayment Date the payment of any Yield-
Maintenance Amount that would be due upon such purchase.
6P. Take or Pay Contracts. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into or be a party to
any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms
requires that payment be made by the Company or such Subsidiary
regardless of whether such materials, supplies, other property or
services are delivered or furnished to it.
6Q. Negative Pledges, Restrictive Agreements, etc. The
Company shall not, and shall not permit any of its Subsidiaries to,
enter into any agreement (excluding (i) this Agreement, (ii) any
other Ancillary Agreement, (iii) any amendment to the Bank
Agreement or the Teachers Note Agreement that causes the terms and
provisions of such agreement to conform to and in any case not
conflict with the terms and provisions hereunder that has been
delivered to Prudential pursuant to this Agreement and (iv) any
agreement governing any Indebtedness secured by Liens permitted by
paragraph 6(A)(a) as to the assets financed with the proceeds of
such Indebtedness) prohibiting:
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Company or any party to a
Guaranty to amend or otherwise modify this Agreement or any
other Ancillary Agreement; or
(b) the ability of any Subsidiary to make any payments,
directly or indirectly, to the Company by way of dividends,
advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and
accruals or other returns on investments, or any other
agreement or arrangement which restricts the ability of any
such Subsidiary to make any payment, directly or indirectly,
to the Company.
6R. Financial Covenants. The Company shall not permit:
(a) Tangible Net Worth at any time to be less than the
sum of (i) $55,000,000 plus (ii) as of the end of each Fiscal
Quarter, an amount equal to 50% of the Company's consolidated
net earnings, on a cumulative basis, commencing on January 1,
1996; provided, however, that in the event that the Company
has a consolidated net loss for any Fiscal Quarter,
consolidated net earnings for purposes of this clause (a)
shall be deemed to be zero for such Fiscal Quarter.
(b) The ratio of (i) Senior Funded Indebtedness to (ii)
Total Capitalization of the Company, on a consolidated basis,
at any time to exceed 57%.
(c) The ratio of (i) Funded Indebtedness to (ii) Total
Capitalization of the Company, on a consolidated basis, after
the incurrence of any additional Subordinated Debt (including
any increase in the amount of any existing Subordinated Debt)
to exceed 60%.
(d) The Fixed Charge Coverage Ratio to be less than the
following amounts during the following periods:
Minimum Fixed
Charge Coverage Ratios For the Quarter Ended
---------------------- ---------------------
1.00 December 31, 1996
.50 March 27, 1997
1.00 June 26, 1997
1.75 September 25, 1997
2.00 December 31, 1997
(e) The Rolling Fixed Charge Coverage Ratio on a
consolidated basis as of the end of each Fiscal Quarter
commencing with the Fiscal Quarter ending March 26, 1998 to be
less than 1.75 to 1.0.
(f) The Current Ratio at any time to be less than 1.25
to 1.0.
6S. The Company will not permit any Subsidiary to create,
assume, guarantee or otherwise become liable in respect of any
Indebtedness (excluding any Indebtedness arising under the
Guaranties or any guaranty by Sunshine or Quantz of the Bank
Obligations or any guaranty by Sunshine of the Company described in
paragraph 6B(2)(ii)) unless at the time such Subsidiary becomes
liable with respect to such Indebtedness and after giving effect
thereto Priority Debt shall not exceed 15% of Consolidated Tangible
Net Worth.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of or Yield-Maintenance Amount payable with respect
to any Note when the same shall become due, either by the
terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 5 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether
as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation
for money borrowed (or any Capital Lease Obligation, any
obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase
money mortgage or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement,
term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder
or under any such agreement shall occur and be continuing) and
the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee
on behalf of such holder or holders) to cause, such obligation
to become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to
the Company or any subsidiary) shall occur and be continuing
exceeds $1,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement
shall be false or misleading in any material respect on the
date as of which made; or
(v) the Company fails to perform or observe any
agreement contained in paragraph 5F or paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure
shall not be remedied within 10 days after the Company
receives written notice thereof from any Significant Holder;
or
(vii) the Company or any subsidiary makes an assignment
for the benefit of creditors; or
(viii) any decree or order for relief in respect of the
Company or any subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency,
readjustment of debt or liquidation or similar law, whether
now or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings
relating to the Company or any Subsidiary under the Bankruptcy
Law of any other jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any
Subsidiary and the Company or such Subsidiary by any act
indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in
any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of
the Company and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of
the Company and its Subsidiaries (determined in accordance
with Generally Accepted Accounting Principles) or which
requires the divestiture of assets, or stock of a Subsidiary,
which shall have contributed a substantial part of the
consolidated net income of the Company and its Subsidiaries
(determined in accordance with Generally Accepted Accounting
Principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xiii) there shall be entered against the Company or
any of its Subsidiaries any one or more judgments or decrees
in excess of $500,000 in the aggregate at any one time
outstanding for the Company or any Subsidiary, excluding those
judgments or decrees (A) that shall have been stayed, vacated
or bonded, (B) that shall have been outstanding less than 30
days from the entry thereof, (C) for and to the extent the
Company or any such Subsidiary is insured and with respect to
which the issuer specifically has assumed responsibility in
writing therefor, or (D) for and to the extent to which the
Company and/or its Subsidiaries are otherwise indemnified if
the terms of such indemnification are satisfactory to the
Required Holders in their sole discretion; or
(xiv) (A) there shall have been instituted by the
Pension Benefit Guaranty Corporation, the Company or any ERISA
Affiliate of steps to terminate a Plan or to reorganize,
withdraw from or terminate a Multiemployer Plan if as a result
of such reorganization, withdrawal or termination, the Company
or any ERISA Affiliate could be required to make a
contribution to such Plan or Multiemployer Plan, or could
incur a liability or obligation to such Plan or Multiemployer
Plan in excess of $250,000, or (B) a contribution failure
occurs with respect to any Plan sufficient to give rise to a
lien under Section 302(f) of ERISA; or
(xv) an "Event of Default" as defined in the Bank
Agreement as amended from time to time after the date hereof
shall occur and be continuing thereunder; or an "Event of
Default" as defined in the Teachers Note Agreement as amended
from time to time after the date hereof shall occur and be
continuing thereunder; or
(xvi) the Company, any Affiliate or any Subsidiary
shall fail to comply with or to perform any provision of, or
otherwise be in default (beyond any applicable grace period)
under, any of the Ancillary Agreements; or any of the
Ancillary Agreements shall fail to remain in full force and
effect; or any Person shall endeavor to take any action to
discontinue, terminate or revoke any of the Ancillary
Agreements or to assert the invalidity thereof; or
(xvii) Any Change of Control shall occur; or
(xviii) the Collateral Agent shall cease to have a first
priority perfected security interest and lien (subject to
liens permitted pursuant to paragraph 6A) in substantially all
of the property of the Company, Sunshine and Quantz pursuant
to the Collateral Documents; or
(xix) the Company shall breach any of the covenants set
forth in Section (A) 9.1 or 9.2 of the Teachers Note Agreement
and such breach shall have continued for a period of more than
15 days after any Authorized Officer has actual knowledge
thereof or the Company receives written notice thereof from
any holder of a Note or any holder of a Senior Note (as
defined in the Teachers Note Agreement) or (B) 10.1 or 10.2 of
the Teachers Note Agreement and such breach shall have
continued for a period of more than 30 days after any
Authorized Officer has actual knowledge thereof or the Company
receives written notice thereof from any holder of a Note or
any holder of a Subordinated Note (as defined in the Teachers
Note Agreement); or
(xx) any Bank or the Bank Agent refuses for more than 5
consecutive Business Days to make any loan, issue any letter
of credit or create any bankers' acceptance requested by the
Company under the Bank Agreement where such loan, letter of
credit or bankers' acceptance would not cause the Company to
exceed the limitations set forth in Section 2.1.1 or 3.1 of
the Bank Agreement or the availability under the Borrowing
Base (as defined in the Bank Agreement);
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A, the holder of any Note (other
than the Company or any of its Subsidiaries or Affiliates) may at
its option, by notice in writing to the Company, declare such Note
to be, and such Note shall thereupon be and become, immediately due
and payable at par together with interest accrued thereon and
together with the Yield Maintenance Amount, if any, with respect to
the Notes, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company, (b) if
such event is an Event of Default specified in clause (viii), (ix)
or (x) of this paragraph 7A with respect to the Company, all of the
Notes at the time outstanding shall automatically become
immediately due and payable at par together with interest accrued
thereon and together with the Yield-Maintenance Amount, if any,
with respect to the Notes, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company,
and (c) if such event is any Event of Default, the Required
Holder(s) of any Series of Notes may at its or their option, by
notice in writing to the Company, declare all of the Notes of such
Series to be, and all of the Notes of such Series shall thereupon
be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if
any, with respect to each Note of such Series, without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Company.
7B. Rescission of Acceleration. At any time after any or
all of the Notes of a Series shall have been declared immediately
due and payable pursuant to paragraph 7A, the Required Holder(s) of
such Series may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company
shall have paid all overdue interest on the Notes of such Series,
the principal of and Yield-Maintenance Amount, if any, payable with
respect to any Notes of such Series which have become due otherwise
than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the
rate specified in the Notes of such Series, (ii) the Company shall
not have paid any amounts which have become due solely by reason of
such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason
of such declaration, shall have been cured or waived pursuant to
paragraph 11C, and (iv) no judgment or decree shall have been
entered for the payment of any amounts due pursuant to the Notes of
such Series or this Agreement (as this Agreement pertains to the
Notes of such Series). No such rescission or annulment shall
extend to or affect any subsequent Event of Default or Default or
impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph
7A or any such declaration shall be rescinded and annulled pursuant
to paragraph 7B, the Company shall forthwith give written notice
thereof to the holder of each Note at the time outstanding.
7D. Other Remedies. If any Event of Default or Default
shall occur and be continuing, the holder of any Note may proceed
to protect and enforce its rights under this Agreement, the other
Ancillary Agreements and such Note by exercising such remedies as
are available to such holder in respect thereof hereunder,
thereunder and under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in any
of the other Ancillary Agreements or in aid of the exercise of any
power granted in this Agreement or in any of the other Ancillary
Agreements. No remedy conferred in this Agreement upon the holder
of any Note or in any of the other Ancillary Agreements is intended
to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy
conferred herein and in the Ancillary Agreements or now or
hereafter existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
8A. Organization. The Company is a corporation duly
organized and existing in good standing under the laws of the State
of Delaware, and each Subsidiary is duly organized and existing in
good standing under the laws of the jurisdiction in which it is
incorporated. The names and jurisdictions of incorporation of each
Subsidiary are set forth on Exhibit F.
8B. Financial Statements. The Company has furnished each
Purchaser of the Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) a
consolidated balance sheet of the Company and its Subsidiaries as
of the last day in each of the five fiscal years of the Company
most recently completed prior to the date as of which this
representation is made or repeated to such Purchaser (other than
fiscal years completed within 90 days prior to such date for which
audited financial statements have not been released) and
consolidated statements of income, stockholders' equity and cash
flows of the Company and its Subsidiaries for each such year, all
certified by Price Waterhouse (or such other accounting firm as may
be reasonably acceptable to such Purchaser); and (ii) a
consolidated balance sheet of the Company and its Subsidiaries as
at the end of the quarterly period (if any) most recently completed
prior to such date and after the end of such fiscal year (other
than quarterly periods completed within 45 days prior to such date
for which financial statements have not been released) and the
comparable quarterly period in the preceding fiscal year and
consolidated statements of income, stockholders' equity and cash
flows of the Company and its Subsidiaries for the periods from the
beginning of the fiscal years in which such quarterly periods are
included to the end of such quarterly periods, prepared by the
Company. Such financial statements (including any related
schedules and/or notes) are true and correct in all material
respects (subject, as to interim statements, to changes resulting
from audits and year-end adjustments), have been prepared in
accordance with Generally Accepted Accounting Principles and show
all liabilities, direct and contingent, of the Company and its
Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the
Company and its Subsidiaries as at the dates thereof, and the
statements of income and statements of cash flows fairly present
the results of the operations of the Company and its Subsidiaries
for the periods indicated. There has been no material adverse
change in the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole
since the end of the most recent fiscal year for which such audited
financial statements have been furnished.
8C. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary or any
properties or rights of the Company or any Subsidiary, by or before
any court, arbitrator or administrative or governmental body which
could be reasonably expected to result in any material adverse
change in the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
8D. Outstanding Indebtedness. Neither the Company nor any
subsidiary has any Indebtedness outstanding except as permitted by
paragraph 6B. There exists no default under the provisions of any
instrument evidencing such Indebtedness or of any agreement
relating thereto.
8E. Title to Properties. The Company has, and each
subsidiary has, good and indefeasible title to its respective real
properties (other than properties which it leases) and good title
to all of its other properties and assets, including the properties
and assets reflected in the most recent audited balance sheet
referred to in paragraph 8B (other than properties and assets
disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by paragraph 6A. The Company
and each subsidiary enjoys peaceful and undisturbed possession of
all leases necessary in any material respect for the conduct of
their respective businesses, none of which contains any unusual or
burdensome provisions which could be reasonably expected to
materially affect or impair the operation of such businesses. All
such leases are valid and subsisting and are in full force and
effect.
8F. Taxes. The Company has, and each subsidiary has, filed
all Federal, State and other income tax returns which, to the best
knowledge of the officers of the Company, are required to be filed,
and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have
become due, except such taxes as are being contested in good faith
by appropriate proceedings for which adequate reserves have been
established in accordance with Generally Accepted Accounting
Principles.
8G. Conflicting Agreements and Other Matters. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, property or
assets, or financial condition. Neither the execution nor delivery
of any of the Ancillary Agreements, nor the offering, issuance and
sale of the Notes, nor fulfillment of nor compliance with the terms
and provisions of any of the Ancillary Agreements will conflict
with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of,
or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to, the
charter or by-laws of the Company or any of its Subsidiaries, any
award of any arbitrator or any agreement (including any agreement
with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its
Subsidiaries is subject. Neither the Company nor any of its
Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of the Company
or any of its subsidiaries, any agreement relating thereto or any
other contract or agreement (including its charter) which limits
the amount of, or otherwise imposes restrictions on the incurring
of, Indebtedness of the Company of the type to be evidenced by the
Notes except as set forth in the agreements listed in Exhibit G
attached hereto.
8H. Offering of Notes. Neither the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes
or any similar security of the Company for sale to, or solicited
any offers to buy the Notes or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto
with, any Person other than Institutional Investors, and neither
the Company nor any agent acting on its behalf has taken or will
take any action which would subject the issuance or sale of the
Notes to the provisions of section 5 of the Securities Act or to
the provisions of any securities or Blue sky law of any applicable
jurisdiction.
8I. Regulation G, Etc. Neither the Company nor any
subsidiary owns or has any present intention of acquiring any
"margin stock" as defined in Regulation G (12 CFR Part 207) of the
Board of Governors of the Federal Reserve System (herein called
"margin stock"). The proceeds of sale of the Notes were used to
refinance certain existing indebtedness of the Company, fund
certain capital expenditures and working capital expenses and to
restructure the Company's capitalized lease obligations with
respect to its facility on Busse Road in Elk Grove Village,
Illinois. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any indebtedness which
was originally incurred to purchase or carry any stock that is
currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning
of such Regulation G. Neither the Company nor any agent acting on
its behalf has taken or will take any action which might cause this
Agreement, the Collateral Documents or the Notes to violate
Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, as amended, in each case as in
effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan (other than a Multiemployer
Plan). No liability to the Pension Benefit Guaranty Corporation
has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan)
by the Company, any Subsidiary or any ERISA Affiliate which is or
would be materially adverse to the business, condition (financial
or otherwise) or operations of the Company and its Subsidiaries
taken as a whole. Neither the Company, any Subsidiary or any ERISA
Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer
Plan which is or would be materially adverse to the Company and its
Subsidiaries taken as a whole. The execution and delivery of this
Agreement and the issuance and sale of the Notes will be exempt
from, or will not involve any transaction which is subject to the
prohibitions of, section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed
under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code. The representation by the Company in the
next preceding sentence is made in reliance upon and subject to the
accuracy of each Purchaser's representation in paragraph 9B.
8K. Governmental Consent. Neither the nature of the Company
or of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in connection
with the offering, issuance, sale or delivery of the Notes is such
as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings
after the date of closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with
the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions of this Agreement or the
Notes.
8L. Environmental Compliance. The Company and its
Subsidiaries and all of their respective properties and facilities
have complied at all times and in all respects with all federal,
state, local and regional statutes, laws, ordinances and judicial
or administrative orders, judgments, rulings and regulations
relating to protection of the environment except, in any such case,
where failure to comply would not result in a material adverse
effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
8M. Hostile Tender Offers. None of the proceeds of the sale
of any Notes will be used to finance a Hostile Tender Offer.
8N. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to any Purchaser by or
on behalf of the Company in connection herewith contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and
therein not misleading. There is no fact peculiar to the Company
or any of its Subsidiaries which materially adversely affects or in
the future may (so far as the Company can now foresee) materially
adversely affect the business, property or assets, or financial
condition of the Company and its Subsidiaries taken as a whole and
which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to the Purchasers
by the Company prior to the date hereof in connection with the
transactions contemplated hereby.
8O. Authorization and Delivery. Each Ancillary Agreement to
which the Company or any of its Subsidiaries is a party has been
duly authorized by all requisite corporate action and duly executed
and delivered by authorized officers of the Company and such
Subsidiary, and are valid obligations of the Company and such
Subsidiary, legally binding upon and enforceable against the
Company and such Subsidiary in accordance with its terms, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
9. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser
represents as set forth below in paragraph 9. Such representations
shall survive the execution and delivery of this Agreement and, to
the extent applicable, the payment of the Notes.
9A. Nature of Purchase. Such Purchaser is not acquiring the
Notes to be purchased by it hereunder with a view to or for sale in
connection with any distribution thereof within the meaning of the
Securities Act, provided that the disposition of such Purchaser's
property shall at all times be and remain within its control. Each
Purchaser hereby acknowledges that the Notes to be purchased have
not been registered under the Securities Act, and therefore, cannot
be resold unless they are registered under the Securities Act or an
exemption from registration is available.
9B. Source of Funds. No part of the funds being used by
such Purchaser to pay the purchase price of the Notes being
purchased by such Purchaser hereunder constitutes assets allocated
to any separate account maintained by such Purchaser. For the
purpose of this paragraph 9B, the terms "separate account" and
"employee benefit plan" shall have the respective meanings
specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the
terms defined in the text of any provision hereof shall have the
respective meanings specified therein, and the following terms
shall have the meanings specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City are
required or authorized to be closed.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that (i) is to be prepaid pursuant to
paragraph 4A(2) or 4B or purchased by the Company pursuant to
paragraph 6O(2) or (ii) is declared to be immediately due and
payable pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on such Note is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the
Business Day next preceding the Settlement Date with respect to
such Called Principal, on the display designated as "Page 678" on
the Telerate Service (or such other display as may replace Page 678
on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields
shall not be reported as of such time or the yields reported as of
such time shall not be ascertainable, (ii) the Treasury Constant
Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-
equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between yields reported for various
maturities.
"Remaining Average Life" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) each Remaining Scheduled Payment of such Called Principal (but
not of interest thereon) by (b) the number of years (calculated to
the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal
and interest thereon that would be due on or after the Settlement
Date with respect to such Called Principal if no payment of such
Called Principal were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal (i)
is to be prepaid pursuant to paragraph 4A(2) or 4B or purchased by
the Company pursuant to paragraph 6O(2) or (ii) is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Yield-Maintenance Amount" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted
Value of the Called Principal of such Note over the sum of (i) such
Called Principal plus (ii) interest accrued thereon as of
(including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
l0B. Other Terms.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or
indirectly, in (i) the acquisition of all or substantially all of
the assets of a Person, or of any business or division of a Person,
(ii) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or
(iii) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided
that the Company or the Subsidiary is the surviving entity.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Subsidiary. A Person shall be
deemed to control a corporation if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Second Amended and Restated Note
Agreement, as amended, restated, supplemented or otherwise modified
from time to time.
"Ancillary Agreements" shall mean this Agreement, the Notes,
the Collateral Documents, the Collateral Agency Agreement and the
Guaranties and the other agreements, documents, certificates and
instruments now or hereafter executed or delivered by the Company,
any Subsidiary or any Affiliate (or any successor of such Person)
in connection with this Agreement.
"Attributable Debt" shall mean, as to any particular lease
relating to a sale and leaseback transaction, the present value of
Rental Payments required to be paid by the Company or any
Subsidiary under such lease during the remaining term thereof
(determined in accordance with Generally Accepted Accounting
Principles using a discount factor equal to the interest rate
implicit in such lease).
"Authorized Officer" shall mean (i) in the case of the
Company, its president, its chief executive officer, its chief
financial officer, its executive vice president, its treasurer and
any vice president of the Company designated as an "Authorized
Officer" of the Company for the purpose of this Agreement in an
Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Prudential and
(ii) in the case of Prudential, Allen Weaver, Mark Hoffmeister,
Scott von Fischer, Marie Frioramonti and any vice president of
Prudential designated as an "Authorized Officer" for the purpose of
this Agreement in a certificate executed by one of its Authorized
Officers or a member of Prudential's law department. Any action
taken under this Agreement on behalf of the Company by any
individual who on or after the date of this Agreement shall have
been an Authorized Officer of the Company and whom Prudential in
good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though
such individual shall have ceased to be an Authorized Officer of
the Company, and any action taken under this Agreement on behalf of
Prudential by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of Prudential, and
whom the Company in good faith believes to be an Authorized Officer
of Prudential at the time of such action shall be binding on
Prudential even though such individual shall have ceased to be an
Authorized Officer of Prudential.
"Bainbridge Industrial Revenue Bond" means those industrial
development revenue bonds known as Series 1987 Bonds issued to
finance the acquisition, construction and equipping of a
manufacturing facility of the Company by the Decatur County-
Bainbridge Industrial Development Authority ("DCBIDA")under that
certain Trust Indenture dated as of June 1, 1987 between DCBIDA and
Trust Company Bank.
"Bank Agent" shall mean Bank of America Illinois in its
capacity as agent under the Bank Agreement.
"Bank Agreement" shall mean that certain Credit Agreement
dated as of March 27, 1996 among the Company, as Borrower, and Bank
of America Illinois, The Northern Trust Company and National City
Bank as lenders, and Bank of America Illinois as agent for such
lenders, together with the Loan Documents (as defined therein), all
as amended, modified and in effect from time to time with the
consent of the Required Holders.
"Bank Obligations" shall mean the "Obligations" as defined in
the Bank Agreement (which shall include additional advances under
the Bank Agreement as amended from time to time whether or not
permitted under the Bank Agreement as of the date hereof but
subject to the restrictions set forth in paragraph 6M as in effect
on the date hereof) as in effect on the date hereof and with such
amendments thereto as the Required Holders may consent to in
writing.
"Bankruptcy Law" shall have the meaning specified in clause
(viii) of paragraph 7A.
"Banks" shall mean Bank of America Illinois, The Northern
Trust Company and National City Bank, and Bank of America Illinois,
in its capacity as agent under the Bank Agreement, and their
respective successors and assigns and any other party that becomes
a lender under the Bank Agreement.
"Capital Expenditures" means, for any period, the aggregate
amount of all expenditures of the Company and its Subsidiaries for
fixed or capital assets made during such period which, in
accordance with Generally Accepted Accounting Principles, would be
classified as capital expenditures.
"Capital Lease Obligation" shall mean any rental obligation
which, under Generally Accepted Accounting Principles, is or will
be required to be capitalized on the books of the Company or any
Subsidiary taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such
principles.
"Cash Equivalent Investment" means, at any time:
(i) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by the
United States Government;
(ii) commercial paper, maturing not more than nine
months from the date of issue, which is issued by
(a) a corporation (other than an Affiliate of the
Company) organized under the laws of any state of the
United States or of the District of Columbia and rated
A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc., or
(b) any Bank (or its holding company);
(iii) any certificate of deposit or banker's acceptance,
maturing not more than one year after such time, which is
issued by either
(a) a commercial banking institution that is a
member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less
than $100,000,000, or
(b) any Bank; or
(iv) any repurchase agreement entered into with any Bank
(or other commercial banking institution of the stature
referred to in clause (iii)(a)) which
(a) is secured by a fully perfected security
interest in any obligation of the type described in any
of clauses (i) through (iii); and
(b) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial
banking institution) thereunder.
"Change in Control" means:
(i) the failure of Jasper B. Sanfilippo and Mathias
Valentine, their respective immediate family members, and
certain trusts created for the benefit of their respective
sons and daughters to own, in the aggregate, shares of voting
stock of the Company, on a fully diluted basis, representing
the right to elect a majority of the directors of the Company;
or
(ii) the failure of the Company to own directly and
beneficially, 100% of Sunshine's or Quantz's outstanding
shares of common stock of all classes.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral Agent" shall mean Bank of America Illinois, in its
capacity as agent for the Secured Lenders (as defined in the
Security Agreement) under the Collateral Agency Agreement, together
with any successor or replacement agent which may be appointed
pursuant to the Collateral Agency Agreement.
"Collateral Agency Agreement" shall have the meaning given to
the term "Intercreditor and Collateral Agency Agreement" in the
Security Agreement.
"Collateral Documents" shall have the meaning given such term
in the Security Agreement.
"Consolidated Interest Expense" means, for any period, the
total interest expense (including interest expense attributable to
Capital Lease Obligations) of the Company and its consolidated
Subsidiaries, determined in accordance with Generally Accepted
Accounting Principles in a manner consistent with that applied in
the preparation of the audited financial statements referred to in
paragraph 8B.
"Consolidated Net Income" means, for any period, the
consolidated net income for the Company and its Subsidiaries as
reflected on its consolidated statement of income for such period,
determined in accordance with Generally Accepted Accounting
Principles in a manner consistent with that applied in the
preparation of the audited financial statements referred to in
paragraph 8B.
"Consolidated Tangible Assets" shall mean as of any date the
consolidated assets of the Company and its Subsidiaries as of such
date less any assets included therein properly classified as
intangible assets, in each case determined in accordance with
Generally Accepted Accounting Principles.
"Consolidated Tangible Net Worth" means, at any time, the
total of stockholders equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury
stock) of the Company and its consolidated Subsidiaries calculated
in accordance with Generally Accepted Accounting Principles, less
the sum of the total amount of any intangible assets. Intangible
assets shall include, without limitation, unamortized debt discount
and expense, unamortized deferred charges and goodwill.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment,
to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the
shares of any other Person. The amount of any Person's obligation
under any Contingent Liability shall (subject to any limitation set
forth therein) be deemed to be the outstanding principal amount (or
maximum principal amount, if larger) of the debt, obligation or
other liability guaranteed thereby.
"Current Debt" shall mean, without duplication, (i) the
"Revolving Loan Accounts" and the "Aggregate Outstanding Acceptance
Amount" as defined in the Bank Agreement (and to the extent the
Bank Agreement shall be supplemented or replaced in whole or in
part by any other credit facility then Current Debt shall include
any comparable account by any other name under any such credit
facility) and (ii) all indebtedness of the Company and its
Subsidiaries for borrowed money or evidenced by notes payable or
drafts accepted representing extensions of credit which by its
terms or by the terms of any instrument or agreement relating
thereto matures on demand or within one year from the date of the
creation thereof.
"Current Liabilities" shall mean all Liabilities of the
Company on a consolidated basis which should, in accordance with
Generally Accepted Accounting Principles consistently applied, be
classified as current liabilities, and in any event shall include
all Indebtedness payable on demand or within one year from the date
of determination without any option on the part of the obligor to
extend or renew beyond such year, all accruals for federal or other
taxes based on or measured by income and payable within such year,
and the current portion of Indebtedness required to be paid within
one year, including, without limitation, the principal amount of
the outstanding Bank Obligations. The term "Current Liabilities"
shall not include the Company's obligations with respect to the
Decatur County Industrial Revenue Bonds to the extent that such
obligations would not constitute Current Liabilities but for the
fact that during the year prior to a reset date thereunder such
bonds are subject to mandatory redemption.
"Current Ratio" means the ratio of (i) consolidated current
assets of the Company and its Subsidiaries to (ii) consolidated
current liabilities of the Company and its Subsidiaries except
current liabilities with respect to deferred taxes.
"EBIT" means, for any period, an amount equal to the sum of
(i) Consolidated Net Income for such period; plus (ii) the
aggregate amount of Consolidated Interest Expense that was deducted
for such period in determining Consolidated Net Income; plus (iii)
the aggregate amount that was deducted in respect of Federal,
state, local, and foreign income taxes of the Company and its
consolidated Subsidiaries for such period in determining
Consolidated Net Income; plus (iv) the aggregate amount of non-cash
losses arising other than in the ordinary course of business for
the Company and its consolidated Subsidiaries during such period;
minus (v) the aggregate amount of non-cash gains arising other than
in the ordinary course of business for the Company and its
consolidated Subsidiaries during such period.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within
the meaning of section 414(b) of the Code, or any trade or business
which is under common control with the Company within the meaning
of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of notice,
or the lapse of time, or the happening of any further condition,
event or act, and "Default" shall mean any of such events, whether
or not any such requirement has been satisfied.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar
months ending on the last day of December; references to a Fiscal
Year with a number corresponding to any calendar year (e.g., the
"1995 Fiscal Year") refer to the Fiscal Year ending on the date
which is the last day in December occurring during such calendar
year.
"Fixed Charge Coverage Ratio" means the ratio, as measured at
the end of each Fiscal Quarter for the applicable Fiscal Quarter,
of (i) the sum of (a) EBIT, plus (b) Rental Payments to (ii) the
sum of (y) Consolidated Interest Expense, plus (z) Rental Payments.
"Funded Debt" shall mean and include without duplication,
(i) any obligation payable more than one year from the
date of creation thereof, which under Generally Accepted
Accounting Principles is shown on the balance sheet as a
liability (including Capital Lease Obligations but excluding
reserves for deferred income taxes and deferred compensation
and other reserves to the extent that such reserves do not
constitute an obligation),
(ii) indebtedness payable more than one year from the
date of creation thereof which is secured by any Lien on
property owned by the Company or any Subsidiary, whether or
not the indebtedness secured thereby shall have been assumed
by the Company or such Subsidiary, and
(iii) guarantees, endorsements (other than endorsements
of negotiable instruments for collection in the ordinary
course of business), obligations under any contract which, in
economic effect, is substantially equivalent to a guarantee,
and other contingent liabilities whether direct or indirect in
connection with the obligations, stock or dividends of any
Person.
The term `Funded Debt' shall not include obligations owing to the
Banks under the Bank Agreement.
"Funded Indebtedness" shall at any date mean:
(i) all outstanding principal under the Bank Agreement,
excluding the principal amount of any Letter of Credit issued in
connection with the Bainbridge Industrial Revenue Bond to the
extent that such obligation is included in paragraph (ii) below;
(ii) all other Indebtedness of the Company or any of its
Subsidiaries which by its terms
(a) matures more than one year from the date of its
creation, or
(b) matures within one year from the date of its
creation but, at the Company's or such Subsidiary's election,
is renewable or extendible (whether or not theretofore renewed
or extended) under, or payable from the proceeds of any other
Indebtedness which may be incurred pursuant to the provisions
of, any revolving credit or similar agreement; and
(iii) all guarantees, direct or indirect, of any obligations
under paragraphs (i) and (ii) above.
"Generally Accented Accounting Principles" shall mean, as of
the date of any determination with respect thereto, generally
accepted accounting principles as used by the Financial Accounting
Standards Board and/or the American Institute of Certified Public
Accountants, consistently applied and maintained throughout the
periods indicated.
"Grower's Liens" means Liens held by any grower or producer of
agricultural products under the provisions of the Perishable
Agricultural Commodities Act, as amended (7 U.S.C. Sections 499a-499t),
or any regulation enacted pursuant thereto (7 C.F.R. Part 46) or
producers liens created under California Food and Agricultural Code
Section 55631, as amended, or any similar state law, but does not
include Liens originally obtained against any grower or supplier,
including but not limited to those obtained through filing or
notification under the Food Security Act of 1985, as amended.
"Guaranties" shall mean that certain Amended and Restated
Guaranty Agreement dated as of October 19,1993 made by Sunshine in
favor of the holders of the Notes and that certain Guaranty
Agreement made by Quantz in favor of the holders of the Notes,
dated as of the date hereof, as each is amended, restated,
supplemented and otherwise modified from time to time in accordance
with the provisions thereof.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements,
interest rat cap agreements and interest rate collar agreements,
and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency exchange
rates.
"Hostile Tender Offer" shall mean, with respect to the use of
proceeds of any Note, any offer to purchase, or any purchase of,
shares of capital stock of any corporation or equity interests in
any other entity, or securities convertible into or representing
the beneficial ownership of, or rights to acquire, any such shares
or equity interests, if such shares, equity interests, securities
or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of
such shares, equity interests, securities or rights representing
less than 5% of the equity interests or beneficial ownership of
such corporation or other entity for portfolio investment purposes,
and such offer or purchase has not been duly approved by the board
of directors of such corporation or the equivalent governing body
of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"Indebtedness" of any Person means, without duplication:
(i) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(ii) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit, whether or not
drawn, and banker's acceptances issued for the account of such
Person;
(iii) all obligations of such Person as lessee under
leases which have been, in accordance with Generally Accepted
Accounting Principles, recorded as Capital Lease Obligations;
(iv) all other items which, in accordance with Generally
Accepted Accounting Principles, would be included as
liabilities on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be
determined;
(v) net liabilities of such Person under all Hedging
Obligations; and
(vi) whether or not so included as liabilities in
accordance with Generally Accepted Accounting Principles, all
obligations of such Person to pay the deferred purchase price
of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse.
For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture
in which such Person is a general partner or a joint venturer.
"Institutional Investor" shall mean Prudential, any Prudential
Affiliate or any bank, bank affiliate, financial institution,
insurance company, pension fund, endowment or other organization
which regularly acquires debt instruments for investment.
"Interest Rate Increase Event" shall have the meaning assigned
to such term in paragraph 11R.
"Investment" means, relative to any Person,
(i) any loan or advance made by such Person to any
other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course
of business); and
(ii) any ownership or similar interest held by such
Person in any other Person.
The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer
or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair
market value of such property.
"Liabilities" shall have the meaning usually given that term
in accordance with Generally Accepted Accounting Principles, and
shall include, without limitation, Indebtedness.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction).
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3)
of ERISA).
"Notes" shall mean the following senior promissory notes of
the Company each due on August 15, 2004 (other than the notes
described in clause (vi), which are due May 15, 2006): (i) 7.87%
Series A Senior Notes in the aggregate principal amount of
$4,000,000, issued September 29, 1992, (ii) 8.22% Series B Senior
Notes in the aggregate principal amount of $6,000,000, issued
September 29, 1992, (iii) 8.22% Series C Senior Notes in the
aggregate principal amount of $4,000,000, issued September 29,
1992, (iv) 8.33% Series D Senior Notes in the aggregate principal
amount of $3,000,000 issued January 15, 1993, (v) 6.49% Series E
Senior Notes in the aggregate principal amount of $8,000,000,
issued September 15, 1993 and (vi) 8.31% Series F Notes Senior
Notes in the aggregate principal amount of $10,000,000 issued June
23, 1994. The terms "Series A Note" and "Series A Notes", "Series
B Note" and "Series B Notes", "Series C Note" and "Series C Notes",
"Series D Note", "Series D Notes", "Series E Note" and "Series E
Notes" and "Series F Note" and Series F Notes" shall respectively
include each Series A Note, Series B Note, Series C Note, Series D
Note, Series E Note and Series F Note delivered pursuant to any
provision of this Agreement.
"Officer's Certificate" shall mean a certificate signed in the
name of the Company by an Authorized Officer of the Company.
"Permitted Liens" shall have the meaning specified in
paragraph 6(A).
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as such
term is defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have
been made, by the Company or any ERISA Affiliate.
"Priority Debt" shall mean the sum (without duplication) of
(i) the aggregate unpaid principal amount of all Indebtedness or
other obligations secured by Liens permitted by paragraph 6A(g)
plus (ii) the aggregate unpaid principal amount of all Indebtedness
of Subsidiaries of the Company plus (iii) all outstanding
Attributable Debt of the Company and any of its Subsidiaries.
"Prohibited Transaction" shall mean "Prohibited Transaction"
as defined in Section 4975(c)(1) of the Code and Section 406(a)(1) of ERISA.
"Prudential" shall mean The Prudential Insurance Company of
America.
"Prudential Affiliate" shall mean any corporation or other
entity all of the Voting Stock (or equivalent voting securities or
interests) of which is owned by Prudential either directly or
through Prudential Affiliates.
"Purchaser" shall mean Prudential as purchasers of the Notes.
"Quantz" shall mean Quantz Acquisition Co., Inc., a Delaware
corporation.
"Rental Obligation" means, with respect to any Person, any
obligation of such Person to make any rent or lease payments or
other similar payments as lessee of real or personal property (or
any interest therein).
"Rental Payment" means, with respect to any Person, any rent
or lease payment or other similar payments made by such Person as
lessee under any lease (other than any Capital Lease) of real or
personal property, including without limitation, an operating lease
or a rental agreement but excluding any amounts required to be paid
by the lessee (whether or not designated as rental or additional
rental) on account of maintenance and repairs, insurance, taxes and
similar charges.
"Reportable Event" shall mean "Reportable Event" as defined in
Section 4043 of ERISA and regulations issued thereunder.
"Required Holder(s)" shall mean the holder or holders of
greater than 50% of the aggregate principal amount of the Notes or
of a Series of Notes, as the context may require, from time to time
outstanding.
"Responsible Officer" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief
accounting officer of the Company or any other officer of the
Company involved principally in its financial administration or its
controllership function.
"Rolling Fixed Charge Coverage Ratio" means the ratio, as
measured at the end of each Fiscal Quarter for the four immediately
preceding Fiscal Quarters, of (i) the sum of (a) EBIT, plus (b)
Rental Payments to (ii) the sum of (y) Consolidated Interest
Expense, plus (z) Rental Payments.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Agreement" shall mean the Security Agreement, dated
as of the date hereof, among the Company, Sunshine, Quantz and the
Collateral Agent, as amended, restated, supplemented or otherwise
modified from time to time.
"Senior Funded Indebtedness" means all Funded Indebtedness of
the Company or any of its Subsidiaries which is not Subordinated
Indebtedness.
"Series" shall mean Notes which are otherwise designated a
"Series" hereunder.
"Significant Holder" shall mean (i) Prudential or any
Prudential Affiliate, so long as Prudential or any Prudential
Affiliate shall hold any Note or (ii) any other holder of at least
10% of the aggregate principal amount of any Series of Notes from
time to time outstanding. To the extent that any notice or
document is required to be delivered to the Significant Holders
under this Agreement, such requirement shall be satisfied with
respect to Prudential and all Prudential Affiliates by giving
notice, or delivery of a copy of any such document, to Prudential
(addressed to Prudential and each such Prudential Affiliate).
"Subordinated Funded Indebtedness" means all Funded
Indebtedness of the Company or any of its Subsidiaries which is
Subordinated Indebtedness.
"Subordinated Indebtedness" shall mean the Teachers
Subordinated Notes and any other indebtedness of the Company and
its Subsidiaries which is subordinated to the Notes in a manner
acceptable to the Required Holder(s) as evidenced by their written
agreement to such effect.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which of the outstanding capital stock having more
than 50% of the voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such
Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"Sunshine" shall mean Sunshine Nut Co., Inc., a Texas
corporation.
"Tangible Net Worth" means the consolidated net worth of the
Company and its Subsidiaries after subtracting therefrom the
aggregate amount of any intangible assets of the Company and its
Subsidiaries, including goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names.
"Teachers" shall mean, collectively, Teachers Insurance and
Annuity Association of America and the other purchasers or holders
of promissory notes issued under the Teachers Note Agreement from
time to time, and any thereof.
"Teachers Indebtedness" shall mean the indebtedness evidenced
by the Teachers Senior Notes and Teachers Subordinated Notes.
"Teachers Note Agreement" shall mean that certain Note
Purchase Agreement dated as of August 30, 1995 between the Company
and Teachers, as in effect on the date of the original execution
thereof and as the same may be amended, modified or supplemented
from time to time.
"Teachers Senior Notes" shall mean the "Senior Notes", as such
term is defined in the Teachers Note Agreement, issued pursuant to
such agreement in the initial aggregate principal amount of
$10,000,000, together with any promissory notes issued in exchange
therefor in the form of such notes and constituting Senior Notes
under the Teachers Note Agreement as in effect on the first closing
date thereunder.
"Teachers Subordinated Notes" shall mean the "Subordinated
Notes", as such term is defined in the Teachers Note Agreement on
the date hereof, issued pursuant to such agreement in the initial
aggregate principal amount of $15,000,000, together with any
promissory notes issued in exchange therefor in the form of such
notes and constituting Subordinated Notes under the Teachers Note
Agreement as in effect on the first closing date thereunder.
"Teachers Sunshine Guaranty" shall mean the "Sunshine
Guaranty" as defined in the Teachers Note Agreement; provided that
such guaranty is permitted under paragraph 6E hereof.
"Total Capitalization" means the sum of Senior Funded
Indebtedness, Subordinated Funded Indebtedness and total
stockholders' equity (excluding treasury stock) of the Company.
"Transferee" shall mean any direct or indirect transferee of
all or any part of any Note purchased under this Agreement.
10C. Accounting Principles, Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all unaudited financial
statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance
with Generally Accepted Accounting Principles, applied on a basis
consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant
to clause (ii) of paragraph 5A or, if no such statements have been
so delivered, the most recent audited financial statements referred
to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal
of, interest on and any Yield-Maintenance Amount payable with
respect to such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for
credit (not later than 11:00 a.m., Chicago time, on the date due)
to (i) such Purchaser's account or accounts as specified in the
Purchaser Schedule attached hereto or (ii) such other account or
accounts in the United States as such Purchaser may designate in
writing, notwithstanding any contrary provision herein or in any
Note with respect to the place of payment. Each Purchaser agrees
that, before disposing of any Note, such Purchaser will make a
notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which
interest thereon has been paid. The Company agrees to afford the
benefits of this paragraph 11A to any Transferee which shall have
made the same agreement as each Purchaser has made in this
paragraph 11A.
11B. Expenses. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay, and
save each Purchaser and any Transferee harmless against liability
for the payment of, all out-of-pocket expenses arising in
connection with such transactions, including (i) all document
production and duplication charges and the fees and expenses of any
special counsel engaged by such Purchaser or such Transferee in
connection with this Agreement or any of the other Ancillary
Agreements, and any subsequent proposed modification of, or
proposed consent under, this Agreement or any of the other
Ancillary Agreements in each case requested by the Company, whether
or not such proposed modification shall be effected or proposed
consent granted, and (ii) the costs and expenses, including
attorneys' fees, incurred by such Purchaser or such Transferee in
enforcing (or determining whether or how to enforce) any rights
under this Agreement, the Notes or any other Ancillary Agreement or
in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or
any other Ancillary Agreement or the transactions contemplated
hereby or by reason of such Purchaser or such Transferee having
acquired any Note, including without limitation costs and expenses
incurred in any bankruptcy case. The Company shall have no
obligation to pay the fees and expenses of any Purchaser incurred
by such Purchaser in connection with a transfer of the Notes unless
a Default or Event of Default shall be continuing. The obligations
of the Company under this paragraph 11B shall survive the transfer
of any Note or portion thereof or interest therein by any Purchaser
or any Transferee and the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the
Company shall obtain the written consent to such amendment, action
or omission to act, of the Required Holder(s) of the Notes of each
Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall
have occurred and be continuing, of the holders of all Notes of all
Series, at the time outstanding (and not without such written
consents), the Notes of such Series may be amended or the
provisions thereof waived to change the maturity thereof, to change
or affect the principal thereof, or to change or affect the rate or
time of payment of interest or Yield-Maintenance Amount payable
with respect to the Notes of such Series, and (ii) without the
written consent of the holder or holders of all Notes at the time
outstanding, no amendment to or waiver of the provisions of this
Agreement shall change or affect the provisions of paragraph 7A or
this paragraph 11C insofar as such provisions relate to proportions
of the principal amount of the Notes of any Series, or the rights
of any individual holder of Notes, required with respect to any
declaration of Notes to be due and payable or with respect to any
consent. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to
indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing
between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein
and in the Notes, the term "this Agreement" and references thereto
shall mean this Agreement as it may from time to time be amended or
supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost
Notes. The Notes are issuable as registered notes without coupons
in denominations of at least $1,000,000 except as may be necessary
to reflect any amount not evenly divisible by $1,000,000; provided,
however, that no such minimum denomination shall apply to Notes
issued to, or issued upon transfer by any holder of the Notes to,
Prudential or one or more Prudential Affiliates or accounts managed
by Prudential or Prudential Affiliates or to any other entity or
group of affiliates with respect to which the Notes so issued or
transferred shall be managed by a single entity. The Company shall
keep at its principal office a register in which the Company shall
provide for the registration of Notes and of transfers of Notes.
Upon surrender for registration of transfer of any Note at the
principal office of the Company, the Company shall, at its expense,
execute and deliver one or more new Notes of like tenor and of a
like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any
Note, such Note may be exchanged for other Notes of like tenor and
of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal
office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver
the Notes which the holder making the exchange is entitled to
receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or
such holder's attorney duly authorized in writing. Any Note or
Notes issued in exchange for any Note or upon transfer thereof
shall carry the rights to unpaid interest and interest to accrue
which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such
transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction,
upon receipt of such holder's unsecured indemnity agreement, or in
the case of any such mutilation upon surrender and cancellation of
such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due
presentment for registration of transfer, the Company may treat the
Person in whose name any Note is registered as the owner and holder
of such Note for the purpose of receiving payment of principal of,
interest on and any Yield-Maintenance Amount payable with respect
to such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence and
any applicable restrictions of the Securities Act on the transfer
thereof, the holder of any Note may from time to time grant
participations in all or any part of such Note to any Person on
such terms and conditions as may be determined by such holder in
its sole and absolute discretion.
11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein or
made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this Agreement
and the Notes, the transfer by any Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made
at any time by or on behalf of any Purchaser or any Transferee.
Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the
Purchasers and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof. Other than
with respect to the Events of Default expressly being waived in the
letter agreement dated the date hereof between Prudential and the
Company (the "Letter Agreement"), neither this Agreement nor the
Letter Agreement shall operate as a waiver of any Default or Event
of Default that has occurred under the Amended and Restated Note
Purchase and Private Shelf Agreement, dated as of October 19,
1993, between the Company and Prudential (the "Prior Agreement")
and which is continuing on the date hereof after giving effect to
this Agreement and the Letter Agreement, or operate as a waiver of
any right, power or remedy of Prudential under the Prior Agreement.
Without limiting the foregoing, notwithstanding that certain
provisions in the Prior Agreement have been deleted in this
Agreement, Prudential is not waiving any of its rights, powers or
remedies with respect to any misrepresentation, breach or fraud by
the Company under or in connection with the Prior Agreement.
11G. Successors and Assigns. All covenants and other
agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including,
without limitation, any Transferee) whether so expressed or not.
11H. [Intentionally left blank.)
11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight
delivery service (with charges prepaid) and (i) if to any
Purchaser, addressed to such Purchaser at the address specified for
such communications in the Purchaser Schedule attached hereto, or
at such other address as any Purchaser shall have specified to the
Company in writing, (ii) if to any other holder of any Note,
addressed to such other holder at such address as such other holder
shall have specified to the Company in writing or, if any such
other holder shall not have so specified an address to the Company,
then addressed to such other holder in care of the last holder of
such Note which shall have so specified an address to the Company,
and (iii) if to the Company, addressed to it at:
John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove Village, Illinois 60007
Attention: Jasper B. Sanfilippo, President
with a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attention: Timothy R. Donovan
or at such other address as the Company shall have specified to the
holder of each Note in writing; provided, however, that any such
communication to the Company may also, at the option of the holder
of any Note, be delivered by any other means either to the Company
at its address specified above or to any officer of the Company.
11J. Payments Due on Non-Business Days. Anything in this
Agreement, the Notes or the Ancillary Agreements to the contrary
notwithstanding, any payment of principal of or interest on any
Note that is due on a date other than a Business Day shall be made
on the next succeeding Business Day. If the date for any payment
is extended to the next succeeding Business Day by reason of the
preceding sentence, the period of such extension shall be included
in the computation of the interest payable on such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to you or to
the Required Holder(s), the determination of such satisfaction
shall be made by you or the Required Holder(s), as the case may be,
in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. Severalty of Obligations. The sales of Notes to the
Purchasers are to be several sales, and the obligations of the
Purchasers under this Agreement are several obligations. No
failure by any Purchaser to perform its obligations under this
Agreement shall relieve any other Purchaser or the Company of any
of its obligations hereunder, and no Purchaser shall be responsible
for the obligations of, or any action taken or omitted by, any
other Purchaser hereunder.
11M. Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
11N. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OR THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS.
11O. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
an original and constitute one and the same agreement. It shall
not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
11P. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
11Q. Binding Agreement. When this Agreement is executed and
delivered by the Company and Prudential, it shall become a binding
agreement between the Company and Prudential.
11R. Interest Rate Increase upon Occurrence of Interest Rate
Increase Event. The Company hereby agrees that immediately upon
the occurrence of an Interest Rate Increase Event the per annum
rate of interest in effect from time to time on each Series of
Notes outstanding hereunder shall be automatically increased to an
amount equal to the sum of (a) the per annum rate of interest
applicable to such Series of Notes in the absence of this paragraph
11R (including, without limitation, any applicable default rate of
interest), plus (b) .85%. Subject to the next sentence of this
paragraph, the Company agrees at its sole expense to take such
further actions and steps as may be reasonably requested by the
Required Holder(s) to evidence any increase in the interest rate on
the Notes pursuant to this paragraph, including, without
limitation, the delivery of new notes evidencing the increased
interest rate on the Notes pursuant to this paragraph; provided,
however, any interest rate increase pursuant to this paragraph
shall be effective whether or not the Company complies with any
request of the Required Holder(s) made under this paragraph. The
Company shall not be responsible for attorney fees and expenses of
counsel to the holder(s) of the Notes incurred in connection with
documentation of an interest rate increase pursuant to this
paragraph.
"Interest Rate Increase Event" shall occur if the Company
shall fail to be in compliance with any of the tests set forth
below:
(i) the ratio (expressed as a percentage) of (A)
Net Income plus Consolidated Interest Expenses for any
fiscal year of the Company to (B) Senior Funded Debt of
the Company and its Subsidiaries as at the end of any
such fiscal year shall be greater than 20% for the
fiscal year ending December 31, 1995 and greater than
22% for the fiscal year ending December 31, 1996;
(ii) (A) Cash Flow for the fiscal year ending
December 31, 1995 shall not be less than the amount of
Capital Expenditures made or incurred during such fiscal
year, and (B) Cash Flow for the fiscal year ending
December 31, 1996 shall exceed the amount of Capital
Expenditures made or incurred by the Company and its
Subsidiaries during such fiscal year by at least
$5,000,000; and
(iii) the ratio (expressed as a percentage) of (A)
Senior Funded Debt of the Company and its Subsidiaries
to (B) Total Capitalization (Prudential) shall not
exceed 50% on December 31, 1995 or December 31, 1996.
For purposes of this paragraph 11R the following terms shall have
the following meanings:
"Cash Flow" shall mean, with respect to the Company for any
Fiscal Year, the amount which in accordance with Generally Accepted
Accounting Principles would be set forth opposite the caption "cash
flows from operating activities" (or any like caption) on the
annual consolidated cash flow statement of the Company with respect
to such Fiscal Year delivered pursuant to paragraph 5A(iii).
"Consolidated Funded Debt" shall mean, as of the time of any
determination thereof, the aggregate principal amount of all Funded
Debt of the Company and its Subsidiaries determined on a
consolidated basis.
"Net Income" shall mean the Company's net income (or loss) on
a consolidated basis after income and franchise taxes and shall
have the meaning given such term by Generally Accepted Accounting
Principles (consistently applied), provided that there shall be
specifically excluded therefrom tax-adjusted (i) gains or losses
from the sale of capital assets, and (ii) gains or losses arising
from extraordinary items, as defined by Generally Accepted
Accounting Principles.
"Senior Funded Debt" shall mean all Funded Debt of the Company
and its Subsidiaries other than Subordinated Indebtedness.
"Total Capitalization (Prudential)" shall mean:
(a) Consolidated Funded Debt; plus
(b) the sum of:
(i) the par value (or value stated on the books of the
Company) of the capital stock of all classes of the Company,
plus (or minus in the case of a surplus deficit)
(ii) the amount of consolidated surplus, whether capital
or earned, of the Company and its Subsidiaries; minus
(c) the amount shown on the consolidated balance sheet of
the Company and its Subsidiaries for any patents, trademarks,
copyrights, trade names, goodwill, unamortized debt discount and
expense, any write-up of the value of any assets after December 31,
1991, and other intangibles (other than notes from affiliates
excluding Subsidiaries) and treasury stock.
11S. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE HOLDERS OF THE NOTES OR THE COMPANY
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE HOLDERS OF THE NOTES OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT
TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER ANCILLARY AGREEMENTS.
11T. Waiver of Jury Trial. THE HOLDERS OF THE NOTES AND THE
COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE HOLDERS OF THE NOTES OR THE COMPANY.
THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER ANCILLARY AGREEMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDERS OF
THE NOTES ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER
ANCILLARY AGREEMENT.
11U. Setoff. Upon the occurrence of any Default described
in paragraphs 7A(vii) through (xi), inclusive, or any Event of
Default, each holder of a Note shall have a right of setoff against
any and all deposits (general or special, time or demand,
provisional or final) and other property at any time held, and
other indebtedness at any time owing, by any holder of a Note, the
Collateral Agent, any holder of Teachers Senior Notes or Teachers
Subordinated Notes, any Bank or the Bank Agent to or for the credit
or the account of the Company (collectively, "Deposits"). Without
limiting the foregoing, each holder of a Note shall have all rights
of setoff provided by applicable law and, in addition thereto, the
Company agrees that at any time any Event of Default exists, each
holder of a Note may apply to the payment of the obligations of the
Company under the Notes and this Agreement in accordance with the
Collateral Agency Agreement, any and all Deposits then or
thereafter held by or with any holder of a Note, any holder of the
Teachers Senior Notes or Teachers Subordinated Notes, the
Collateral Agent, any Bank or the Bank Agent.
[signature page to follow]
Very truly yours,
JOHN B. SANFILIPPO & SON, INC.
By: /s/ Gary P. Jensen
------------------
Title: Executive Vice President
of Finance and Chief
The foregoing Agreement is Financial Officer
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Mark Hoffmeister
--------------------
Title: Vice President
PURCHASER SCHEDULE
John B. Sanfilippo & Son Inc.
Series A Notes, Series B Notes and Series C Notes
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
--------------- ---------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $14,000,000 $4,000,000
$6,000,000
$4,000,000
All payments on account of
Notes held by such purchaser
shall be made by wire transfer
of immediately available funds
for credit to:
(1) In the case of payments on
account of the Series A Note
originally issued in the
principal amount of
$4,000,000:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name of the
Company, a reference to "7.87%
Series A Senior Notes due
August 15, 2004, Security No.
!INV4299!", and the due date
and application (as among
principal, interest and Yield-
Maintenance Amount) of the
payment being made.
(2) In the case of payments on
account of the Series B Note
originally issued in the
principal amount of
$6,000,000:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name of the
Company, a reference to "8.22%
Series B Senior Notes due
August 15, 2004, Security No.
!INV4299!", and the due date
and application (as among
principal, interest and Yield
Maintenance Amount) of the
payment being made.
(3) In the case of payments on
account of the Series C Note
originally issued in the
principal amount of
$4,000,000:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name
of the Company, a reference
to "8.22% Series C
Senior Notes due August 15,
2004, Security No.
11NV4299!", and the due date
and application
(as among principal, interest
and Yield-
Maintenance Amount) of the
payment being made.
(4) Address for all notices
relating to payments:
The Prudential Insurance
Company of America
c/o Prudential Capital
Corporation
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment
Administration Unit
(5) Address for all other
communications and notices:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Attention: Managing Director
(6) Recipient of telephonic
prepayment notices:
Manager, Asset Management
Unit
(201) 802-6429
(7) Tax Identification No.:
22-1211670
SERIES D NOTES
PURCHASER SCHEDULE
John B. Sanfilippo & Son Inc.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
----------- ---------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $3,000,000 $3,000,000
(1) All payments on account of
Notes held by such purchaser
shall be made by wire transfer
of immediately available funds
for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name of the
Company, a reference to "8.33%
Series D Senior Note due
August 15, 2004, Security No.
!1NV4299!", and the due date
and application (as among
principal, interest and Yield-
Maintenance Amount) of the
payment being made.
(2) Address for all notices
relating to payments:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment
Administration Unit
(3) Address for all other
communications and notices:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Attention: Managing
Director
(4) Recipient of telephonic
prepayment notices:
Manager, Asset Management
Unit
(201) 802-6429
(5) Tax Identification No.:
22-1211670
SERIES E NOTES
PURCHASER SCHEDULE
John B. Sanfilippo & Son Inc.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
----------- ---------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $8,000,000 $8,000,000
(1) All payments on account of
Notes held by such purchaser
shall be made by wire transfer
of immediately available funds
for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name of the
Company, a reference to "6.49%
Series E Senior Note due
August 15, 2004, Security No.
!1NV4299!", and the due date
and application (as among
principal, interest and Yield-
Maintenance Amount) of the
payment being made.
(2) Address for all notices
relating to payments:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment
Administration Unit
(3) Address for all other
communications and notices:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Attention: Managing Director
(4) Recipient of telephonic
prepayment notices:
Manager, Asset Management
Unit
(201) 802-6429
(5) Tax Identification No.:
22-1211670
SERIES F NOTES
PURCHASER SCHEDULE
John B. Sanfilippo & Son Inc.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
----------- ---------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $10,000,000 $10,000,000
(1) All payments on account of
Notes held by such purchaser
shall be made by wire transfer
of immediately available funds
for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall
set forth the name of the
Company, a reference to "8.31%
Series F Senior Note due May
15, 2006, Security No.
!1NV4299!", and the due date
and application (as among
principal, interest and Yield-
Maintenance Amount) of the
payment being made.
(2) Address for all notices
relating to payments:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Investment
Administration Unit
(3) Address for all other
communications and notices:
The Prudential Insurance
Company of America
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Attention: Managing Director
(4) Recipient of telephonic
prepayment notices:
Manager, Asset Management
Unit
(201) 802-6429
(5) Tax Identification No.:
22-1211670
EXHIBIT A
[Intentionally Omitted]
EXHIBIT B
[Intentionally Omitted]
EXHIBIT C
[Intentionally Omitted]
EXHIBIT D
[Intentionally Omitted]
EXHIBIT E
[Intentionally Omitted]
EXHIBIT F
Place of Business
Name Incorporation Ownership Description
-----------------------------------------------------------------------------
Sunshine Nut Co., Inc. Texas 100% Manufactures or
processes a
product line of
food and snack
items
Quantz Acquisition Delaware 100% Holds certain
Co., Inc. (formerly patents
known as Machine Design,
Inc.)
JBS International, Inc. Barbados 100% A foreign
international
sales
corporation
EXHIBIT H
[Intentionally Omitted]
EXHIBIT I
Aggregate
Amount
Nature of Outstanding Description
Indebtedness Indebtedness Obligor at 02-02-96 of any Lien
- -------------------------------------------------------------------------------
1. COMMERCIAL LETTERS OF Commercial Borrower $389,863 N/A
CREDIT letters of
credit
Five commercial letters
of credit issued under
the Credit Agreement and
outstanding as of the
date hereof will survive
the payoff of the
indebtedness listed in
item 8.2.2(b). The
letters of credit expire
on the following dates:
one will expire on March
30, 1996; (b) two will
expire on April 30, 1996;
and (c) the remaining two
will expire on May 15,
1996
2. IRB FINANCING
(a) Trust Indenture dated Industrial Borrower $8,000,000 Security
as of June 1, 1997 between Development interest to
Decatur County-Bainbridge Bonds TCB in all
Development Authority and originally real
Trust Company Bank ("TCB"), issued to property,
as Trustee finance the real
construction property
(b) Loan Agreement dated and equipping improve-
as of June 1, 1987 by and of Borrower's ments,
between Decatur County- Bainbridge, machinery,
Bainbridge Industrial Georgia equipment
Development Authority and facility and other
Borrower tangible
personal
(c) Deed to Secure Debt property at
and Security Agreement Borrower's
dated as of June 1, 1987 Bainbridge,
between Borrower and TCB Georgia
facility
(d) Irrevocable Direct
Pay Letter of Credit from
LNB to TCB dated June 1,
1992 in the amount of
$8,260,000 (the "IRB
Letter of Credit")
(e) Amended and Restated
Reimbursement Agreement
dated June 1, 1992 by and
between Borrower, LNB and
ANB
(f) Amendment to Amended
and Restated Reimbursement
Agreement dated October 19,
1993 by and between
Borrower, LNB and ANB
3. PRUDENTIAL FINANCING
(a) Amended and Restated Long term Borrower $32,500,000(4) None
Note Purchase and Private financing
Shelf Agreement dated as facility
of October 19, 1993 by and
between The Prudential
Insurance Company of
America ("Prudential") and
Borrower (the "Prudential
Financing") (3)
(b) Amended and Restated Sunshine Sunshine $32,500,000(4) None
Guaranty Agreement dated Guaranty
as of October 19, 1993 by of
Sunshine in favor of Prudential
Prudential Financing
4. BUSSE CAPITAL LEASE
OBLIGATION
Industrial Building Lease Lease for Borrower $6,131,117 N/A
dated June 1, 1985 by and 2299 Busse
between Borrower and LNB, Road, Elk
Trustee, under Trust Grove Village,
Agreement dated 2-7-79 and Illinois and 1717
known as Trust No. Arthur Avenue,
100628(5) Elk Grove Village,
Illinois
- --------------------------------
(3) Prior to the date hereof (and, therefore, excluding any amendment
necessitated by the transaction contemplated by the Credit Agreement for
which this Disclosure Schedule was prepared) the Prudential Financing has
been amended by four amendments: (a) a First Amendment to Amended and Restated
Note Purchase and Private Shelf Agreement dated as of August 31, 1994; (b)
a Second Amendment to Amended and Restated Note Purchase and Private Shelf
Agreement dated as of September 12, 1995; (c) a Third Amendment to amended
and Restated Note Purchase and Private Shelf Agreement dated as of February
20, 1996; and (d) a Consent and Waiver dated October 13, 1995 by and between
Borrower and Prudential.
(4) Represents the aggregate original principal amount of all seven promissory
notes which have been issued pursuant to the Prudential Financing, as follows:
(a) 7.87% Series A Senior Note Due August 15, 2004 in the original principal
amount of $4,000,000 (No. A-1); (b) 8.22% Series B Senior Note Due August 15,
2004 in the original principal amount of $6,000,000 (No. B-1); (c) 8.22% Series
C Senior Note Due August 15, 2004 in the original principal amount of
$4,000,000 (No. C-1); (d) 8.33% Series D Senior Note Due August 15, 2004 in
the original principal amount of $3,000,000 (No. D-1); (e) 6.49% Series E
Senior Note Due August 15, 2004 in the original principal amount of $8,000,000
(No. E-1); (f) 8.31% Series F Senior Note Due May 15, 2006 in the original
principal amount of $8,000,000 (No. F-1); and (g) 8.31% Series F Senior Note
Due May 15, 2006 in the original principal amount of $2,000,000 (No. F-2).
(5) This Industrial Building Lease has been amended by two amendments: (a)
a First Amendment to Industrial Building Lease dated September 29, 1992; and
(b) a Second Amendment to Industrial Building Lease dated March 3, 1995.
- -------------------------------
Aggregate
Amount
Nature of Outstanding Description
Indebtedness Indebtedness Obligor at 02-02-96 of any Lien
- -------------------------------------------------------------------------------
5. TOUHY CAPITAL LEASE
OBLIGATION
Industrial Building Lease Lease for Borrower $2,126,840 N/A
dated November 1, 1985 by 300 E. Touhy
and between Borrower and Avenue, Des
LNB, as Trustee under Plaines,
Trust Agreement dated Illinois
September 20, 1966 and
known as Trust No. 34837(6)
6. MALMO MORTGAGE
(a) Promissory Note dated 3001 Malmo Borrower $2,484,619 N/A
September 27, 1995 made Drive,
payable to Indianapolis Arlington
Life Insurance Company Heights,
("Indianapolis Life") in Illinois
the original principal
amount of $2,500,000
(b) First Mortgage and
Security Agreement dated
September 27, 1995 from
Borrower to Indianapolis
Life
(c) Assignment of Rents,
Leases, Income and Profits
dated September 27, 1995
by Borrower for the benefit
of Indianapolis Life
(d) Environment Risk
Agreement dated as of
September 27, 1995 by
Borrower for the benefit of
Indianapolis Life
- -------------------------------
(6) This Industrial Lease has been amended by three amendments: (a) a First
Amendment to Industrial Building Lease dated June 1, 1987; (b) a Second
Amendment to Industrial Building Lease dated December 14, 1990; and (c) a Third
Amendment to Industrial Building Lease dated September 1, 1991.
- -------------------------------
Aggregate
Amount
Nature of Outstanding Description
Indebtedness Indebtedness Obligor at 02-02-96 of any Lien
- -------------------------------------------------------------------------------
7. ARTHUR AVENUE MORTGAGE
(a) Promissory Note dated Funds borrowed Borrower $1,663,641 Mortgage on
as of March 31, 1989 and to acquire real
made payable by LNB, as building at property
Trustee under Trust 1851 Arthur and real
Agreement dated March 17, Avenue, Elk property
1989 and known as Trust Grove Village, improve-
No. 114243 ("LNB Trustee") Illinois ments (and
to the order of Cohen rents and
Financial Corporation leases
("Cohen") in the original relating
principal amount of thereto) at
$1,800,000 1851 Arthur
Avenue, Elk
(b) Mortgage dated as of Grove
March 31, 1989 by and Village,
between LNB Trustee and Illinois
Cohen and all
machinery,
(c) Modification Agreement equipment,
dated July 1, 1990 by and fixtures,
among LNB Trustee, Borrower, furniture,
Jasper Sanfilippo, Mathias etc.,
Valentine and Mutual Trust located at
Life Insurance Company (" such
Mutual Life") premises
(d) Modification Agreement
dated September 29, 1992 by
and among LNB Trustee, Borrower,
Jasper Sanfilippo, Mathias
Valentine and Mutual Life
(e) Assignment of Rents and
Leases dated March 31, 1989
by and between LNB Trustee,
Borrower and Cohen
(f) Security Agreement dated
as of March 31, 1989 by and
between LNB Trustee, Borrower
and Cohen
8. TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
(a) Note Purchase Agreement Long term Borrower $25,000,000 Unsecured
dated August 30, 1995 financing
between Borrower and facility
Teachers Insurance Annuity
Association of America
("Teachers") (7)(8)
(b) Guaranty dated as of Sunshine Sunshine $17,000,000 Unsecured
August 30, 1995 by Sunshine Guaranty of
in favor of Teachers long term
(Senior Notes) financing
facility
(c) Guaranty dated as of Sunshine Sunshine $15,000,000 Unsecured
August 30, 1995 by Sunshine Guaranty of
in favor of Teachers long term
(Subordinated Notes) financing
facility
------------------------------
(7) Represents the aggregate original principal amount of two promissory
notes which have been issued pursuant to the Note Purchase Agreement, as
follows: (a) 8.30% Senior Note due 2005 in the original principal amount of
$10,000,000; and (b) 9.38% Senior Subordinated Note due 2005 in the original
principal amount of $15,000,000.
(8) Prior to the date hereof (and, therefore, excluding any amendment
necessitated by the transaction contemplated by the Credit Agreement
for which this Disclosure Schedule was prepared) the Note Purchase Agreement
has been amended once by that certain Consent and Waiver dated October 13,
1995 by and between Borrower and Teachers.
------------------------------
Aggregate
Amount
Nature of Outstanding Description
Indebtedness Indebtedness Obligor at 02-02-96 of any Lien
- -------------------------------------------------------------------------------
9. FISHER NUT COMPANY
$1,250,000 Promissory Purchase Price Borrower $1,250,000 Various
Note dated January 10, for equipment UCC
1996 and made payable purchased in financing
to the Fisher Nut connection with statements
Company ("Fisher") (9) the acquisition filed
of certain against
assets of Fisher certain
equipment
10. OTHER LIABILITIES Trade payables, Borrower $18,525,777 N/A
income tax
payables and other
accrued expenses
11. BORROWER EQUIPMENT Lease payments Borrower Not in Various
LEASES under various excess of UCC
equipment lease $200,000 financing
statements
filed
against
such
leased
equipment
12. SUNSHINE EQUIPMENT Lease payments Sunshine Not in Various
LEASES under various excess of UCC
equipment leases $50,000 financing
statements
filed
against
such
leased
equipment
- -------------------------------
(9) The Borrower completed the first step of the Fisher Nut Company
transaction (the "Fisher Transaction") on November 6, 1995. The Fisher
Transaction was divided into several parts, with the Borrower acquiring:
(i) the Fisher trademarks, brand names, product formulas and other
intellectual and proprietary property for $5.0 million, paid on November 6,
1995; (ii) certain specified items of machinery and equipment for approximately
$1.25 million, payable pursuant to a promissory note dated January 10, 1996
(secured by such machinery and equipment), bearing interest at an annual rate
of 8.5% and requiring eight equal quarterly installments of principal (plus
accrued interest) commencing in June 1996; (iii) certain of the raw material
and finished goods inventories of the Fisher Nut business for approximately
$15.8 million, payable monthly, in cash, in amounts based on the amount of
such inventories actually used by the Borrower in each month with a final
payment of the balance, if any, of the purchase price on March 31, 1996;
and (iv) substantially all of the packaging materials of the Fisher Nut
business for approximately $1.1 million, payable monthly, in cash, in amounts
based on the amount of such materials actually used by the Borrower during
each month with a final payment of the balance, if any, of the purchase
price on November 6, 1996. As of March 15, 1996, the Borrower had remaining
obligations to purchase approximately $3.6 million of raw material and finished
goods inventories, and approximately $0.7 million of packaging inventories,
in connection with the Fisher Transaction.
- -------------------------------
13. OTHER SUNSHINE
NOTES PAYABLES
(a) U.S. Small Business Term Note to Sunshine $90,249 UCC financing
Administration Certified purchase statements
Development Company machinery and filed in
Program "504" Note Loan equipment respect of 1
No. CDC-L-ME-4-205 243 can line, 1
003 in the original shell sorter
principal amount of (upgrade to
$137,000 Asset #475),
1 shell
sorter (with
color
sorting) --
serial
#89587, 1
forklift, 1
nut sizer --
serial
# S-2282, 1
two stage
blower --
serial
# B-2283, 1
barrel
dumper, 1 jet
printer and
all proceeds,
replacements,
etc., thereof
(b) Commercial Term Note Machinery and Sunshine $61,905 Same as 13(a)
dated August 29, 1991 equipment above
made by Sunshine in favor Term Note
of Bank One, Texas, N.A.
("Bank One") in the
principal amount of
$162,500
(c) Commercial Term Note Machinery and Sunshine $17,346 UCC financing
dated February 27, 1992 equipment statements
made by Sunshine in favor Term Note filed against
of Bank One in the certain
principal amount with equipment
$74,523.83
(d) Commercial Term Note Machinery and Sunshine $1,669 UCC financing
dated May 6, 1991 made by equipment statements
Sunshine in favor of Term Note filed in
Bank One in the principal respect of 1
amount of $26,029 Assy-3VTB
Slide-Pecan-
MIDG PC S
(Serial No.
91853) and
1 Install Kit
3VTB-Slide
EXHIBIT J
Investments in the entities set forth on Exhibit F.
EXHIBIT K
[Intentionally Omitted]
EXHIBIT L
[Intentionally Omitted]
EXHIBIT M
MONTHLY COVENANT COMPLIANCE CERTIFICATE
This Monthly Covenant Compliance Certificate ("Compliance
Certificate") is furnished in connection with the Second Amended
and Restated Note Agreement dated as of January ___, 1997 (the
"Note Agreement") among the undersigned, John B. Sanfilippo & Son,
Inc. (the "Company"), The Prudential Insurance Company of America
and each "Prudential Affiliate" which pursuant to the terms thereof
has become a party thereto ("Prudential"). Unless otherwise
defined herein, the terms used in this Compliance Certificate have
the meanings specified in the Note Agreement.
The undersigned hereby certifies on behalf of the Company that:
1. I am the duly elected ________________________ of the
Company;
2. I have reviewed the terms of the Note Agreement and I
have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of the Company
and its subsidiaries during the accounting period covered by the
financial statements being delivered together with this Compliance
Certificate;
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Default or Event of Default
during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Compliance
Certificate, except as set forth below; and
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the Company
has taken, is taking, or proposes to take with respect to each such
condition or event:
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Company's and its Subsidiaries
compliance with the covenants of the Note Agreement, Bank Agreement
and Teachers Note Agreement specified in clauses (a), (b) and (c)
of paragraph 5 below, all of which data and computations are, to
the best of my knowledge, true and correct in all material
respects.
5. The Company certifies and warrants that as of the date
hereof:
(a) Company is in compliance with each of the
covenants contained in the following Sections of the
Bank Agreement:
Section 8.2.2 Indebtedness
Section 8.2.4 Financial Condition
Section 8.2.6 Restricted Payment, etc.
Section 8.2.7 Capital Expenditures,
etc.
Section 8.2.10 Consolidation, Merger,
etc.
Section 8.2.11 Dispositions of Assets
Section 8.2.12 Modification of Certain
Agreements
Section 8.2.14 Negative Pledges,
Restrictive Agreements,
etc.
Section 8.2.15 Clean Down
Section 8.2.16 Subsidiary Debt
(b) Company is in compliance with each of the
covenants contained in the following paragraphs of the Note Agreement:
Paragraph 6B Indebtedness and
Liabilities
Paragraph 6C Consolidations, Mergers
Paragraph 6F Disposal of Property
Paragraph 6H Distributions
Paragraph 6K Other Business
Paragraph 6M Amendments to Certain
Documents
Paragraph 6N Capital Expenditures
Paragraph 6O Teachers Notes
Paragraph 6Q Negative Pledges,
Restrictive Agreements
Paragraph 6R Financial Covenants
Paragraph 6S Subsidiary Indebtedness
(c) Company is in compliance with each of the
covenants contained in the following Sections of the Teachers Note Agreement:
Section 8.7 Current Ratio
Section 8.8 Subsidiary Debt
Section 8.9 Restricted Payments
and Restricted
Investments
Section 8.11 Lines of Business
Section 9.1 Financial Tests
Section 9.2 Consolidated Tangible
Net Worth
Section 9.3 Indebtedness
Section 9.4 Consolidation, Merger
or Disposition of
Substantially All
Assets
Section 9.5 Disposition of Assets
(d) no Event of Default (as defined in the Bank
Agreement) has occurred and is continuing pursuant to the following Sections
of the Bank Agreement:
Section 9.1.2 Breach of Warranty
Section 9.1.7 Change in Control
Section 9.1.8 Bankruptcy, Insolvency,
etc.
Section 9.1.11 Impairment of Liens
(e) no Event of Default has occurred and is
continuing pursuant to the following paragraphs of the Note Agreement:
Paragraph 7A(iv) False or misleading
representation or
warranty
Paragraph 7A(viii) Bankruptcy or similar
event
Paragraph 7A(ix) Voluntary bankruptcy
or similar event
Paragraph 7A(x) Involuntary bankruptcy
or similar event
Paragraph 7A(xvii) Change of control
Paragraph 7A(xviii) Impairment of liens
(f) no Event of Default (as defined in the
Teachers Note Agreement) has occurred and is continuing pursuant to the
following Sections of the Teachers Note
Agreement:
Section 12.1(D) False or misleading warranty
Section 12.1(H) Bankruptcy or similar event
Section 12.1(I) Voluntary bankruptcy or similar
event
Section 12.1(J) Involuntary bankruptcy or
similar event
Section 12.1(Q) Impairment of liens.
The Company hereby acknowledges and agrees that the attached
Schedule I is not intended to be a comprehensive or complete list
of all the covenants in the Note Agreement nor shall it limit the
right of prudential to require further information from the Company
if permitted by the Note Agreement. The foregoing certifications,
together with the computations set forth in Schedule I hereto and
the financial statements delivered with this Compliance Certificate
in support hereof, are made and delivered this _________ day of
______________________, l9__.
JOHN B. SANFILIPPO & SON, INC.
By:
Title:
SCHEDULE 6J
PERMITTED LEASES AND SALES
Lease of Building #4
Industrial Park
Selma, Texas
Tenant: TOMCO Equipment Co.
3340 Rosebud Road
Loganville, GA 30249
Term: April 1 to December 31, 1993
Lease of Building #3
Industrial Park
Selma, Texas
Tenant: Svedala Industries, Inc.
16435 1H35 South
Selma, Texas 78154
Term: July 1, 1993 to June 30, 1996
Sale of Commercial Building at
1332 West Grand Avenue
Chicago, Illinois
Anticipated closing - October, 1993
Lease of 2500 square feet at
1851 Arthur
Elk Grove Village, Illinois
Tenant: JesCorp
1851 Arthur
Elk Grove Village, IL
EXECUTION COPY
JOHN B. SANFILIPPO & SON, INC.
2299 Busse Road
Elk Grove Village, Illinois 60007
New York, New York
As of January 24, 1997
Re: Amendment No. 2 to Note Purchase Agreement
dated as of August 30, 1995
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement dated
as of August 30, 1995 (as in effect on the date hereof, the
"Agreement") between John B. Sanfilippo & Son, Inc., a Delaware
corporation (the "Company"), and Teachers Insurance and Annuity
Association of America (the "Noteholder"), pursuant to which the
Noteholder purchased $10,000,000 aggregate principal amount of
the Company's 8.30% Senior Notes due 2005 (the "Senior Notes")
and $15,000,000 aggregate principal amount of the Company's 9.38%
Senior Subordinated Notes due 2005 (the "Subordinated Notes" and,
together with the Senior Notes, the "Notes").
The Company has requested that the Noteholder agree,
and the Noteholder is willing, to amend various provisions of the
Agreement, all on the terms and conditions of this Amendment.
Accordingly, in consideration of the premises and the
mutual agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined
herein, all terms used herein which are defined in the Agreement
(as amended hereby) shall have their respective meanings as
therein defined. In addition, as used herein, "Bank Amendment"
means Amendment No. 3 to Credit Agreement dated as of January 24,
1997 by and among the Company, the lenders party thereto and Bank
of America Illinois, as Agent.
Section 2. Amendments to Agreement. Subject to the
satisfaction of the conditions to effectiveness specified in
Section 6 below, the Agreement is amended as follows:
2.1. Addition of Section 5.9. A new Section 5.9 and
a new Section 5.10 are added to the Agreement to read as
follows:
"Section 5.9. Prepayment Pursuant to Collateral
Agency Agreement. If amounts are to be applied to the
principal of the Notes pursuant to the terms of the
Collateral Agency Agreement or any other Collateral
Document, such amounts shall be deemed to be optional
prepayments of the Notes pursuant to Section 5.2, and the
applicable Make-Whole Amount in respect of such principal to
be prepaid shall be due and payable as provided in said
Section 5.2.
Section 5.10. Existing Prudential Notes. Neither the
Company nor any Subsidiary shall make any optional
prepayment of principal with respect to the Existing
Prudential Notes without providing the holders of the Senior
Notes written notice thereof at the same time as notice is
given to Prudential with respect to such prepayment (which
notice in any case shall not be given less than ten (10)
Business Days or more than sixty (60) days prior to such
proposed date of prepayment). Such notice shall contain an
offer by the Company to the holders of Senior Notes to
purchase, on a date (the "Prepayment Date") no later than
the date that the Existing Prudential Notes are scheduled to
be prepaid, that outstanding principal amount of Senior
Notes which bears the same proportion to the aggregate
principal amount of Senior Notes then outstanding as the
outstanding principal amount of Existing Prudential Notes
being prepaid bears to the aggregate principal amount of
Existing Prudential Notes then outstanding. If a holder of
Senior Notes accepts such offer, the Company shall on the
Prepayment Date purchase (and each such holder thereof shall
sell) such holder's pro rata share (based on the proportion
of the outstanding principal amount of all Senior Notes held
by such holder) of the principal amount of Senior Notes that
the Company is offering to purchase hereunder at a purchase
price equal to the aggregate outstanding principal amount
thereof, together with interest thereon to the date of
purchase and the applicable Make-Whole Amount, if any, with
respect thereto (calculated as if the purchase of such Note
were an optional prepayment thereof as provided in Section
5.2); provided, however, if a holder of a Senior Note
notifies the Company prior to the proposed Prepayment Date
that such holder is rejecting the Company's offer to
purchase such holder's Senior Notes, the Company shall not
be obligated to purchase, and such holder shall not be
obligated to sell, such holder's Senior Notes under this
Section 5.10. For purposes of this Section 5.10, a
holder's failure prior to the Prepayment Date to reject in
writing any offer made by the Company hereunder to purchase
such holder's Senior Notes shall be deemed an acceptance of
such offer. No holder of any such Senior Note shall be
required to make any representation or warranty in
connection with such sale, other than with respect to its
ownership of its Notes. All purchases of a holder's Senior
Notes pursuant to this Section 5.10 shall be applied
ratably to the Senior Notes then outstanding held by such
holder. Any partial prepayment of the Senior Notes pursuant
to this Section 5.10 shall not relieve the Company of its
obligation to make the prepayments of principal of the
Senior Notes required by Section 5.1. Notwithstanding the
foregoing, if the holders of the Existing Prudential Notes
waive the payment of any Yield-Maintenance Amount (as
defined in the Amended and Restated Prudential Note
Agreement) with respect to any optional prepayment of the
Existing Prudential Notes, and no other prepayment fee or
similar amount is payable in connection therewith, the
Company shall not be obligated with respect to such optional
payment to purchase under this Section 5.10 all or any
portion of the Senior Notes of a holder that has accepted
the Company's offer to purchase made in connection with such
optional prepayment, unless such holder waives in writing
prior to or on the Prepayment Date the payment of any
applicable Make-Whole Amount that would be due upon such
purchase.".
2.2. Amendment to Section 8.6. Section 8.6 of the
Agreement is amended to read in its entirety as follows:
"Section 8.6. Ownership. Jasper B. Sanfilippo and
Mathias A. Valentine, together with their respective
immediate family members and certain trusts created for the
benefit of their respective sons and daughters, shall
continue to own shares representing the right to elect a
majority of the directors of the Company. The Company shall
continue to own, directly and beneficially, shares
representing (a) 100% of Sunshine's aggregate outstanding
shares of common stock of all classes and (b) 100% of
Quantz's aggregate outstanding shares of common stock of all
classes.".
2.3. Amendment to Section 8.8. Section 8.8 of the
Agreement is amended to read in its entirety as follows:
"Section 8.8. Subsidiary Debt. The Company will not
permit any Subsidiary to create, assume, guarantee or
otherwise become liable in respect of any Indebtedness
(excluding any Indebtedness arising under any Guaranty or
any guaranty by Sunshine or Quantz of the obligations of the
Company under the Existing Indebtedness Documents) unless at
the time such Subsidiary becomes liable with respect to such
Indebtedness and after giving effect thereto Priority Debt
shall not exceed 15% of Consolidated Tangible Net Worth.".
2.4. Amendment to Section 9.1. Section 9.1 of the
Agreement is amended to read in its entirety as follows:
"Section 9.1. Financial Tests. (A) The Company (i)
will not on any date falling in the Company's fiscal quarter
ending in September, 1997 permit the Fixed Charge Coverage
Ratio for the period of four consecutive quarterly fiscal
periods of the Company ending on or immediately prior to
such date to be less than 1 to 1, (ii) will not on any date
falling in the Company's fiscal quarter ending in December,
1997 permit the Fixed Charge Coverage Ratio for the period
of four consecutive quarterly fiscal periods of the Company
ending on or immediately prior to such date to be less than
1.35 to 1 and (iii) will not on any date thereafter permit
the Fixed Charge Coverage Ratio for the period of four
consecutive quarterly fiscal periods of the Company ending
on or immediately prior to such date to be less than 1.75 to
1.
(B) The Company will not permit Interest Expense for
any fiscal quarter set forth below to be greater than the
respective amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending In: Amount($)
------------------------- ---------
December, 1996 2,350,000
March, 1997 3,200,000
June, 1997 2,800,000.
(C) The Company will not permit Consolidated Operating
Income for any fiscal quarter set forth below to be less
than the respective amount set forth opposite such fiscal
quarter:
Fiscal Quarter Ending In: Amount($)
------------------------- ---------
December, 1996 2,000,000
March, 1997 1,300,000
June, 1997 2,400,000.".
2.5. Amendment to Section 9.3(C). Section 9.3(C) of
the Agreement is amended to read in its entirety as follows:
"(C) Cash Management Liabilities (excluding
liabilities in respect of checks in the process of
clearing) in an aggregate outstanding amount at any
time not greater than $1,000,000 and Indebtedness
represented by the Senior Notes and the Subordinated
Notes,".
2.6. Amendment to Section 9.6(A). Section 9.6(A) of
the Agreement is amended to read in its entirety as follows:
"(A) Liens existing on the date hereof securing
Indebtedness of the Company outstanding on the date
hereof, as specified in Exhibit C hereto, and Liens
arising under the Collateral Documents;".
2.7. Amendment to Section 10.1. Section 10.1 of the
Agreement is amended to read in its entirety as follows:
"Section 10.1. Financial Tests. (A) The Company (i)
will not on any date falling in the Company's fiscal quarter
ending in September, 1997 permit the Fixed Charge Coverage
Ratio for the period of four consecutive quarterly fiscal
periods of the Company ending on or immediately prior to
such date to be less than 0.7 to 1, (ii) will not on any
date falling in the Company's fiscal quarter ending in
December, 1997 permit the Fixed Charge Coverage Ratio for
the period of four consecutive quarterly fiscal periods of
the Company ending on or immediately prior to such date to
be less than 1 to 1 and (iii) will not on any date
thereafter permit the Fixed Charge Coverage Ratio for the
period of four consecutive quarterly fiscal periods of the
Company ending on or immediately prior to such date to be
less than 1.35 to 1.
(B) The Company will not permit Interest Expense for
any fiscal quarter set forth below to be greater than the
respective amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending In: Amount($)
------------------------- ---------
December, 1996 2,900,000
March, 1997 3,900,000
June, 1997 3,400,000.
(C) The Company will not permit Consolidated Operating
Income for any fiscal quarter set forth below to be less
than the respective amount set forth opposite such fiscal
quarter:
Fiscal Quarter Ending In: Amount($)
------------------------- ---------
December, 1996 1,500,000
March, 1997 1,000,000
June, 1997 1,850,000.".
2.8. Amendment to Section 10.3(C). Section 10.3(C) of
the Agreement is amended to read in its entirety as follows:
"(C) Cash Management Liabilities (excluding
liabilities in respect of checks in the process of
clearing) in an aggregate outstanding amount at any
time not greater than $1,000,000 and Indebtedness
represented by the Senior Notes and the Subordinated
Notes,".
2.9. Amendment to Section 10.6(A). Section 10.6(A) of
the Agreement is amended to read in its entirety as follows:
"(A) Liens existing on the date hereof securing
Indebtedness of the Company outstanding on the date
hereof, as specified in Exhibit C hereto, and Liens
arising under the Collateral Documents;".
2.10. Amendment to Section 12.1. Section 12.1 of the
Agreement is amended by deleting Subsection (P) thereof and
replacing said Subsection with the following new Subsections (P),
(Q) and (R):
"(P) any Guaranty shall be terminated or shall
cease to be in full force and effect, or default shall
be made in the performance or observance of any
covenant, agreement or condition contained in any
Guaranty; or
(Q) the Collateral Agent under the Collateral
Agency Agreement shall cease to have a first priority
perfected security interest and Lien (subject to Liens
permitted by Section 9.6 and Section 10.6) in
substantially all of the property of the Borrower,
Sunshine and Quantz pursuant to the Collateral
Documents; or
(R) any Bank or the Bank Agent (as defined in the
Bank Agreement) shall refuse for more than five
consecutive Business Days to make any loan, issue any
letter of credit or create any bankers' acceptance
requested by the Company under the Bank Agreement where
such loan, letter of credit or bankers' acceptance
would not cause the Company to exceed the limitations
set forth in Section 2.1.1 or 3.1 of the Bank
Agreement or the availability under the Borrowing Base
(as so defined);".
2.11. Amendment to Section 11. (A) The following
definitions in Section 11 of the Agreement are amended and
restated to read in their entirety as follows:
"'Amended and Restated Prudential Note Purchase
Agreement' shall mean the Second Amended and Restated Note
Agreement dated as of January 24, 1997 between the Company,
Prudential and certain other Persons, as amended, modified
and in effect from time to time."
"'Existing Prudential Notes' means the 'Notes' as
defined in the Amended and Restated Prudential Note Purchase
Agreement."
"'Interest Expense' shall mean for any period the sum
(without duplication) of the following (in each case,
eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to
be eliminated in the course of the preparation of
consolidated financial statements of the Company and its
Subsidiaries in accordance with Generally Accepted
Accounting Principles): (i) all interest in respect of
Indebtedness of the Company and its Subsidiaries (including
imputed interest on Capitalized Lease Obligations and any
fees and commissions payable by the Company or any
Subsidiary in respect of such Indebtedness) deducted in
determining Consolidated Net Income for such period, (ii)
all Specified Letter of Credit Fees and (iii) all debt
discount and expense amortized or required to be amortized
in the determination of Consolidated Net Income for such
period."
"'Senior Indebtedness' shall mean (subject to the next
succeeding sentence) (i) all Bank Obligations (as such term
is defined in the Bank Agreement as in effect from time to
time or in any extension or renewal thereof, or the
equivalent obligations under any refunding or refinancing
thereof permitted pursuant to clause (y) of Section
10.3(B)(i)), (ii) all Cash Management Liabilities and (iii)
all principal, interest and premium (if any) and fees and
expenses on or in respect of (x) the Amended and Restated
Prudential Note Purchase Agreement and the Existing
Prudential Notes issued thereunder, each as in effect from
time to time (collectively, the "Prudential Obligations"),
(y) this Agreement (as this Agreement relates to the Senior
Notes) and the Senior Notes and (z) any Senior Funded Debt
incurred in compliance with Section 9.3(D) and Section
10.3(D), provided that (A) the aggregate outstanding
principal amount (and undrawn face amount in the case of
letters of credit) of the Bank Obligations included in
Senior Indebtedness in respect of revolving loans, term
loans, letters of credit and bankers acceptances shall not
exceed $60,000,000 plus an additional amount not exceeding
$2,000,000 in aggregate outstanding principal in respect of
loans to fund overdrafts or overdrafts, (B) the aggregate
principal amount of the Cash Management Liabilities included
in Senior Indebtedness shall not exceed $1,000,000 and (C)
and the aggregate principal amount of the Prudential
Obligations included in Senior Indebtedness shall not exceed
$33,750,000. With respect to interest, the term "Senior
Indebtedness" shall include any interest accruing for a
period of two years after the date of any filing by or
against the Company of any bankruptcy, insolvency or similar
proceeding, whether or not allowed as a claim in any such
proceeding.".
(B) Section 11 of the Agreement is further amended by
adding the following definitions in their respective appropriate
alphabetic locations:
"'Cash Management Liabilities' has the meaning
specified in the Security Agreement."
"'Collateral Agency Agreement' means the Collateral
Agency Agreement dated as of January 24, 1997 by and among
Bank of America Illinois, individually and as Collateral
Agent, Teachers Insurance and Annuity Association, and the
other financial institutions party thereto, as such
agreement may be amended and supplemented and in effect from
time to time."
"'Collateral Documents' has the meaning specified in
the Collateral Agency Agreement."
"'Guaranty' shall mean each of (i) a Guaranty by
Sunshine in favor of the holders of the Senior Notes from
time to time, as the same may be amended or supplemented and
in effect from time to time, (ii) a Guaranty by Sunshine in
favor of the holders of the Subordinated Notes from time to
time, as the same may be amended or supplemented and in
effect from time to time, (iii) a Guaranty by Quantz in
favor of the holders of the Senior Notes from time to time,
as the same may be amended or supplemented and in effect
from time to time and (iv) a Guaranty by Quantz in favor of
the holders of the Subordinated Notes from time to time, as
the same may be amended or supplemented and in effect from
time to time, each such Guaranty to be substantially in the
form of Exhibit G."
"'Security Agreement' has the meaning specified in the
Collateral Agency Agreement."
"'Specified Letter of Credit Fees' has the meaning
specified in the Security Agreement."
"'Quantz' means Quantz Acquisition Co., Inc., a
Delaware corporation.".
(C) The definition of "Indebtedness" in Section 11 of
the Agreement is amended by adding the following sentence at the
end thereof:
"In addition to the foregoing, for all purposes of this
Agreement, liabilities of the Company arising in respect of
Cash Management Liabilities shall constitute 'Indebtedness'
of the Company.".
(D) The definition "Private Shelf Notes" is deleted
from Section 11 of the Agreement, and each other reference to
"Private Shelf Notes" in the Agreement is also deleted.
2.12. Amendment to Exhibits A-1 and A-2. Each of
Exhibit A-1 and Exhibit A-2 of the Agreement is amended by
deleting the second sentence from the second paragraph thereof
and replacing said sentence with the following:
"Payment of the principal of, interest on and any Make-Whole
Amount with respect to this Note has been guaranteed (i) by
Sunshine Nut Co., Inc. pursuant to a Guaranty Agreement
dated as of August 30, 1995 and (ii) by Quantz Acquisition
Co., Inc. pursuant to a Guaranty Agreement dated as of
January 24, 1997. In addition, this Note is entitled to the
security provided for in the Collateral Documents (as
defined in said Note Purchase Agreement)."
2.13. Amendment to Exhibit J. Exhibit J of the
Agreement is amended by deleting Section B therefrom and
replacing said Section B with the following:
"B. Amended and Restated Prudential Note Agreement
Any Event of Default (as defined therein) under*:
(i) Section 7A(i).
(ii) Section 7A(ii).
(iii) Section 7A(v) to the extent such Event of
Default results from a breach of obligations under
Section 5I or under any of Section s 6A through 6S,
inclusive, other than Section 6I or 6L.
(iv) Section 7A(vi) to the extent such Event of
Default results from a breach of Section 6A.
(v) Section 7A(xvii).".
Section 3. Amendment to Outstanding Notes. Each
outstanding Series A Note is amended to reflect the changes made
to Exhibit A-1 to the Agreement as set forth in Section 2.12
above, and each outstanding Series B Note is amended to reflect
the changes made to Exhibit A-2 to the Agreement as set forth in
Section 2.12 above.
Section 4. Consent. The Noteholder hereby consents to
(i) the amendment of the Bank Agreement as provided by the Bank
Amendment and (ii) the amendment and restatement of the terms of
the documents governing the Senior Indebtedness held by
Prudential as provided by the Amended and Restated Prudential
Note Purchase Agreement.
Section 5. Representations and Warranties. The
Company represents and warrants to the Noteholder on the date
hereof and as of the Effective Date as follows (and the parties
hereto agree that the following representations and warranties
shall be deemed to have been made pursuant to the Agreement for
all relevant purposes thereof):
5.1. Power and Authority. The Company has all
requisite corporate power and authority to execute and deliver
this Amendment and to perform the Agreement as amended hereby
(the "Amended Agreement") and this Amendment has been duly
authorized by all necessary corporate action on the part of the
Company.
5.2. Enforceability. This Amendment has been duly
executed and delivered by the Company, and the Amended Agreement
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms
except as such enforcement may be limited by bankruptcy,
insolvency, fraudulent transfers or similar laws of general
application relating to creditors' rights.
5.3. No Conflicts. Neither the execution nor delivery
of this Amendment, nor fulfillment of nor compliance with the
terms and provisions hereof and of the Amended Agreement will
conflict with, or result in the breach of the terms, conditions
or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company pursuant to, the charter
or by-laws of the Company, any award of any arbitrator or any
agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company is subject.
5.4. Governmental Authorizations. No consent,
approval or authorization of, or registration, filing or
declaration with, any Governmental Body is required for the
validity of the execution and delivery of this Amendment or for
the performance by the Company of the Amended Agreement.
5.5. No Defaults. After giving effect to this
Amendment, no Default or Event of Default shall have occurred and
be continuing, and no default shall have occurred and be
continuing under the Bank Agreement or under the Amended and
Restated Prudential Note Purchase Agreement.
5.6. No Misstatement. This Amendment does not contain
any misstatement of a material fact or fail to state a material
fact necessary to make the statement or statements of the Company
contained herein not misleading, and the Company has disclosed to
the Noteholder all facts or circumstances of which the Company is
aware following due and diligent inquiry which are material to,
or could adversely affect in any way, the purpose or subject
matter of this Amendment and/or the consummation of the terms and
conditions hereof.
5.7. No Change. Since September 26, 1996 (the date of
the Company's most recent financial statements, copies of which
have been provided to the Noteholder), there has been no material
adverse change in the assets or the financial condition of the
Company and its Subsidiaries taken as a whole.
5.8. Other Documents. The Company has provided the
Noteholder with true and correct copies of the Bank Agreement,
the Bank Amendment and the Amended and Restated Prudential Note
Purchase Agreement as in effect on the date hereof.
Section 6. Conditions to Effectiveness. This
Amendment shall become effective as of the date (the "Effective
Date") when the following conditions shall have been satisfied:
6.1. Amendment. This Amendment shall have been duly
executed and delivered by the Company and the Noteholder, and
duly acknowledged by Sunshine.
6.2. Other Documents. The Noteholder shall have
received each of the documents specified in Section 4(a) of the
Bank Amendment, each of which shall be in form and substance
satisfactory to the Noteholder, together with such other
documents as the Noteholder may reasonably request, provided that
(a) with respect to the "Guaranty" by Quantz referred to in
clause (xii) of the Bank Amendment, the Noteholder shall have
received each of (i) a Guaranty executed and delivered by Quantz
in favor of the holders of the Senior Notes from time to time and
(ii) a Guaranty executed and delivered by Quantz in favor of the
holders of the Subordinated Notes from time to time, each of
which shall be substantially in the form of the Sunshine
Guaranty, (b) with respect to the documents referred to in clause
(xiii) of the Bank Amendment, such documents shall contain
appropriate references to this Amendment, (c) with respect to the
certificate referred to in clause (xvi) of the Bank Amendment,
such certificate shall contain appropriate references to this
Amendment, to Defaults and Events of Default arising under the
Agreement, and to the representations of the Company set forth in
this Amendment, and (d) with respect to the legal opinion
referred to in clause (xvii) of the Bank Amendment, such opinion
shall cover, inter alia, the matters specified in Sections 5.1,
5.2, 5.3 and 5.4 above and shall be addressed to the Noteholder.
6.3. Fees. The Company shall have paid the fees and
expenses of special counsel to the Noteholder, Milbank, Tweed,
Hadley & McCloy, relating to the transactions contemplated
hereby.
Section 7. Miscellaneous.
7.1. Ratification; Waiver. The Agreement, except as
amended pursuant hereto, is in all respects ratified and
confirmed, and the terms, covenants and agreements thereof shall
remain in full force and effect. Subject to the satisfaction of
the conditions to effectiveness specified in Section 6 above, the
Noteholder hereby waives (i) any Default or Event of Default that
may be in existence on the date hereof caused by the failure of
the Company to comply with Section 9.1 or Section 10.1 of the
Agreement (except as required by the Agreement as amended hereby)
and (ii) any Default or Event of Default that may be in existence
on the date hereof arising under Section 12.1(C) or (O) of the
Agreement caused by the failure of the Company to comply with any
provision of the Bank Agreement or the Amended and Restated Note
Purchase Agreement. The Noteholder is not aware of any Default
or Event of Default in existence on the date hereof after giving
effect to this Amendment.
7.2. References to Agreement and Notes. From and
after the Effective Date, all references to the Agreement in the
Agreement and in the Notes shall be deemed to be references to
the Agreement as amended by this Amendment.
7.3. Governing Law. This Amendment shall be construed
in accordance with and governed by the laws of the State of New
York.
7.4. Execution in Counterparts. This Amendment may be
executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
<PAGE>
If you are in agreement with the foregoing, please sign
the form of acceptance in the space provided below whereupon this
Amendment shall become a binding agreement between you and the
Company.
Very truly yours,
JOHN B. SANFILIPPO & SON, INC.
By: /s/ Gary P. Jensen
-------------------
Title: Executive Vice President of Finance
and Chief Financial Officer
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Nancy F. Heller
---------------------
Title: Managing Director
ACKNOWLEDGED AND AGREED:
SUNSHINE NUT CO.
By: /s/ John C. Taylor
---------------------
Title: President
