SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 10-Q
(Mark One)
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 26, 1998
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ______________
Commission file number 0-19681
JOHN B. SANFILIPPO & SON, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2419677
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
2299 Busse Road
Elk Grove Village, Illinois 60007
(Address of Principal Executive Offices)
Registrant's telephone number, including area code
(847) 593-2300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No __________
As of May 8, 1998, 5,461,139 shares of the Registrant's Common
Stock, $.01 par value per share, excluding 117,900 treasury shares
and 3,687,426 shares of the Registrant's Class A Common Stock, $.01
par value per share, were outstanding.
JOHN B. SANFILIPPO & SON, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
Item 1 -- Consolidated Financial Statements:
Consolidated Statements of Operations for
the quarters and thirty-nine weeks ended March 26, 1998 and March
27, 1997 3
Consolidated Balance Sheets as of March 26, 1998
and June 26, 1997 4
Consolidated Statements of Cash Flows for the
Thirty-nine weeks ended March 26, 1998 and March 27, 1997 5
Notes to Consolidated Financial Statements 6
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
- ---------------------------
Item 2 -- Changes in Securities 14
Item 6 -- Exhibits and Reports on Form 8-K 14
SIGNATURE 15
- ---------
OMITTED FINANCIAL STATEMENTS
- ----------------------------
None
PART I. FINANCIAL INFORMATION
------------------------------
Item 1 -- Financial Statements
- ------------------------------
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Quarter Ended For the Thirty-nine Weeks Ended
--------------------- -------------------------------
March 26, March 27, March 26, March 27,
1998 1997 1998 1997
--------- --------- --------- ---------
Net sales $ 58,145 $ 58,525 $248,084 $234,961
Cost of sales 47,279 48,962 203,911 203,673
--------- --------- --------- ---------
Gross profit 10,866 9,563 44,173 31,288
--------- --------- --------- ---------
Selling expenses 6,045 5,448 22,670 18,951
Administrative expenses 2,668 2,493 7,820 8,342
--------- --------- --------- ---------
8,713 7,941 30,490 27,293
--------- --------- --------- ---------
Income from operations 2,153 1,622 13,683 3,995
--------- --------- --------- ---------
Other income (expense):
Interest expense (2,406) (2,019) (6,254) (6,248)
Interest income 10 6 23 16
Gain (loss) on
disposition of
properties 2 -- 2 (3)
Rental income 108 115 380 311
--------- --------- --------- ---------
(2,286) (1,898) (5,849) (5,924)
--------- --------- --------- ---------
Income (loss) before
income taxes (133) (276) 7,834 (1,929)
Income tax
(expense) benefit 27 84 (3,212) 693
--------- --------- --------- ---------
Net income (loss) $ (106) $ (192) $ 4,622 $(1,236)
========= ========= ========= =========
Basic earnings (loss)
per common share $ (0.01) $ (0.02) $ 0.51 $ (0.14)
========= ========= ========= =========
Diluted earnings (loss)
per common share $ (0.01) $ (0.02) $ 0.50 $ (0.14)
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 26, June 26,
1998 1997
--------- ---------
ASSETS
- ------
CURRENT ASSETS:
Cash $ 255 $ 631
Accounts receivable, net 17,921 25,200
Inventories 110,315 62,988
Deferred income taxes 618 618
Income taxes receivable 935 2,830
Prepaid expenses and other
current assets 3,143 1,419
--------- ---------
TOTAL CURRENT ASSETS 133,187 93,686
--------- ---------
PROPERTIES:
Buildings 55,240 55,211
Machinery and equipment 69,232 66,019
Furniture and leasehold improvements 4,987 4,956
Vehicles 4,298 4,190
--------- ---------
133,757 130,376
Less: Accumulated depreciation 59,287 53,749
--------- ---------
74,470 76,627
Land 1,892 1,892
--------- ---------
76,362 78,519
--------- ---------
OTHER ASSETS:
Goodwill and other intangibles 7,968 8,667
Miscellaneous 7,331 6,545
--------- ---------
15,299 15,212
--------- ---------
$ 224,848 $ 187,417
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes payable $ 51,996 $ 19,034
Current maturities 4,611 4,937
Accounts payable 15,138 11,193
Accrued expenses 8,295 8,656
--------- ---------
TOTAL CURRENT LIABILITIES 80,040 43,820
--------- ---------
LONG-TERM DEBT 65,450 68,862
--------- ---------
LONG-TERM DEFERRED INCOME TAXES 1,664 1,664
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock -- --
Class A Common Stock 37 37
Common Stock 56 56
Capital in excess of par value 57,193 57,191
Retained earnings 21,612 16,991
Treasury stock (1,204) (1,204)
--------- ---------
77,694 73,071
--------- ---------
$ 224,848 $ 187,417
========= =========
The accompanying notes are an integral part of these financial statements.
JOHN B. SANFILIPPO & SON, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Thirty-nine Weeks Ended
-------------------------------
March 26, March 27,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 4,622 $ (1,236)
Adjustments:
Depreciation and amortization 6,261 6,641
Gain on disposition of properties (2) (1)
Deferred income taxes -- 390
Change in current assets
and current liabilities:
Accounts receivable, net 7,279 (128)
Inventories (47,327) 3,928
Prepaid expenses and other current assets (1,724) (827)
Accounts payable 3,945 (1,111)
Accrued expenses (361) (240)
Income taxes payable/receivable 1,895 (603)
--------- ---------
Net cash provided by (used in)
operating activities (25,412) 6,813
--------- ---------
Cash flows from investing activities:
Acquisition of properties (3,260) (4,789)
Proceeds from disposition of properties 4 3
Other (822) (1,780)
--------- ---------
Net cash used in investing activities (4,078) (6,566)
--------- ---------
Cash flows from financing activities:
Net borrowings (repayments) on notes payable 32,962 3,276
Principal borrowings of long-term debt -- 133
Principal payments on long-term debt (3,848) (3,595)
--------- ---------
Net cash provided by (used in)
financing activities 29,114 (183)
--------- ---------
Net increase (decrease) in cash (376) 64
Cash:
Beginning of period 631 276
--------- ---------
End of period $ 255 $ 340
========= =========
Supplemental disclosures:
Interest paid $ 6,558 $ 6,568
Taxes paid 3,315 133
Supplemental disclosure of
noncash investing and financing activities:
Capital lease obligation incurred 110 79
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
NOTE 1 - BASIS OF CONSOLIDATION
- -------------------------------
The consolidated financial statements include the accounts of
John B. Sanfilippo & Son, Inc. ("JBSS") and its wholly owned
subsidiaries (collectively, with JBSS, the "Company"), including
Sunshine Nut Co., Inc. ("Sunshine").
NOTE 2 - INVENTORIES
- --------------------
Inventories are stated at the lower of cost (first in, first out)
or market. Inventories consist of the following:
March 26, June 26,
1998 1997
--------- --------
Raw material and supplies $ 66,670 $ 29,713
Work-in-process and finished goods 43,645 33,275
--------- --------
$110,315 $ 62,988
========= ========
NOTE 3 - EARNINGS PER COMMON SHARE
- ----------------------------------
Earnings per common share is calculated using the weighted average
number of shares of Common Stock and Class A Common Stock
outstanding during the period. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 128 "Earnings Per Share" which is
effective for all reporting periods ending after December 15,
1997, and requires restatement for all prior periods presented.
The following tables present the required disclosures under SFAS
No. 128:
<TABLE>
For the Quarter Ended March 26, 1998 For the Quarter Ended March 27, 1997
------------------------------------ ------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income (loss) $(106) $(192)
Basic Earnings Per Share
Income available to common
Stockholders (106) 9,147,699 $ (0.01) (192) 9,147,666 $ (0.02)
======== ========
Effect of Dilutive Securities
Stock options -- --
Diluted Earnings Per Share
Income available to common
Stockholders $(106) 9,147,699 $ (0.01) $(192) 9,147,666 $ (0.02)
====== ========= ======== ====== ========== ========
</TABLE>
<TABLE>
For the Thirty-nine Weeks Ended For the Thirty-nine Weeks Ended
March 26, 1998 March 27, 1997
----------------------------------- -----------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income (loss) $4,622 $(1,236)
Basic Earnings (Loss) Per Share
Income available to common
Stockholders 4,622 9,147,677 $ 0.51 (1,236) 9,147,666 $ (0.14)
======= ========
Effect of Dilutive Securities
Stock options 23,516
Diluted Earnings Per Share
Income available to common
Stockholders $4,622 9,171,193 $ 0.50 $(1,236) 9,147,666 $ (0.14)
====== ========= ======= ======== ========= ========
</TABLE>
The following table summarizes the weighted-average number of
options which were outstanding for the periods presented but were
not included in the computation of diluted earnings per share
because the exercise prices of the options were greater than the
average market price of the common shares, or because the options
were anti-dilutive due to a net loss for the period:
Weighted-Average
Number of Options Exercise Price
----------------- ----------------
Quarter Ended March 26, 1998 400,009 $ 10.24
Quarter Ended March 27, 1997 354,153 $ 11.66
Thirty-nine Weeks Ended March 26, 1998 272,538 $ 12.13
Thirty-nine Weeks Ended March 27, 1997 376,688 $ 11.67
NOTE 4 - MANAGEMENT'S STATEMENT
- -------------------------------
The unaudited financial statements included herein have been
prepared by the Company. In the opinion of the Company's
management, these statements present fairly the consolidated
statements of operations, consolidated balance sheets and
consolidated statements of cash flows, and reflect all normal
recurring adjustments which, in the opinion of management, are
necessary for the fair presentation of the results of the interim
periods. The interim results of operations are not necessarily
indicative of the results to be expected for a full year. The
data presented on the balance sheet for the transition period
ended June 26, 1997 were derived from audited financial
statements. It is suggested that these financial statements be
read in conjunction with the financial statements and notes
thereto included in the Company's Transition Report on Form 10-K
for the transition period from January 1, 1997 to June 26, 1997.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
On April 30, 1997 the Board of Directors of JBSS voted to, upon
the approval of its lenders, change the Company's fiscal year from
a calendar year end to a fiscal year that ends on the final
Thursday of June of each year. A Transition Report on Form 10-K
was filed for the transition period from January 1, 1997 to June
26, 1997. This Quarterly Report on Form 10-Q is for the Company's
third quarter for the fiscal year ending June 25, 1998.
The Company's business is seasonal. Demand for peanut and other
nut products is highest during the months of October through
December. Peanuts, pecans, walnuts, almonds and cashews, the
Company's principal raw materials, are purchased primarily during
the period from August to February and are processed throughout
the year. As a result of this seasonality, the Company's
personnel and working capital requirements peak during the last
four months of the calendar year. Also, due primarily to the
seasonal nature of the Company's business, the Company maintains
significant inventories of peanuts, pecans, walnuts, almonds and
other nuts at certain times of the year, especially during the
second and third quarters of the Company's fiscal year.
Fluctuations in the market prices of such nuts may affect the
value of the Company's inventory and thus the Company's
profitability. At March 26, 1998, the Company's inventories
totaled approximately $110.3 million compared to approximately
$63.0 million at June 26, 1997, and approximately $79.3 million at
March 27, 1997. The increase in inventories at March 26, 1998
when compared to March 27, 1997 is primarily due to increased
levels of purchases for certain nuts, especially walnuts and
pecans. See "Factors That May Affect Future Results --
Availability of Raw Materials and Market Price Fluctuations."
RESULTS OF OPERATIONS
NET SALES. Net sales decreased slightly from approximately $58.5
million for the quarter ended March 27, 1997 to approximately
$58.1 million in the third quarter of fiscal 1998, a decrease of
approximately $0.4 million, or 0.6%. The slight decrease was due
primarily to lower unit volume sales to industrial customers,
which was partially offset by an increase in unit volume sales to
retail customers. For the thirty-nine weeks ended March 26, 1998,
net sales totaled approximately $248.1 million compared to
approximately $235.0 million for the thirty-nine weeks ended March
27, 1997, representing an increase of approximately $13.1 million,
or 5.6%. This increase in net sales was due primarily to an
increase in unit volume sales to the Company's retail and food
service customers. The increase in net sales to retail customers
was due primarily to increased unit volume sales to existing
customers and the addition of several new customers. The increase
in net sales to food service customers was due primarily to
additional unit volume sales to airline customers.
GROSS PROFIT. Gross profit margin increased from 16.3% for the
quarter ended March 27, 1997 to 18.7% in the third quarter of
fiscal 1998. For the thirty-nine weeks ended March 26, 1998, the
gross profit margin increased to 17.8% compared to 13.3% for the
thirty-nine weeks ended March 27, 1997. The increase in gross
profit margin for the thirty-nine weeks ended March 26, 1998 was
due primarily to (i) a $2.6 million write-down of pecan inventory
to market value as of September 26, 1996, and corresponding low
margins on pecan sales for the quarters ended December 31, 1996
and March 27, 1997, (ii) declines in the market price for
processed pecan meats relative to the cost of pecan inventory
throughout the quarter ended September 26, 1996, and (iii)
increases in net sales as a percentage of total sales to retail
customers, which generally carry higher margins than sales to the
Company's other customers, during the thirty-nine weeks ended
March 26, 1998 compared to the thirty-nine weeks ended March 27,
1997. The increase in gross profit margin for the quarter ended
March 26, 1998 was due primarily to (i) low margins on pecan sales
for the quarter ended March 27, 1997, as discussed above, and (ii)
increases in net sales as a percentage of total sales to retail
customers, which generally carry higher margins than sales to the
Company's other customers, during the quarter ended March 26, 1998
compared to the quarter ended March 27, 1997.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses as a percentage of net sales increased from 13.6% for the
quarter ended March 27, 1997 to 15.0% in the third quarter of
fiscal 1998. Selling expenses as a percentage of net sales
increased from 9.3% for the quarter ended March 27, 1997 to 10.4%
in the third quarter of fiscal 1998. Administrative expenses as a
percentage of net sales increased from 4.3% for the quarter ended
March 27, 1997 to 4.6% in the third quarter of fiscal 1998.
Selling and administrative expenses as a percentage of net sales
for the thirty-nine weeks ended March 26, 1998 increased to 12.3%
from 11.6% for the thirty-nine weeks ended March 27, 1997.
Selling expenses as a percentage of net sales for the thirty-nine
weeks ended March 26, 1998 increased to 9.1% from 8.1% for the
thirty-nine weeks ended March 27, 1997. Administrative expenses as
a percentage of net sales for the thirty-nine weeks ended March
26, 1998 decreased to 3.2% from 3.6% for the thirty-nine weeks
ended March 27, 1997. The increase in selling expenses as a
percentage of net sales for both the quarter and year-to-date
periods was due primarily to higher promotional allowances to
support the growth in the Company's sales to retail customers.
The decrease in administrative expenses as a percentage of net
sales for the year-to-date period was due primarily to the
Company's efforts to control administrative expenses coupled with
an increasing revenue base. The increase in administrative
expenses as a percentage of net sales for the quarterly period was
due primarily to an increase in expenses related to compensation
programs and a slightly smaller revenue base for this quarter
compared to the same period in fiscal 1997.
INCOME FROM OPERATIONS. Due to the factors discussed above,
income from operations increased from approximately $1.6 million,
or 2.8% of net sales, for the quarter ended March 27, 1997 to
approximately $2.2 million, or 3.7% of net sales, in the third
quarter of fiscal 1998. For the thirty-nine weeks ended March 26,
1998, income from operations increased to approximately $13.7
million, or 5.5% of net sales, from approximately $4.0 million, or
1.7% of net sales, for the thirty-nine weeks ended March 27, 1997.
INTEREST EXPENSE. Interest expense increased from approximately
$2.0 million for the quarter ended March 27, 1997 to approximately
$2.4 million in the third quarter of fiscal 1998. For the thirty-
nine weeks ended March 26, 1998, interest expense was
approximately $6.3 million, nearly the same as the amount for the
thirty-nine weeks ended March 27, 1997. The increase in
quarterly interest expense was due primarily to increased working
capital requirements related to a higher level of inventory
purchases.
INCOME TAXES. The Company recorded an income tax benefit of
approximately $27 thousand, or 20.3% of the loss before income
taxes, for the third quarter of fiscal 1998 and an income tax
expense of approximately $3.2 million, or 41.07% of income before
income taxes, for the thirty-nine weeks ended March 26, 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the third quarter of fiscal 1998, the Company continued to
finance its activities through a bank credit facility (the "Bank
Credit Facility"), $35.0 million borrowed under a long-term
financing facility originally entered into by the Company in 1992
(the "Long-Term Financing Facility") and $25.0 million borrowed on
September 12, 1995 under a long-term financing arrangement (the
"Additional Long-Term Financing").
Net cash used in operating activities was approximately $25.4
million for the thirty-nine weeks ended March 26, 1998 compared to
net cash provided by operating activities of approximately $6.8
million for the thirty-nine weeks ended March 27, 1997. The
significant decrease in cash provided by operating activities was
due primarily to increased purchases of certain nuts, especially
walnuts and pecans. The largest component of net cash used in
operating activities for the thirty-nine weeks ended March 26,
1998 was an increase of approximately $47.3 million in
inventories. During the thirty-nine weeks ended March 26, 1998,
the Company spent approximately $3.3 million in capital
expenditures, compared to approximately $4.8 million for the
thirty-nine weeks ended March 27, 1997, and repaid approximately
$3.8 million of long-term debt, compared to approximately $3.6
million for the thirty-nine weeks ended March 27, 1997.
The Bank Credit Facility was comprised of (i) a working capital
revolving loan which provided for working capital financing of up
to approximately $51.7 million, in the aggregate, and matured on
March 27, 1998, and (ii) an $8.3 million letter of credit to
secure the industrial development bonds which matures on June 1,
2002. Borrowings under the working capital revolving loan accrued
interest at a rate (the weighted average of which was 6.98% at
March 26, 1998) determined pursuant to a formula based on the
agent bank's quoted rate, the Federal Funds Rate and the
Eurodollar Interbank rate. On March 27, 1998 the Bank Credit
Facility was amended to extend the facility through April 30,
1998.
On March 31,1998, the Company entered into a new unsecured credit
facility with certain banks, totaling $70.0 million (the
"Replacement Credit Facility"), which replaced the Bank Credit
Facility. The Replacement Credit Facility is comprised of (i) a
working capital revolving loan which provides for working capital
financing of up to approximately $61.7 million, in the aggregate,
and matures on March 31, 2001, and (ii) an $8.3 million letter of
credit to secure the industrial development bonds which matures on
June 1, 2002. Borrowings under the working capital revolving
loan accrue interest at a rate determined pursuant to a formula
based on the agent bank's reference rate and the Eurodollar rate.
Of the total $35.0 million of borrowings under the Long-Term
Financing Facility, $25.0 million matures on August 15, 2004,
bears interest rates ranging from 7.34% to 9.18% per annum payable
quarterly, and requires equal semi-annual principal installments
based on a ten-year amortization schedule. The remaining $10.0
million of this indebtedness matures on May 15, 2006, bears
interest at the rate of 9.16% per annum payable quarterly, and
requires equal semi-annual principal installments based on a ten-
year amortization schedule. The Long-Term Financing Facility was
amended on March 31, 1998 to, among other things, convert it from
a secured to an unsecured credit facility and conform it to
certain terms of the Replacement Credit Facility. As of March 26,
1998, the total principal amount outstanding under the Long-Term
Financing Facility was $24.8 million.
The Additional Long-Term Financing has a maturity date of
September 1, 2005 and (i) as to $10.0 million of the principal
amount thereof, bears interest at an annual rate of 8.3% payable
semiannually and, beginning on September 1, 1999, requires annual
principal payments of approximately $1.4 million each through
maturity, and (ii) as to the other $15.0 million of the principal
amount thereof, bears interest at an annual rate of 9.38% payable
semiannually and requires principal payments of $5.0 million each
on September 1, 2003 and September 1, 2004, with a final payment
of $5.0 million at maturity on September 1, 2005. The Additional
Long-Term Financing was amended on March 31, 1998 to, among other
things, convert it from a secured to an unsecured credit facility
and conform it to certain terms of the Replacement Credit
Facility. As of March 26, 1998, the total principal amount
outstanding under the Additional Long-Term Financing was $25.0
million.
The terms of the Company's financing facilities, as amended,
include certain restrictive covenants that, among other things,
(i) require the Company to maintain specified financial ratios,
(ii) limit the Company's capital expenditures to $7.5 million
annually, and (iii) require that Jasper B. Sanfilippo (the
Company's Chairman of the Board and Chief Executive Officer) and
Mathias A. Valentine (a director and the Company's President)
together with their respective immediate family members and
certain trusts created for the benefit of their respective sons
and daughters, continue to own shares representing the right to
elect a majority of the directors of the Company. In addition,
(i) the Long-Term Financing Facility limits the Company's payment
of dividends to a cumulative amount not to exceed 25% of the
Company's cumulative net income from and after January 1, 1996;
(ii) the Additional Long-Term Financing limits cumulative
dividends to the sum of (a) 50% of the Company's cumulative net
income (or minus 100% of the Company's cumulative net loss) from
and after January 1, 1995 to the date the dividend is declared,
(b) the cumulative amount of the net proceeds received by the
Company during the same period from any sale of its capital stock,
and (c) $5.0 million; and (iii) the Replacement Credit Facility
limits dividends to the lesser of (a) 25% of net income for the
previous fiscal year, or (b) $5.0 million and prohibits the
Company from redeeming shares of capital stock.
As of March 26, 1998, the Company had approximately $2.9 million
of available credit under the Bank Credit Facility. Approximately
$3.3 million was incurred on capital expenditures for the thirty-
nine weeks ended March 26, 1998. No significant capital
expenditures are anticipated for fiscal 1998. The Company believes
that cash flow from operating activities and funds available under
the Replacement Credit Facility will be sufficient to meet working
capital requirements and anticipated capital expenditures for the
foreseeable future.
The Financial Accounting Standards Board ("FASB") issued Statement
128, "Earnings Per Share", to be effective December 15, 1997.
This recently issued standard will impact the preparation of, but
not materially affect, the financial statements of the Company.
Furthermore, the adoption of FASB 128 will not have a material
effect on the Company's financial position or its results of
operations.
The Company has reviewed its existing computer software programs and
operating systems to determine if it has software applications that
contain source codes that are unable to appropriately
interpret the upcoming calendar year 2000. As a result of such review,
the Company does not believe that such modifications or adjustments
necessary for calendar year 2000 will affect the Company in any
material respect.
FACTORS THAT MAY AFFECT FUTURE RESULTS
(a) Availability of Raw Materials and Market Price Fluctuations
The availability and cost of raw materials for the production of
the Company's products, including peanuts, pecans, other nuts,
dried fruit and chocolate, are subject to crop size and yield
fluctuations caused by factors beyond the Company's control, such
as weather condition and plant diseases. Additionally, the supply
of edible nuts and other raw materials used in the Company's
products could be reduced upon any determination by the United
States Department of Agriculture or other government agency that
certain pesticides, herbicides or other chemicals used by growers
have left harmful residues on portions of the crop or that the
crop has been contaminated by aflatoxin or other agents.
Shortages in the supply of and increases in the prices of nuts and
other raw materials used by the Company in its products could have
an adverse impact on the Company's profitability. Furthermore,
fluctuations in the market prices of nuts, dried fruit or
chocolate may affect the value of the Company's inventory and the
Company's profitability. For example, during the quarter ended
September 26, 1996 the Company was required to record a $2.6
million charge against its earnings to reflect the impact of a
lower cost or market adjustment of its pecan inventory. The
Company has a significant inventory of nuts, dried fruit and
chocolate that would be adversely affected by any decrease in the
market price of such raw materials. See "General" and "Results of
Operations - Gross Profit".
(b) Competitive Environment
The Company operates in a highly competitive environment. The
Company's principal products compete against food and snack
products manufactured and sold by numerous regional and national
companies, some of which are substantially larger and have greater
resources than the Company, such as Planters Lifesavers Company (a
subsidiary of RJR Nabisco, Inc.). The Company also competes with
other shellers in the industrial market and with regional
processors in the retail and wholesale markets. In order to
maintain or increase its market share, the Company must continue
to price its products competitively, which may lower revenue per
unit and cause declines in gross margin, if the Company is unable
to increase unit volumes as well as reduce its costs.
(c) Fixed Price Commitments
From time to time, the Company enters into fixed price commitments
with its customers. However, such commitments typically represent
10% or less of the Company's annual net sales and are normally
entered into after the Company's cost to acquire the nut products
necessary to satisfy the fixed price commitment is substantially
fixed. The Company will continue to enter into fixed price
commitments in respect to certain of its nut products prior to
fixing its acquisition cost when, in management's judgment, market
or crop harvest conditions so warrant. To the extent the Company
does so, these fixed price commitments may result in losses.
Historically, however, such losses have generally been offset by
gains on other fixed price commitments. However, there can be no
assurance that losses from fixed price commitments may not have a
material adverse effect on the Company's results of operations.
(d) Federal Regulation of Peanut Prices, Quotas and Poundage
Allotments
Peanuts are an important part of the Company's product line.
Approximately 50% of the total pounds of products processed
annually by the Company are peanuts, peanut butter and other
products containing peanuts. The production and marketing of
peanuts are regulated by the USDA under the Agricultural
Adjustment Act of 1938 (the "Agricultural Adjustment Act"). The
Agricultural Adjustment Act, and regulations promulgated
thereunder, support the peanut crop by: (i) limiting peanut
imports, (ii) limiting the amount of peanuts that American farmers
are allowed to take to the domestic market each year, and (iii)
setting a minimum price that a sheller must pay for peanuts which
may be sold for domestic consumption. The amount of peanuts that
American farmers can sell each year is determined by the Secretary
of Agriculture and is based upon the prior year's peanut
consumption in the United States. Only peanuts that qualify under
the quota may be sold for domestic food products and seed. The
peanut quota for the 1998 calendar year is approximately 1.2
million tons. Peanuts in excess of the quota are called
"additional peanuts" and generally may only be exported or used
domestically for crushing into oil or meal. Current regulations
permit additional peanuts to be domestically processed and
exported as finished goods to any foreign country. The quota
support price for the 1998 calendar year is $615 per ton.
The 1996 Farm Bill extended the federal support and subsidy
program for peanuts for seven years. However, there are no
assurances that Congress will not change or eliminate the program
prior to its scheduled expiration. Changes in the federal peanut
program could significantly affect the supply of, and price for,
peanuts. While the Company has successfully operated in a market
shaped by the federal peanut program for many years, the Company
believes that it could adapt to a market without federal
regulation if that were to become necessary. However, the Company
has no experience in operating in such a peanut market, and no
assurances can be given that the elimination or modification of
the federal peanut program would not adversely affect the
Company's business. Future changes in import quota limitations or
the quota support price for peanuts at a time when the Company is
maintaining a significant inventory of peanuts or has significant
outstanding purchase commitments could adversely affect the
Company's business by lowering the market value of the peanuts in
its inventory or the peanuts which it is committed to buy. While
the Company believes that its ability to use its raw peanut
inventories in its own processing operations gives it greater
protection against these changes than is possessed by certain
competitors whose operations are limited to either shelling or
processing, no assurances can be given that future changes in, or
the elimination of, the federal peanut program or import quotas
will not adversely affect the Company's business.
The North American Free Trade Agreement ("NAFTA"), effective
January 1, 1994, committed the United States, Mexico and Canada to
the elimination of quantitative restrictions and tariffs on the
cross-border movement of industrial and agricultural products.
Under NAFTA, United States import restrictions on Mexican shelled
and inshell peanuts were replaced by a tariff rate quota,
initially set at 3,377 tons and which increases by a 3% compound
rate each year until 2001. Shipments within the quota's
parameters enter the U.S. duty-free, while imports above-quota
parameters from Mexico face tariffs. The tariffs are being phased
out gradually and are scheduled to be eliminated by 2001.
The Uruguay Round Agreement of the General Agreement on Trade and
Tariffs ("GATT") took effect on July 1, 1995. Under GATT, the
United States must allow peanut imports to grow to 5% of domestic
consumption by 2001, and import quotas on peanuts were replaced by
high ad valorem tariffs, which must be reduced annually pursuant
to the terms of GATT. Also under GATT, the United States may
continue to limit imports of peanut butter but is permitted to
establish a tariff rate quota for peanut butter imports based on
1993 import levels. Peanut butter imports above the quota are
subject to an over-quota ad valorem tariff which also must be
reduced annually pursuant to the terms of GATT.
Although NAFTA and GATT do not directly affect the federal peanut
program, the federal government may, in future legislative
initiatives, reconsider the federal peanut program in light of
these agreements. The Company does not believe that NAFTA and
GATT have had a material impact on the Company's business or will
have a material impact on the Company's business in the near term.
PART II. OTHER INFORMATION
Item 2 - Changes in Securities
- ------------------------------
As described above under "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and
Capital Resources" under Part I of this report, there are
restrictive covenants under the Company's financing facilities
which limit the payment of dividends.
Item 6 -- Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) The exhibits filed herewith are listed in the exhibit index
which follows the signature page and immediately precedes the
exhibits filed.
(b) Reports on Form 8-K: There were no Current Reports on
Form 8-K filed during the quarter ended March 26, 1998.
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: May 8, 1998 By: /s/ Gary P. Jensen
--------------------
Gary P. Jensen
Executive Vice President, Finance
and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
- -------- ----------------------
2 None
3.1 Restated Certificate of Incorporation of Registrant(2)
3.2 Certificate of Correction to Restated Certificate(2)
3.3 Bylaws of Registrant(1)
4.1 Specimen Common Stock Certificate(3)
4.2 Specimen Class A Common Stock Certificate(3)
4.3 Second Amended and Restated Note Agreement by and between the
Registrant and The Prudential Insurance Company of America
("Prudential") dated January 24, 1997 (the "Long-Term Financing
Facility")(19)
4.4 7.87% Series A Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004 executed
by the Registrant in favor of Prudential(5)
4.5 8.22% Series B Senior Note dated September 29, 1992 in the
original principal amount of $6.0 million due August 15, 2004 executed
by the Registrant in favor of Prudential(5)
4.6 8.22% Series C Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004 executed
by the Registrant in favor of Prudential(5)
4.7 8.33% Series D Senior Note dated January 15, 1993 in the original
principal amount of $3.0 million due August 15, 2004 executed by the
Registrant in favor of Prudential(6)
4.8 6.49% Series E Senior Note dated September 15, 1993 in the
original principal amount of $8.0 million due August 15, 2004 executed
by the Registrant in favor of Prudential(9)
4.9 8.31% Series F Senior Note dated June 23, 1994 in the original
principal amount of $8.0 million due May 15, 2006 executed by the
Registrant in favor of Prudential(10)
4.10 8.31% Series F Senior Note dated June 23, 1994 in the original
principal amount of $2.0 million due May 15, 2006 executed by the
Registrant in favor of Prudential(10)
4.11 Amended and Restated Guaranty Agreement dated as of October 19,
1993 by Sunshine in favor of Prudential(8)
4.12 Amendment to the Second Amended and Restated Note Agreement dated
May 21, 1997 by and among Prudential, Sunshine and the Registrant(20)
4.13 Amendment to the Second Amended and Restated Note Agreement dated
March 31, 1998 by and among Prudential, the Registrant, Sunshine, and
Quantz Acquisition Co., Inc. ("Quantz").
4.14 Guaranty Agreement dated as of March 31, 1998 by JBS
International, Inc. ("JBSI") in favor of Prudential.
4.15 $1.8 million Promissory Note dated March 31, 1989 evidencing a
loan by Cohen Financial Corporation to LaSalle National Bank ("LNB"),
as Trustee under Trust Agreement dated March 17, 1989 and known as
Trust No. 114243(12)
4.16 Modification Agreement dated as of September 29, 1992 by and
among LaSalle National Trust, N.A. ("LaSalle Trust"), a national
banking association, not personally but as Successor Trustee to LNB
under Trust Agreement dated March 17, 1989 known as Trust
Number 114243; the Registrant; Jasper B. Sanfilippo and Mathias A.
Valentine; and Mutual Trust Life Insurance Company(5)
4.17 Note Purchase Agreement dated as of August 30, 1995 between the
Registrant and Teachers Insurance and Annuity Association of America
("Teachers")(15)
4.18 8.30% Senior Note due 2005 in the original principal amount of
$10.0 million, dated September 12, 1995 and executed by the Registrant
in favor of Teachers(15)
4.19 9.38% Senior Subordinated Note due 2005 in the original principal
amount of $15.0 million, dated September 12, 1995 and executed by the
Registrant in favor of Teachers(15)
4.20 Guaranty Agreement dated as of August 30, 1995 by Sunshine in
favor of Teachers (Senior Notes)(15)
4.21 Guaranty Agreement dated as of August 30, 1995 by Sunshine in
favor of Teachers (Senior Subordinated Notes)(15)
4.21 Amendment, Consent and Waiver, dated as of March 27, 1996, by and
among Teachers, Sunshine and the Registrant(17)
4.22 Amendment No. 2 to Note Purchase Agreement dated as of January
24, 1997 by and among Teachers, Sunshine and the Registrant(19)
4.23 Amendment to Note Purchase Agreement dated May 19, 1997 by and
among Teachers, Sunshine and the Registrant(20)
4.24 Amendment No. 3 to Note Purchase Agreement dated as of March 31,
1998 by and among Teachers, Sunshine, Quantz and the Registrant.
4.25 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Notes).
4.26 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Subordinated Notes).
10.1 Certain documents relating to $8.0 million Decatur County-
Bainbridge Industrial Development Authority Industrial Development
Revenue Bonds (John B. Sanfilippo & Son, Inc. Project) Series 1987
dated as of June 1, 1987(1)
10.2 Industrial Building Lease dated as of October 1, 1991 between
JesCorp, Inc. and LNB, as Trustee under Trust Agreement dated March 17,
1989 and known as Trust No. 114243(14)
10.3 Industrial Building Lease (the "Touhy Avenue Lease") dated
November 1, 1985 between Registrant and LNB, as Trustee under Trust
Agreement dated September 20, 1966 and known as Trust No. 34837(11)
10.4 First Amendment to the Touhy Avenue Lease dated June 1, 1987(11)
10.5 Second Amendment to the Touhy Avenue Lease dated December 14,
1990(11)
10.6 Third Amendment to the Touhy Avenue Lease dated September 1,
1991(16)
10.7 Industrial Real Estate Lease (the "Lemon Avenue Lease") dated
May 7, 1991 between Registrant, Majestic Realty Co. and Patrician
Associates, Inc(1)
10.8 First Amendment to the Lemon Avenue Lease dated January 10,
1996(17)
10.9 Mortgage, Assignment of Rents and Security Agreement made on
September 29, 1992 by LaSalle Trust, not personally but as Successor
Trustee under Trust Agreement dated February 7, 1979 known as Trust
Number 100628 in favor of the Registrant relating to the properties
commonly known as 2299 Busse Road and 1717 Arthur Avenue, Elk Grove
Village, Illinois(5)
10.10 Industrial Building Lease dated June 1, 1985 between Registrant
and LNB, as Trustee under Trust Agreement dated February 7, 1979 and
known as Trust No. 100628(1)
10.11 First Amendment to Industrial Building Lease dated September 29,
1992 by and between the Registrant and LaSalle Trust, not personally
but as Successor Trustee under Trust Agreement dated February 7, 1979
and known as Trust Number 100628(5)
10.12 Second Amendment to Industrial Building Lease dated March 3,
1995, by and between the Registrant and LaSalle Trust, not personally
but as Successor Trustee under Trust Agreement dated February 7, 1979
and known as Trust Number 100628(12)
10.13 Ground Lease dated January 1, 1995, between the Registrant and
LaSalle Trust, not personally but as Successor Trustee under Trust
Agreement dated February 7, 1979 and known as Trust Number 100628(12)
10.14 Party Wall Agreement, dated March 3, 1995, between the
Registrant, LaSalle Trust, not personally but as Successor Trustee
under Trust Agreement dated February 7, 1979 and known as Trust Number
100628 and the Arthur/Busse Limited Partnership(12)
10.15 Secured Promissory Note in the amount of $6,223,321.81 dated Sep-
tember 29, 1992 executed by Arthur/Busse Limited Partnership in favor
of the Registrant(5)
10.16 Tax Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
10.17 Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
10.18 The Registrant's 1991 Stock Option Plan(1)
10.19 First Amendment to the Registrant's 1991 Stock Option Plan(4)
10.20 John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement
Number One among John E. Sanfilippo, as trustee of the Jasper and
Marian Sanfilippo Irrevocable Trust, dated September 23, 1990, Jasper
B. Sanfilippo, Marian R. Sanfilippo and Registrant, and Collateral
Assignment from John E. Sanfilippo as trustee of the Jasper and Marian
Sanfilippo Irrevocable Trust, dated September 23, 1990, as assignor, to
Registrant, as assignee(7)
10.21 John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement
Number Two among Michael J. Valentine, as trustee of the Valentine Life
Insurance Trust, dated May 15, 1991, Mathias Valentine, Mary Valentine
and Registrant, and Collateral Assignment from Michael J. Valentine, as
trustee of the Valentine Life Insurance Trust, dated May 15, 1991, as
assignor, and Registrant, as assignee(7)
10.22 Certain documents relating to Reverse Split-Dollar Insurance
Agreement between Sunshine and John Charles Taylor dated November 24,
1987(12)
10.23 Outsource Agreement between the Registrant and Preferred
Products, Inc. dated January 19, 1995 [CONFIDENTIAL TREATMENT
REQUESTED](12)
10.24 Letter Agreement between the Registrant and Preferred Products,
Inc., dated February 24, 1995, amending the Outsource Agreement dated
January 19, 1994 [CONFIDENTIAL TREATMENT REQUESTED](12)
10.25 The Registrant's 1995 Equity Incentive Plan(13)
10.26 Promissory Note (the "ILIC Promissory Note") in the original
principal amount of $2.5 million, dated September 27, 1995 and executed
by the Registrant in favor of Indianapolis Life Insurance Company
("ILIC")(16)
10.27 First Mortgage and Security Agreement (the "ILIC" Mortgage") by
and between the Registrant, as mortgagor, and ILIC, as mortgagee, dated
September 27, 1995, and securing the ILIC Promissory Note and relating
to the property commonly known as 3001 Malmo Drive, Arlington Heights,
Illinois (16)
10.28 Assignment of Rents, Leases, Income and Profits dated September
27, 1995, executed by the Registrant in favor of ILIC and relating to
the ILIC Promissory Note, the ILIC Mortgage and the Arlington Heights
facility(16)
10.29 Environmental Risk Agreement dated September 27, 1995, executed
by the Registrant in favor of ILIC and relating to the ILIC Promissory
Note, the ILIC Mortgage and the Arlington Heights facility(16)
10.30 Credit Agreement among the Registrant, Bank of America Illinois
("BAI") as agent, NCB, The Northern Trust Company ("NTC") and BAI,
dated as of March 27, 1996(17)
10.31 Reimbursement Agreement between the Registrant and BAI, dated as
of March 27, 1996(17)
10.32 Guaranty Agreement dated as March 27, 1996 by Sunshine in favor
of BAI as agent on behalf of NCB, NTC and BAI(17)
10.33 Amendment No. 1 and Waiver to Credit Agreement dated as of August
1, 1996 by and among the Registrant, BAI, NCB and NTC(18)
10.34 Amendment No. 2 and Waiver to Credit Agreement dated as of
October 30, 1996 by and among the Registrant, BAI, NCB and NTC(18)
10.35 Amendment No. 3 to Credit Agreement dated as of January 24, 1997
by and among the Registrant, BAI, NCB, and NTC(19)
10.36 Amendment No. 5 to Credit Agreement dated as of June 2, 1997 by
and among the Registrant, BAI, NCB, and NTC(20)
10.37 Amendment No. 7 to Credit Agreement dated as of March 27, 1998 by
and among the Registrant, BAI, NCB, and NTC
10.38 Employment Agreement by and between Sunshine and John C. Taylor
dated June 17, 1992(19)
10.39 Employment Agreement by and between Sunshine and Steven G. Taylor
dated June 17, 1992(19)
10.40 Credit Agreement dated as of March 31, 1998 among the Registrant,
Sunshine, Quantz, JBSI, U.S. Bancorp Ag Credit, Inc. ("USB") as Agent,
Keybank National Association ("KNA"), and LNB.
10.41 Revolving Credit Note in the principal amount of $35.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of USB,
dated as of March 31, 1998.
10.42 Revolving Credit Note in the principal amount of $15.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of KNA,
dated as of March 31, 1998.
10.43 Revolving Credit Note in the principal amount of $20.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of LSB,
dated as of March 31, 1998.
11 None
15 None
17 None
18 None
24-26 None
27 Financial Data Schedule
99 None
- -------------------------------------------
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Registration No. 33-43353, as filed
with the Commission on October 15, 1991 (Commission File No.
0-19681).
(2) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991
(Commission File No. 0-19681).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Amendment No. 3), Registration No. 33-
43353, as filed with the Commission on November 25, 1991
(Commission File No. 0-19681).
(4) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the second quarter ended June 25, 1992
(Commission File No. 0-19681).
(5) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated September 29, 1992 (Commission File No. 0-
19681).
(6) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated January 15, 1993 (Commission File No. 0-
19681).
(7) Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Registration No. 33-59366, as filed
with the Commission on March 11, 1993 (Commission File No. 0-
19681).
(8) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the third quarter ended September 30, 1993
(Commission File No. 0-19681).
(9) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated September 15, 1993 (Commission file No. 0-
19681).
(10) Incorporated by reference to the Registrant's Current
Report and Form 8-K dated June 23, 1994 (Commission File No.
0-19681).
(11) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 (Commission File No. 0-19681).
(12) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994 (Commission File No. 0-19681).
(13) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the first quarter ended March 30, 1995
(Commission File No. 0-19681).
(14) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the second quarter ended June 29, 1995
(Commission File No. 0-19681).
(15) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated September 12, 1995 (Commission File
No. 0-19681).
(16) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the third quarter ended September 28,
1995 (Commission file No. 0-19681).
(17) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1995 (Commission file No. 0-19681).
(18) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated January 24, 1997
(Commission file No. 0-19681).
(19) Incorporated by reference to the Registrant's Annual
Report Form 10-K for the fiscal year ended December 31, 1996
(Commission file No. 0-19681)
(20) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated May 21, 1997
(Commission file No. 0-19681)
John B. Sanfilippo & Son, Inc. will furnish any of the above
exhibits to its stockholders upon written request addressed to the
Secretary at the address given on the cover page of this Form 10-
Q. The charge for furnishing copies of the exhibits is $.25 per
page, plus postage.
As of March 31, 1998
John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove, Illinois 60007
Attention: Jasper B. Sanfilippo, President
Ladies and Gentlemen:
Reference is made to that certain Second Amended and
Restated Note Agreement dated as of January 24, 1997 (as amended
from time to time, the "Note Agreement") between John B.
Sanfilippo & Son, Inc., a Delaware corporation (the "Company"),
and The Prudential Insurance Company of America ("Prudential"),
pursuant to which the Company issued and sold and Prudential
purchased the Company's Series A, B, C, D, E and F Senior Notes.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Note
Agreement.
Pursuant to the request of the Company and in accordance
with the provisions of paragraph 11C of the Note Agreement, the
parties hereto agree as follows:
SECTION 1. Amendment. From and after the date this letter
becomes effective in accordance with its terms, the Note
Agreement is amended as follows:
1.1 Paragraph 4A(2) of the Note Agreement is deleted in its
entirety and the following is hereby substituted therefor:
"4A(2). Prepayment with Yield-Maintenance Amount
under Certain Circumstances. If amounts are to be
applied to the principal of the Notes pursuant to
paragraph 6F(iii) or 11U, 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 in the inverse
order of their scheduled maturity dates."
1.2 Clause (x) of paragraph 5A of the Note Agreement is
amended to (i) delete in its entirety the phrase "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" appearing therein and to
substitute therefor the following:
"Sections 9 and 10 of the Bank Agreement",
and (ii) to delete in its entirety subclause (A) thereof and to
substitute the following therefor:
"(A) no "Matured Default" (as defined in the Bank
Agreement has occurred and is continuing under the Bank
Agreement,"
1.3 Clause (xi) of paragraph 5A of the Note Agreement is
amended to delete in its entirety the phrase "the borrowing base
certificate and" appearing therein.
1.4 Paragraph 5B of the Note Agreement is amended to delete
in its entirety the phrase "the Collateral or" appearing in the
parenthetical contained in such paragraph 5B.
1.5 Paragraph 5I of the Note Agreement is hereby deleted in
its entirety and the following is hereby substituted herefor:
"5I. [Intentionally Omitted];"
1.6 Clause (f) of paragraph 6A of the Note Agreement is
hereby deleted in its entirety and the following is hereby
substituted therefor:
"(f) [Intentionally Omitted];"
1.7 Clause (vi) of paragraph 6B(2) of the Note Agreement is
hereby deleted in its entirety and the following is hereby
substituted therefor:
"(vi) [Intentionally Omitted];"
1.8 Paragraph M of the Note Agreement is deleted in its
entirety and the following is hereby substituted therefor:
"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 such amendment, supplement or other
modification which:
(i) extends the date or reduces the
amount of any required repayment or
redemption,
(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 of this Agreement,
or
(iii) solely with respect to the Bank
Agreement and subject to the terms of
paragraphs 6R and 6S, increases the principal
amount of Debt thereunder or pricing
applicable thereto if no default or event of
default shall be continuing hereunder or
under the Bank Agreement at the time (or
immediately prior to the time) such
amendment, supplement or modification is
entered into (or series of related
amendments, modifications or supplements
entered into in concert),
without, in all cases, the consent of the Required
Holder(s), which consent shall not be unreasonably
withheld or delayed. Without limiting the generality
of the foregoing, the Company will not consent to or
permit any amendment, supplement or other modification
which has the effect of (a) increasing the interest
rate or fees under such agreement (other than the Bank
Agreement to the extent permitted by the immediately
preceding sentence), (b) increasing the amount of
obligations of the Company or any Subsidiary under such
agreement (other than the Bank Agreement to the extent
permitted by the immediately preceding sentence), (c)
amending the financial covenants contained in such
agreement or (d) with respect to the Teachers Note
Agreement, permitting any prepayment of obligations
under such agreement.
1.9 Paragraph 6R of the Note Agreement is hereby amended to
add to a new clause (g) thereto at the end thereof as follows:
"(g) Total assets of the Company on an
unconsolidated basis to be less than 75% of total
assets of the Company and its Subsidiaries on a
consolidated basis at any time."
1.10 Paragraph 6S of the Note Agreement is deleted in its
entirety and the following is hereby substituted therefor:
"6S. Subsidiary Indebtedness. 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 Guarantees or any Bank Obligations of Subsidiaries
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 Net Worth."
1.11 Clause (iii) of paragraph 6Q of the Note Agreement is
amended to add at the beginning thereof the following phrase "the
Bank Agreement or".
1.12 Clause (xv) of paragraph 7A of the Note Agreement is
amended to delete in its entirety the phrase "an `Event of
Default' as defined in the Bank Agreement" and to substitute
therefor the phrase "a `Matured Default' as defined in the Bank
Agreement".
1.13 Clauses (xviii) and (xx) of paragraph 7A of the Note
Agreement are hereby deleted in their entirety and clause (xix)
of the Note Agreement is hereby renumbered to be clause (xviii)
of paragraph 7A of the Note Agreement.
1.14 Paragraph 10B of the Note Agreement is hereby amended
to:
(i) delete in their entirety the following defined
terms appearing therein: "Collateral Agent",
"Collateral Agency Agreement", "Collateral Documents",
and "Security Agreement", and
(ii) to amend and restate in their entirety the
defined terms listed below to read as set forth below:
"Ancillary Agreements" shall mean this Agreement,
the Notes, 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."
"Bank Agent" shall mean U.S. Bancorp Ag Credit,
Inc., a Colorado corporation, in its capacity as agent
under the Bank Agreement.
"Bank Agreement" shall mean that certain Credit
Agreement dated as of March 31, 1998 among the Company,
Sunshine, Quantz and JBS International, Inc. as
borrowers, and U.S. Bancorp Ag Credit, Inc., LaSalle
National Bank and KeyBank National Association as
lenders and the Bank Agent as agent for such lenders,
together with the "Financing Agreements" (as defined
therein), all as amended, modified and in effect from
time to time with the consent of the Required
Holder(s)."
"Bank Obligations" shall mean the "Liabilities" 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 and with such amendments thereto as the
Required Holders may consent to in writing.
"Banks" shall mean U.S. Bancorp Ag Credit, Inc.,
LaSalle National Bank and KeyBank National Association
and the Bank Agent in its capacity as such under the
Bank Agreement, and their respective successor and
assigns and any other party that becomes a lender under
the Bank Agreement."
"Fiscal Year" shall mean any period of twelve
consecutive calendar months ending on the last Thursday
of June; 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 Thursday in June occurring
during such calendar year."
1.15 Paragraph 11U of the Note Agreement is amended to
delete therefrom all references to "the Collateral Agent" and to
delete the reference to the "Collateral Agency Agreement"
appearing therein and substitute therefor a reference to
"paragraph 4A(2) of this Agreement".
1.16 Exhibit M to the Note Agreement is hereby amended and
restated in the form of the Exhibit M attached hereto.
SECTION 2. Release of Collateral; Consent. Prudential
hereby authorizes Bank of America Illinois, in its capacity as
Collateral Agent under the Intercreditor and Collateral Agency
Agreement dated as of January 24, 1997, to release any Liens held
by it for the benefit of Prudential securing the Notes and
obligations under the Note Agreement simultaneously with the
release and termination of all "Collateral Documents" (as defined
in the Note Agreement prior to the effectiveness of this letter).
Upon the effectiveness of this letter, Prudential consents to
(a) the amendment dated as of the date hereof to the Teachers
Note Agreement in the form of Attachment B hereto and (b) the
entry by the Company and its Subsidiaries into the Bank Agreement
in the form of Attachment D hereto.
SECTION 3. Conditions Precedent. This letter shall become
effective as of the date first above written upon the last to
occur of (i) the return by the Company to Prudential of a
counterpart hereof duly executed by the Company, the other
signatories listed below and Prudential, (ii) the execution and
delivery of a guaranty of the Notes by JBS International, Inc., a
Barbados corporation, in the form attached hereto as Attachment C
together with a favorable legal opinion from Jenner & Block
addressed to Prudential and in form and substance satisfactory to
Prudential covering the matters stated in the second sentence of
Sections 3.2 and 3.3 (as to applicable laws) of such guaranty,
and (iii) the effectiveness of the Credit Agreement attached
hereto as Attachment D. The letter should be returned to:
Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, Attention: Wiley S. Adams.
SECTION 4. Representations and Warranties. The Company
represents and warrants to Prudential on the date hereof and as
of the date this letter becomes effective in accordance with its
terms (and the parties hereto agree that the following
representations and warranties shall be deemed to have been made
pursuant to the Note Agreement for all relevant purposes hereof):
4.1 Enforceability. This letter has been duly executed and
delivered by the Company, and the Note Agreement (before and
after the effectiveness of this letter) 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
transfer or similar laws of general application relating to
creditors' rights.
4.2 No Defaults. No Default or Event of Default has
occurred and is continuing, and no default has occurred and is
continuing under the Bank Agreement or under the Teachers Note
Agreement.
4.3 No Misstatement. This letter does not contain any
misstatement of a material fact necessary to make the statement
or statements of the Company contained herein not misleading, and
the Company has disclosed to Prudential 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 letter and/or
the consummation of the terms and conditions hereof.
4.4 Other Documents. The Company has provided Prudential
with true and correct copies of the Bank Agreement and the
amendment dated as of the date hereof to the Teachers Note
Agreement both as in effect on the date hereof.
SECTION 5. Reference to and Effect on Note Agreement. Upon
the effectiveness of this letter, each reference to the Note
Agreement in any other document, instrument or agreement shall
mean and be a reference to the Note Agreement as modified by this
letter. Except as specifically set forth in Section 1 hereof,
the Note Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.
SECTION 6. Governing Law. THIS LETTER SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF
SUCH STATE.
SECTION 7. Counterparts; Section Titles. This letter 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 but one and the same
instrument. The section titles contained in this letter are and
shall be without substance, meaning or content of any kind
whatsoever and are not a part of the agreement between the
parties hereto.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Mark Hoffmeister
-----------------
Senior Vice President
cc: Timothy R. Donovan ---------------------
Jenner & Block
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
AGREED AND ACCEPTED:
JOHN B. SANFILIPPO & SON, INC.
By: Gary P. Jensen
---------------
Title: Executive Vice President,
Finance and Chief Financial
Officer
---------------------------
The guaranties of the Notes executed
by the undersigned are hereby
ratified and confirmed in all respects:
SUNSHINE NUT CO., INC.
By: Michael J. Valentine
---------------------
Title: Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC.
By: Michael J. Valentine
---------------------
Title: Assistant Secretary
-------------------
GUARANTY AGREEMENT
This Guaranty Agreement (the "Guaranty"), dated as of March
31, 1998, is made by JBS International, Inc., a Barbados
corporation ("Guarantor"), in favor of The Prudential Insurance
Company of America ("Prudential") and each "Prudential Affiliate"
(as defined in the Amended Agreement referred to below) which
becomes bound by the Amended Agreement as provided therein,
together with their respective successors and assigns (each such
Prudential Affiliate together with Prudential and their
successors and assigns and each holder of a Note are herein
referred to individually and collectively as the "Lender").
RECITALS:
WHEREAS, John B. Sanfilippo & Son, Inc., a Delaware
corporation ("Borrower"), desires to enter into that certain
letter amendment dated as of the date hereof (the "Letter
Amendment") to the Second Amended and Restated Note Agreement
dated as of January 27, 1997 (as amended by such Letter Amendment
hereinafter referred to as, the "Amended Agreement") which
amended and restated in its entirety the Amended and Restated
Note Purchase and Private Shelf Agreement dated as of October 19,
1993 under which the Lender has purchased, and the Borrower has
issued and sold, the Notes (as defined in the Amended Agreement);
and
WHEREAS, all parties acknowledge that the indebtedness and
obligations contemplated by the Amended Agreement have been
incurred for and will inure, in part, to the benefit of the
Guarantor; and
WHEREAS, in order to enter into the Letter Amendment, Lender
has required, among other things, that this Guaranty be executed
and delivered.
NOW THEREFORE, for value received, to satisfy one of the
conditions precedent to the Letter Amendment, to induce any
Transferee to accept the transfer of all or any part of any Note,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Guarantor agrees
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the
term "Indebtedness" shall mean all of the indebtedness,
obligations and liabilities existing on the date hereof or
arising from time to time hereafter, whether direct or indirect,
joint or several, actual, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured,
arising by contract, operation of law or otherwise, of the
Borrower to the Lender and all other holders of Notes under or in
respect of the Amended Agreement, the Notes or any one or more of
the other Ancillary Agreements, including, without limitation,
the principal of and interest and Yield-Maintenance Amount, if
any, on the Notes.
SECTION 1.2 OTHER DEFINITIONS. Capitalized terms that are
used in this Guaranty and not defined in this Guaranty shall have
the meaning ascribed to them in the Amended Agreement; provided,
that, the terms "Environmental Laws", "CERCLA" and "Pension
Plan", shall have the meanings given such terms in the Bank
Agreement, as in effect on the date hereof, and such definitions
are incorporated by reference herein as though set forth fully
herein.
ARTICLE II
THE GUARANTY
SECTION 2.1 GUARANTY OF PAYMENT AND PERFORMANCE OF
OBLIGATIONS. Guarantor absolutely, unconditionally and
irrevocably guarantees the full and prompt payment in United
States currency when due (whether at maturity, a stated
prepayment date or earlier by reason of acceleration or
otherwise) and at all times thereafter, and the due and punctual
performance, of all Indebtedness together with all costs and
expenses, including without limitation all court costs and
expenses and attorneys' fees, paid or incurred by Lender in
endeavoring to enforce this Guaranty or in pursuing any action
against Borrower or Guarantor or enforcing any rights of Lender
in the security for the Indebtedness or for liabilities of the
Guarantor hereunder, and any taxes, fees or penalties which may
be paid or payable in connection therewith. This is a continuing
guaranty of payment and performance not of collection.
Upon an Event of Default, Lender may, at its sole election
and without notice, proceed directly and at once against
Guarantor to seek and enforce performance of, and to collect and
recover, the Indebtedness, or any portion thereof, without first
proceeding against Borrower, any other Person, or any security
for the Indebtedness or for the liability of any such other
Person or the Guarantor hereunder. Lender shall have the
exclusive right to determine the application of payments and
credits, if any, from Guarantor, Borrower or from any other
Person on account of the Indebtedness or otherwise.
SECTION 2.2 OBLIGATION, UNCONDITIONAL. The obligations of
Guarantor under this Guaranty shall be continuing, absolute and
unconditional, irrespective of (i) the invalidity or
unenforceability of any part or all of the Amended Agreement or
any other Ancillary Agreement; (ii) the absence of any attempt by
Lender to collect the Indebtedness or any portion thereof from
Borrower or other action to enforce the same; (iii) the waiver or
consent by Lender with respect to any provision of the Amended
Agreement or any other Ancillary Agreement or applicable law;
(iv) any failure by Lender to acquire, perfect or maintain any
security interest or lien in, or take any steps to preserve its
rights to any security for the Indebtedness or any portion
thereof or for the liability of Guarantor hereunder; (v) any
defense arising by reason of any disability or other defense
(other than a defense of payment, unless the payment on which
such defense is based was or is subsequently invalidated,
declared to be fraudulent or preferential, otherwise avoided
and/or required to be repaid to Borrower, the Guarantor, the
estate of either the Borrower or the Guarantor, a trustee,
receiver or any other Person under any bankruptcy law, state or
federal law, common law or equitable cause, in which case there
shall be no defense of payment with respect to such payment) of
Borrower or any other Person liable on the Indebtedness or any
portion thereof; (vi) Lender's election, in any proceeding
instituted under Chapter 11 of Title 11 of the Federal Bankruptcy
Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the
application of Section llll(b)(2) of the Bankruptcy Code; (vii)
any borrowing or grant of a security interest to Lender by
Borrower, as debtor-in-possession, or extension of credit, under
Section 364 of the Bankruptcy Code; (viii) the disallowance or
avoidance of all or any portion of Lender's claim(s) for
repayment of the Indebtedness under the Bankruptcy Code or any
similar state law or the avoidance of any security for the
Indebtedness or any security for the liability of the Guarantor
hereunder; (ix) any amendment to, waiver or modification of, or
consent under any provision of the Amended Agreement or any other
Ancillary Agreement; (x) any change in any provision of any
applicable law or regulation; (xi) any order, judgment, writ,
award or decree of any court, arbitrator or governmental
authority, domestic or foreign, binding on or affecting Guarantor
or Borrower or any of their assets; (xii) the charter or by-laws
of Guarantor or Borrower; (xiii) any mortgage, indenture, lease,
contract, or other agreement (including without limitation any
agreement with stockholders), instrument or undertaking to which
Guarantor or Borrower is a party or which purports to be binding
on or affect Guarantor or Borrower or any of their assets; or
(xiv) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
SECTION 2.3 LENDER'S FREEDOM TO ACT. Lender is authorized,
without notice and without affecting the liability of Guarantor
hereunder, from time to time to (i) renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating
to, the Indebtedness or any portion thereof, or otherwise modify,
amend or change the terms of the Amended Agreement or any of the
other Ancillary Agreements; (ii) accept partial payments on the
Indebtedness; (iii) take and hold security or additional
guaranties or sureties for the Indebtedness or any portion
thereof or any other liabilities of Borrower, the obligations of
Guarantor under this Guaranty and the obligations under any other
guaranties and sureties of the Indebtedness, and exchange,
enforce, waive, release, sell, transfer, assign or otherwise deal
with any such security, guaranty or surety; (iv) apply such
security and direct the order or manner of sale thereof as Lender
may determine in its sole discretion; (v) settle, release,
compromise, collect or otherwise liquidate the Indebtedness or
any portion thereof and any security therefor in any manner; (vi)
extend additional loans, credit and financial accommodations and
otherwise create additional Indebtedness; (vii) waive strict
compliance with the terms of the Amended Agreement or the other
Ancillary Agreements and otherwise forbear from asserting
Lender's rights and remedies thereunder; (viii) enforce or
forbear from enforcing the guaranty or surety of any other
guarantor or surety of the Indebtedness, any portion thereof or
release any such guarantor or surety; and (ix) assign this
Guaranty in part or in whole in connection with any assignment of
the Indebtedness or any portion thereof.
SECTION 2.4 WAIVERS OF GUARANTOR. Guarantor waives all
set-offs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and diligence with respect to the
Indebtedness and the obligations of Guarantor hereunder, the
filing of any claims with a court in the event of receivership or
bankruptcy of Borrower, and notices of acceptance of this
Guaranty. Guarantor further waives all notices that the
principal amount, any payment or any portion thereof, any
interest or Yield- Maintenance Amount on the Indebtedness or any
portion thereof is due, notices of any and all proceedings to
collect from Borrower, anyone primarily or secondarily liable
with respect to the Indebtedness or any portion thereof, or from
anyone else, and, to the extent permitted by law, notices of
exchange, sale, surrender or other handling of any security
securing payment of the Indebtedness or this Guaranty. The
Guarantor agrees that the Lender shall not be under any
obligation to marshall any assets in favor of Guarantor or
against or in payment of any or all of the Indebtedness.
The Guarantor hereby waives and releases the Borrower from
any and all "claims" (as defined in Section 101(4) of the
Bankruptcy Code) to which the Guarantor is or would at any time
be entitled by virtue of its obligations under this Guaranty,
including, without limitation, any right of subrogation (whether
contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, indemnity, exoneration
or similar right against the Borrower. Guarantor further waives
any right to demand security from Borrower and any benefit of,
and any right to participate in, any security given to Lender to
secure payment of the Indebtedness or any other liability of
Borrower to Lender.
SECTION 2.5 REVIVAL. To the extent that Borrower or
Guarantor makes a payment or payments, or a transfer of an
interest in any property to Lender or Lender enforces its rights
in any security for the liabilities of Guarantor hereunder or
exercises its right of set-off, and such payment, payments,
transfer, or the proceeds of such enforcement or set-off, or any
portion of such payment, payments, transfer or proceeds are
subsequently invalidated, declared to be fraudulent or
preferential, set aside, otherwise avoided or required to be
repaid to Borrower, Guarantor, the estate of Borrower or
Guarantor, a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such recovery, avoidance or
repayment, the obligation or part of such obligation originally
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such
payment, enforcement or set-off had not occurred.
SECTION 2.6 OBLIGATION TO KEEP INFORMED. Guarantor shall
be responsible for keeping itself informed of the financial
condition of Borrower and any other Persons primarily or
secondarily liable on the Indebtedness or any portion thereof,
and of all other circumstances bearing upon the risk of
nonpayment of the Indebtedness or any portion thereof, and
Guarantor agrees that Lender shall have no duty to advise
Guarantor of information known to Lender regarding such condition
or any such circumstance. If Lender, in its discretion,
undertakes at any time or from time to time to provide any such
information to Guarantor, Lender shall not be under any
obligation (i) to undertake any investigation, whether or not a
part of its regular business routine, (ii) to disclose any
information which Lender wishes to maintain confidential, or
(iii) to make any other or future disclosures of such information
or any other information to Guarantor.
SECTION 2.7 BANKRUPTCY. If any Event of Default specified
in clauses (viii) to (x), inclusive, of paragraph 7A of the
Amended Agreement shall occur and be continuing, any and all
obligations of the Guarantor shall forthwith become due and
payable without notice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The undersigned represents, covenants and warrants as
follows:
SECTION 3.1 ORGANIZATION. The Guarantor is a corporation
duly organized and existing in good standing under the laws of
Barbados. The Guarantor is duly qualified and authorized to
transact business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the
business conducted by it or the ownership of its properties or
assets makes such qualification necessary, except where the
failure to be in good standing or to be so qualified or
authorized would not have a material adverse effect on the
business, condition (financial or otherwise) or operations of the
Guarantor.
SECTION 3.2 POWER AND AUTHORITY. The Guarantor has all
requisite corporate power to conduct its business as currently
conducted and as currently proposed to be conducted. The
Guarantor has all requisite corporate power to execute, deliver
and perform its obligations under this Guaranty and all other
Ancillary Agreements to which it is a party. The execution,
delivery and performance by the Guarantor of this Guaranty and
all other Ancillary Agreements to which it is a party have been
duly authorized by all requisite corporate action on the part of
the Guarantor. The Guarantor has duly executed and delivered
this Guaranty and all other Ancillary Agreements to which it is a
party and this Guaranty and all other Ancillary Agreements to
which it is a party constitute the legal, valid and binding
obligations of the Guarantor, enforceable against the Guarantor
in accordance with their terms.
SECTION 3.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. The
Guarantor is not 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 this
Guaranty or any of the other Ancillary Agreements to which it is
a party nor fulfillment of nor compliance with the terms and
provisions hereof or thereof, 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
Guarantor pursuant to, the charter or by-laws of the Guarantor,
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 Guarantor
is subject. The Guarantor is not a party to, or otherwise
subject to any provision contained in, any instrument evidencing
Indebtedness (as defined in the Amended Agreement) of the
Guarantor, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of,
or otherwise imposes restrictions on the creation of, any
guarantee, except under the Amended Agreement, the Bank Agreement
and the Teachers Note Agreement.
SECTION 3.4. [Intentionally Left Blank.]
SECTION 3.5 [Intentionally Left Blank.]
SECTION 3.6 LITIGATION, LABOR CONTROVERSIES ETC. There
is no pending or, to the knowledge of the Guarantor, threatened
litigation, action, proceeding, or labor controversy affecting
the Guarantor, or any of its properties, businesses, assets or
revenues, which may materially adversely affect the financial
condition, operations, assets, business, properties or prospects
of the Guarantor or which purports to affect the legality,
validity or enforceability of this Guaranty, the Amended
Agreement or any other Ancillary Agreement.
SECTION 3.7 SUBSIDIARIES. The Borrower owns not less
than 100% of the issued and outstanding shares of capital stock
of the Guarantor. The Guarantor has no Subsidiaries.
SECTION 3.8 OWNERSHIP OF PROPERTIES. The Guarantor owns
good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service
marks and copyrights), free and clear of all Liens, charges or
claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant
to paragraph 6A of the Amended Agreement.
SECTION 3.9 TAXES. The Guarantor has filed all tax
returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
SECTION 3.10 PENSION AND WELFARE PLANS. During the
twelve-consecutive-month period prior to the date of the
execution and delivery of this Guaranty, no steps have been taken
to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise
to a Lien under section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension
Plan which might result in the incurrence by the Guarantor or any
ERISA Affiliate of any material liability, fine or penalty.
Neither the Guarantor nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement benefit under a
welfare plan, other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
SECTION 3.11 ENVIRONMENTAL WARRANTIES.
(a) all facilities and property (including
underlying groundwater) owned or leased by the
Guarantor have been, and continue to be, owned or
leased by the Guarantor in material compliance with all
Environmental Laws;
(b) there have been no past, and there are no
pending or threatened
(i) claims, complaints, notices or
requests for information received by the
Guarantor with respect to any alleged
violation of any Environmental Law, or
(ii) complaints, notices or inquiries to
the Guarantor regarding potential liability
under any Environmental Law;
(c) there have been no releases of hazardous
materials at, on or under any property now or
previously owned or leased by the Guarantor that,
singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the
financial condition, operations, assets, business,
properties or prospects of the Guarantor;
(d) the Guarantor has been issued and is in
material compliance with all permits, certificates,
approvals, licenses and other authorizations relating
to environmental matters and necessary or desirable for
its businesses;
(e) no property now or previously owned or leased
by the Guarantor is listed or proposed for listing
(with respect to owned property only) on the National
Priorities List pursuant to CERCLA, on the CERCLIS or
on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks,
active or abandoned, including petroleum storage tanks,
on or under any property now or previously owned or
leased by the Guarantor that, singly or in the
aggregate, have, or may reasonably be expected to have,
a material adverse effect on the financial condition,
operations, assets, business, properties or prospects
of the Guarantor;
(g) the Guarantor has not directly transported or
directly arranged for the transportation of any
hazardous material to any location which is listed or
proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar
state list or which is the subject of federal, state or
local enforcement actions or other investigations which
may lead to material claims against the Guarantor for
any remedial work, damage to natural resources or
personal injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or
friable asbestos present at any property now or
previously owned or leased by the Guarantor that,
singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the
financial condition, operations, assets, business,
properties or prospects of the Guarantor; and
(i) no conditions exist at, on or under any
property now or previously owned or leased by the
Guarantor which, with the passage of tine, or the
giving of notice or both, would give rise to liability
under any Environmental Law.
SECTION 3.12 ACCURACY OF INFORMATION. All factual
information heretofore or contemporaneously furnished by or on
behalf of the Guarantor in writing to Prudential or any Lender
for purposes of or in connection with this Guaranty or any
transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Guarantor
to Prudential or any Lender will be, true and accurate in every
material respect on the date as of which such information is
dated or certified and as of the date of execution and delivery
of this Guaranty by Prudential and such Lender, and such
information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to
make such information not misleading.
ARTICLE IV
COVENANTS
SECTION 4.1 AFFIRMATIVE COVENANTS. The Guarantor
covenants and agrees that, so long as any portion of the
Indebtedness shall remain unpaid, the Guarantor will, unless the
Required Holders shall otherwise consent in writing, perform the
obligations set forth in this Section.
SECTION 4.1.1 [Intentionally Left Blank.]
SECTION 4.1.2 COMPLIANCE WITH LAWS, ETC. The Guarantor
will comply in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its
corporate existence and qualification as a foreign
corporation; and
(b) the payment, before the same become
delinquent, of all taxes, assessments and governmental
charges imposed upon it or upon its property except to
the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on
its books.
SECTION 4.1.3 MAINTENANCE OF PROPERTIES. The Guarantor
will maintain, preserve, protect and keep its properties in good
repair, working order and condition, and make necessary and
proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at
all times unless the Guarantor determines in good faith that the
continued maintenance of any of its properties is no longer
economically desirable.
SECTION 4.1.4 INSURANCE. The Guarantor will maintain or
cause to be maintained with responsible insurance companies
insurance with respect to its properties and business against
such casualties and contingencies and of such types and in such
amounts as is customary in the case of similar businesses and
will, upon request of Prudential, furnish to each holder of a
Note at reasonable intervals a certificate of an Authorized
Officer of the Guarantor setting forth the nature and extent of
all insurance maintained by the Guarantor and its Subsidiaries in
accordance with this section.
SECTION 4.1.5 BOOKS AND RECORDS. The Guarantor will keep
books and records which accurately reflect all of its business
affairs and transactions and permit any holder of a Note or any
of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial
matters with its officers and independent public accountant (and
the Guarantor hereby authorizes such independent public
accountant to discuss the Guarantor's financial matters with any
holder of a Note or its representatives whether or not any
representative of the Guarantor is present) and to examine (and,
at the expense of the Guarantor, photocopy extracts from) any of
its books or other corporate records. The Guarantor shall pay
any fees of such independent public accountant incurred in
connection with any holder's exercise of its rights pursuant to
this section.
SECTION 4.1.6 ENVIRONMENTAL COVENANT. The Guarantor will
(a) use and operate all of its facilities and
properties in material compliance with all
Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other
authorizations relating to environmental matters in
effect and remain in material compliance therewith, and
handle all hazardous materials in material compliance
with all applicable Environmental Laws;
(b) immediately notify Prudential and provide
copies upon receipt of all written claims, complaints,
notices or inquiries relating to the condition of its
facilities and properties or compliance with
Environmental Laws, and shall diligently defend to the
satisfaction of the Agent any actions and proceedings
relating to compliance with Environmental Laws; and
(c) provide such information and certifications
which Prudential may reasonably request from time to
time to evidence compliance with this section 4.1.6.
SECTION 4.2 NEGATIVE COVENANTS. The Guarantor covenants
and agrees that, so long as any portion of the Indebtedness shall
remain unpaid, the Guarantor will not, without the prior written
consent of the Required Holders, do anything prohibited in this
section.
SECTION 4.2.1 INDEBTEDNESS. The Guarantor will not create,
incur, assume or suffer to exist or otherwise become or be liable
in respect of any Indebtedness or any guaranty of any
Indebtedness other than Indebtedness under the Teachers Note
Agreement and the Bank Agreement as in effect on the date hereof.
SECTION 4.2.2 LIENS. The Guarantor will not create, incur,
assume or suffer to exist any Lien upon any of its property,
revenues or assets, whether now owned or hereafter acquired.
SECTION 4.2.3 INVESTMENTS. The Guarantor will not make,
incur, assume or suffer to exist any Investment in any other
Person.
SECTION 4.2.4 BUSINESS; OWNERSHIP OF PROPERTY. The
Guarantor will not engage in any business or own any property
other than the property owned by the Guarantor on the date
hereof.
SECTION 4.2.5 CONSOLIDATION, MERGER, ETC. The Guarantor
will not 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 as permitted by all of the Amended
Agreement.
SECTION 4.2.6 ASSET DISPOSITIONS ETC. The Guarantor will
not sell, transfer, lease, contribute or otherwise convey, or
grant options, warrants or other rights with respect to, all or
any part of its assets (including accounts receivable and capital
stock of Subsidiaries) to any Person, except as permitted by the
Amended Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 SUCCESSORS, ASSIGNS AND PARTICIPANTS. This
Guaranty shall be binding upon Guarantor and its successors and
assigns and shall inure to the benefit of Lender and its
successors, transferees and assigns; all references herein to
Guarantor shall be deemed to include its successors and assigns,
and all references herein to Lender shall be deemed to include
its successors and assigns. This Guaranty shall be enforceable
by Lender and any of Lender's successors, assigns and
participants, and any such successors and assigns shall have the
same rights and benefits with respect to the Borrower under this
Guaranty as the Lender hereunder.
SECTION 5.2 FURTHER ASSURANCES. Guarantor agrees, at the
sole cost and expense of Guarantor, to promptly do all such
things and execute all such documents as Lender may consider
necessary or desirable to preserve the rights and powers of
Lender hereunder.
SECTION 5.3 NOTICES. Except as otherwise expressly
provided herein, any notice required or desired to be served,
given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered five (5)
days after deposit in the United States mails, with proper
postage prepaid, or upon delivery by courier or upon transmission
by telex, telecopy or similar electronic medium to the following
addresses:
(i) If to the Lender at:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Attention: Managing Director
Telecopy: (312) 540-4222
Telephone: (312) 540-4204
with a copy to:
Wiley S. Adams
Assistant General Counsel
Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Telecopy: (312) 540-4222
Telephone: (312) 540-4204
(ii) If to Guarantor at:
JBS International, Inc.
c/o John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove Village, Illinois 60007
Attn: Michael J. Valentine, Chairman and President
Telecopy: (847) 593-3085
Telephone: (847) 593-2300
with a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attn: Timothy R. Donovan
Telecopy: (312) 527-0484
Telephone: (312)222-9350
or to such other address as each party designates to the other in
the manner herein prescribed.
SECTION 5.4 AMENDMENTS, WAIVERS and CONSENTS. No amendment
or waiver of or consent to any departure by Guarantor from any
provision of this Guaranty, shall be binding on Lender except as
expressly set forth and consented to in a writing duly signed and
delivered by the Required Holder(s), and then such amendment,
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No course
of dealing between Guarantor and Lender, nor any failure on the
part of Lender to exercise any right, power or remedy nor any
delay on the part of Lender in exercising any right, power or
remedy shall operate as a waiver thereof, and no single or
partial exercise by Lender of any right, power or remedy shall
preclude any further exercise thereof by Lender. No waiver of
any right, power or remedy shall be deemed to occur by any act or
knowledge of Lender, its agents, officers or employees or be
binding against Lender, except as expressly set forth in a
writing duly signed and delivered by the Required Holder(s). No
waiver by the Required Holder(s) of any default shall operate as
a waiver of any other default or the same default on a future
occasion, and no action by Lender permitted hereunder shall in
any way affect or impair any of Lender's rights, powers or
remedies or the obligations of Guarantor under this Guaranty.
Any determination by a court of competent jurisdiction of the
amount of any part of the Indebtedness shall be conclusive and
binding on Guarantor irrespective of whether Guarantor was a
party to the suit or action in which such determination was made.
As used herein, the term "this Guaranty" and references thereto
shall mean this Guaranty as it may from time to time be amended
or supplemented.
SECTION 5.5 GOVERNING LAW. THIS GUARANTY HAS BEEN
DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT CHICAGO,
ILLINOIS AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF
THE STATE OF ILLINOIS.
SECTION 5.6 SUBMISSION TO JURISDICTION. THE GUARANTOR
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS, AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE LENDER'S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
GUARANTY OR THE OTHER ANCILLARY AGREEMENTS TO WHICH THE GUARANTOR
IS A PARTY SHALL BE LITIGATED IN SUCH COURTS, AND THE GUARANTOR
WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH
COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT,
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR
MESSENGER ON JOHN B. SANFILIPPO & SON, INC. AT THE ADDRESS SET
FORTH IN SECTION 5.3 ABOVE AND THAT SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE GUARANTOR'S
ADDRESS AS SET FORTH IN SECTION 5.3. THE LENDER AND THE
GUARANTOR ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH
TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY
JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE LENDER.
NOTHING CONTAINED IN THIS SUBSECTION 5.6 SHALL AFFECT THE RIGHT
OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY
ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 5.7 COUNTERPARTS. This Guaranty may be executed in
any number of counterparts, each of which shall be an original
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
SECTION 5.8 INTERPRETATION; PARTIAL INVALIDITY. Whenever
possible each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
SECTION 5.9 NO USURY. Nothing contained in this Guaranty
shall be construed or shall so operate either presently or
prospectively to require Guarantor to pay any amount under this
Guaranty on account of the Indebtedness that constitutes interest
in excess of the maximum amount of interest permitted by law to
be charged on all or any portion of the Indebtedness and to be
guaranteed by Guarantor hereunder. If any interest in excess of
the maximum amount of interest permitted by law to be charged and
to be guaranteed hereunder is provided for, or is adjudicated to
be provided for, with respect to all or any portion of the
Indebtedness, then in such event (i) the provisions of this
Section 5.9 shall govern and control; (ii) Guarantor shall not be
obligated to pay any amount under this Guaranty that constitutes
interest in excess of that so permitted on all or any portion of
the Indebtedness; (iii) any amount paid by Guarantor to Lender
under this Guaranty that constitutes interest in excess of that
so permitted on all or any portion of the Indebtedness shall, at
the option of Lender, be (A) applied as a credit against the then
unpaid but due and owing amount under this Guaranty, (B) refunded
to the Guarantor or (C) applied or refunded pursuant to any
combination of the foregoing; (iv) this Guaranty shall have been
deemed to have been, and shall be, reformed and modified to
reflect, the Guarantor's guarantee hereunder of the payment of
the Indebtedness to the extent interest included therein is
permitted by law to be charged and to be guaranteed by Guarantor
hereunder; and (v) Guarantor shall not have any action against
Lender for any damages whatsoever arising out of the payment or
collection of any such amount.
SECTION 5.10 MISCELLANEOUS. The section headings used in
this Guaranty are for convenience of reference only and shall not
define or limit the provisions of this Guaranty. All remedies
under this Guaranty are cumulative and are not exclusive of any
other remedies provided by law.
[Signature pages to follow]
IN WITNESS WHEREOF, Guarantor and Prudential have caused
this Guaranty to be duly executed as of the date first above
written.
JBS INTERNATIONAL, INC.
By:/s/ Michael J. Valentine
---------------------------
Title: President
---------
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Mark Hoffmeister
-----------------
Senior Vice President
---------------------
EXECUTION COPY 3/31/98
NY3:#7155570v4
JOHN B. SANFILIPPO & SON, INC.
2299 Busse Road
Elk Grove Village, Illinois 60007
New York, New York
As of March 31, 1998
Re: Amendment No. 3 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:
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, "Prudential Amendment"
means the amendment letter dated as of March 31, 1998 amending
the Amended and Restated Prudential Note Purchase Agreement.
2. Amendments to Agreement. Subject to the
satisfaction of the conditions to effectiveness specified in Section 5
below, the Agreement is amended as follows:
2.1. Deletion of 5.9. 5.9 of the Agreement is
deleted in its entirety and 5.10 of the Agreement is re-
numbered as the new 5.9 of the Agreement (and all references in
the Agreement to "5.10" shall be deemed to be references to
such new 5.9).
2.2. Amendment to 8.8. 8.8 of the Agreement is
amended to read in its entirety as follows:
"8.8. Subsidiary Debt. (a) The Company will
not permit any Subsidiary to create, assume, guarantee
or otherwise become liable in respect of any
Indebtedness (excluding any Indebtedness arising with
respect to any Guaranty or any guaranty or incurrence
of liability by such Subsidiary in respect of
obligations of the Company under the Existing
Indebtedness Documents (provided that such Subsidiary
has executed and delivered a Guaranty)) unless at the
time such Subsidiary becomes liable with respect
thereto Priority Debt shall not exceed 15% of Tangible
Net Worth.
(b) The Company shall not permit any
Subsidiary to create, assume, guarantee or otherwise
become liable in respect of any Indebtedness of the
Company (including without limitation any Indebtedness
of the Company under the Existing Indebtedness
Documents) unless such Subsidiary shall execute and
deliver a Guaranty to each holder of Senior Notes and
a Guaranty to each holder of Subordinated Notes on or
prior to the date of such creation, assumption,
guarantee or incurrence of other liability.".
2.3. Amendments to 9.3. 9.3(B) and (C) of the
Agreement are amended to read in their entirety as follows:
"(B) Indebtedness outstanding under or in respect
of the Amended and Restated Prudential Note Purchase
Agreement and the Existing Prudential Notes issued
thereunder in an aggregate original principal amount
not exceeding $33,750,000,
(C) Indebtedness represented by the Senior Notes
and the Subordinated Notes,"
2.4. Amendments to 9.6. 9.6(A) and (I) of the
Agreement are amended to read in their 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;"
"(I) [Intentionally Omitted];".
2.5. Amendments to 9.7. 9.7 is amended by (i)
inserting the text "; Certain Amendments to Bank Agreement" to
the title thereof, (ii) inserting the text "(a)" immediately
prior to the first paragraph thereof and (iii) adding the
following new paragraph (b) at the end thereof:
"(b) Subject to the terms of 9.3, 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 Bank
Agreement if the effect thereof would be to increase
the principal amount of Indebtedness thereunder and,
at the time of such amendment, supplement or other
modification or immediately prior thereto, a Default
or Event of Default shall have occurred and be
continuing or a "Default" or a "Matured Default" (each
as defined in the Bank Agreement) shall have occurred
and be continuing under the Bank Agreement."
2.6. Amendments to 10.3. 10.3(B) and (C) of the
Agreement are amended to read in their entirety as follows:
"(B) Indebtedness outstanding under or in respect
of the Amended and Restated Prudential Note Purchase
Agreement and the Existing Prudential Notes issued
thereunder in an aggregate original principal amount
not exceeding $33,750,000,
(C) Indebtedness represented by the Senior Notes
and the Subordinated Notes,"
2.7. Amendments to 10.6. 10.6(A) and (I) of the
Agreement are amended to read in their 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;"
"(I) [Intentionally Omitted];".
2.8. Amendments to 10.7. 10.7 is amended by (i)
inserting the text "(a)" immediately prior to the first
paragraph thereof and (ii) adding the following new paragraph
(b) at the end thereof:
"(b) Subject to the terms of 10.3, 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 Bank
Agreement if the effect thereof would be to increase
the principal amount of Indebtedness thereunder and,
at the time of such amendment, supplement or other
modification or immediately prior thereto, a Default
or Event of Default shall have occurred and be
continuing or a "Default" or a "Matured Default" (each
as defined in the Bank Agreement) shall have occurred
and be continuing under the Bank Agreement."
2.9. Amendments to 11. (A) The following
definitions in 11 of the Agreement are amended and restated to
read in their entirety as follows:
"'Bank Agreement' shall mean that certain Credit
Agreement dated as of March 31, 1998 by and among the
Company, Sunshine, Quantz and JBS International,
collectively as borrowers, U.S. Bancorp Ag Credit, Inc.,
Key Bank and LaSalle National Bank, as lenders, and U.S.
Bancorp Ag Credit, Inc., as agent for such lenders, and the
Notes referred to therein, as in effect on the date hereof
and as amended, modified and in effect from time to time.
The term 'Bank Agreement' shall continue to refer to the
foregoing Credit Agreement and other instruments following
any assignment by any such lender pursuant to the
provisions of Section 13.24 thereof or any resignation by
the agent thereunder pursuant to the provisions of Section
12.7 thereof so long as in effecting such assignment or
resignation such lender or agent is acting individually and
not in concert with the other lenders thereunder."
"'Banks' shall mean U.S. Bancorp Ag Credit, Inc., Key
Bank and LaSalle National Bank, and U.S. Bancorp Ag Credit,
Inc., 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."
"'EPA Matter' shall mean any event or condition in
respect of the environment or any environmental law, the
existence of which the Company or any of its Affiliates
would be required to notify any Lender or the Agent
pursuant to the Bank Agreement."
"'Guaranty' shall mean a Guaranty of the Senior Notes
from time to time or of the Subordinated Notes from time to
time by Sunshine, Quantz, JBS International or any other
Subsidiary of the Company, in each case substantially in
the form of Exhibit G (with such changes as may be agreed
by the Required Holders)."
"'Senior Indebtedness' shall mean (subject to the next
succeeding sentence) (i) all Liabilities (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 10.3(B)(i)) and (ii) 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 9.3(D) and 10.3(D), provided
that (A) the aggregate outstanding principal amount (and
undrawn face amount in the case of letters of credit) of
the 'Liabilities' under the Bank Agreement included in
Senior Indebtedness (as so defined) shall not exceed
$70,000,000 and (B) the aggregate original 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) 11 of the Agreement is further amended by adding
the definition in its appropriate alphabetic location:
"'JBS International' shall mean JBS International,
Inc., a Barbados corporation."
(C) 11 of the Agreement is further amended by
deleting the definitions of "Cash Management Liabilities",
"Collateral Agency Agreement", "Collateral Documents", "Security
Agreement" and "Specified Letter of Credit Fees".
(D) The definition of "Indebtedness" in 11 of the
Agreement is amended by deleting the last sentence thereof.
2.10. Amendment to 12.1. 12.1 of the Agreement is
amended by deleting the word "or" at the end of Subsection (P)
thereof, deleting Subsections (Q) and (R) thereof and amending
Subsection (O) thereof to read as follows:
"(O) a 'Matured Default' (as defined in the Bank
Agreement) shall occur under the Bank Agreement or an
'Event of Default' (as defined in the Amended and
Restated Prudential Note Purchase Agreement) shall
occur under the Amended and Restated Prudential Note
Purchase Agreement (whether or not any such 'Matured
Default' or 'Event of Default' shall be waived);"
2.11. 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 by (i) Sunshine Nut Co., Inc. pursuant to a
Guaranty Agreement dated as of August 30, 1995, (ii) Quantz
Acquisition Co., Inc. pursuant to a Guaranty Agreement
dated as of January 24, 1997 and (iii) JBS International,
Inc. pursuant to a Guaranty Agreement dated as of March 31,
1998, and may also be guaranteed by certain other
subsidiaries of the Company."
2.12. Amendment to Exhibit J. Exhibit J of the
Agreement is amended by deleting Section A therefrom and
replacing it with the following:
"A. Bank Agreement
Any Matured Default (as defined therein) arising
under the following clauses of the definition of
such term:
(a), (b), (c) or (d) (to the extent
such event arises from a breach of Sections
9.6, 10.1 through 10.6, inclusive, or 10.10
of the Bank Agreement)."
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 2.11 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 2.11 above.
Section 4. 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):
4.1. 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.
4.2. 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.
4.3. 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.
4.4. 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.
4.5. No Defaults. No Default or Event of Default has
occurred and is continuing, and no default has occurred and is
continuing under the Bank Agreement or under the Amended and
Restated Prudential Note Purchase Agreement.
4.6. 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.
4.7. No Change. Since June 30, 1997, there has been
no material adverse change in the assets or the financial
condition of the Company and its Subsidiaries taken as a whole.
4.8. Other Documents. The Company has provided the
Noteholder with true and correct copies of the Bank Agreement,
the Amended and Restated Prudential Note Purchase Agreement and
the Prudential Amendment, each as in effect on the date hereof.
5. Conditions to Effectiveness. This Amendment
shall become effective as of the date (the "Effective Date")
when the following conditions shall have been satisfied:
5.1. Amendment. This Amendment shall have been duly
executed and delivered by the Company and the Noteholder, and
duly acknowledged by Sunshine and Quantz.
5.2 Other Documents. The Noteholder shall have
received (a) a Guaranty in favor of the holders of the Senior
Notes from time to time and a Guaranty in favor of the holders
of the Subordinated Notes from time to time, in each case duly
executed and delivered by JBS International, (b) each of the
documents specified as Items 10 and 11 in Exhibit 8A to the Bank
Agreement and (c) a legal opinion addressed to the Noteholder
and in form and substance satisfactory to the Noteholder
covering the matters stated in the second sentence of Section
3.2 and in the second sentence of Section 3.3 (as to applicable
laws) of the Guaranties referred to above.
6. Consent. As of the Effective Date the Noteholder
hereby consents to (a) the amendment of the Amended and Restated
Prudential Note Purchase Agreement as provided by the Prudential
Amendment, (b) the entry by the Company and its Subsidiaries
into the Bank Agreement and (c) the termination of the
Collateral Agency Agreement (as defined in the Agreement
immediately prior to the Effective Date) and the release of all
collateral and Liens thereunder.
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.
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.
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,
Finance and Chief Financial
Officer
---------------------------
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ David G. Persky
--------------------------
Title: Associate Director
------------------
ACKNOWLEDGED AND AGREED:
SUNSHINE NUT CO.
By: /s/ Michael J. Valentine
---------------------------
Title: Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC.
By: /s/ Michael J. Valentine
---------------------------
Title: Assistant Secretary
-------------------
EXECUTION COPY
3/31/98
NY:#7155995v4
This Guaranty Agreement (the "Guaranty"), dated as of
March 31, 1998, is made by JBS International, Inc., a Barbados
corporation ("Guarantor"), in favor of Teachers Insurance and
Annuity Association of America ("Teachers") and each other
holder from time to time of any of the Notes referred to below
(Teachers and each such other holder being collectively referred
to herein as the "Noteholders").
RECITALS:
WHEREAS, John B. Sanfilippo & Son, Inc., a Delaware
corporation ("Borrower"), has entered into that certain Note
Purchase Agreement dated as of August 30, 1995 (as in effect on
the date hereof, the "Note Agreement") under which Teachers
purchased, and the Borrower issued and sold, among other things,
$10,000,000 aggregate principal amount of 8.30% Senior Notes due
2005 (the "Notes"); and
WHEREAS, all parties acknowledge that the indebtedness
and obligations contemplated by the Note Agreement have been
incurred for and will inure, in part, to the benefit of
Guarantor; and
WHEREAS, in order to consent to an amendment of the
Note Agreement, Teachers requires that this Guaranty be executed
and delivered;
NOW THEREFORE, for value received, to satisfy one of
the conditions precedent to the amendment of the Note Agreement,
to induce any transferee to accept the transfer of all or any
part of any Note, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged,
Guarantor agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Guaranty,
the term "Indebtedness" shall mean all of the indebtedness,
obligations and liabilities existing on the date hereof or
arising from time to time thereafter, whether direct or
indirect, joint or several, actual, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise,
of Borrower to the Noteholders under or in respect of the Note
Agreement (as such Agreement relates to the Notes) or the Notes,
including, without limitation, the principal of and interest and
Make-Whole Amount, if any, on the Notes.
SECTION 1.2 OTHER DEFINITIONS. Capitalized terms
that are used in this Guaranty and not defined in this Guaranty
shall have the meaning ascribed to them in the Note Agreement.
ARTICLE II
THE GUARANTY
SECTION 2.1 GUARANTY OF PAYMENT AND PERFORMANCE OF
OBLIGATIONS. Guarantor absolutely, unconditionally and
irrevocably guarantees the full and prompt payment in United
States currency when due (whether at maturity, a stated
prepayment date or earlier by reason of acceleration or
otherwise) and at all times thereafter, and the due and punctual
performance, of all Indebtedness together with all costs and
expenses, including without limitation all court costs and
expenses and attorneys' fees, paid or incurred by the
Noteholders in endeavoring to enforce this Guaranty or in
pursuing any action against Borrower or Guarantor or enforcing
any rights of the Noteholders in the security, if any, for the
Indebtedness or for liabilities of Guarantor hereunder, and any
taxes, fees or penalties which may be paid or payable in
connection therewith. This is a continuing guaranty of payment
and performance not of collection.
Upon an Event of Default, the Noteholders may, at
their sole election and without notice, proceed directly and at
once against Guarantor to seek and enforce performance of, and
to collect and recover, the Indebtedness, or any portion
thereof, without first proceeding against Borrower, any other
Person, or any security for the Indebtedness or for the
liability of any such other Person or the Guarantor hereunder.
The Noteholders shall have the exclusive right to determine the
application of payments and credits, if any, from Guarantor,
Borrower or from any other Person on account of the Indebtedness
or otherwise.
SECTION 2.2 OBLIGATIONS UNCONDITIONAL. The
obligations of Guarantor under this Guaranty shall be
continuing, absolute and unconditional, irrespective of (i) the
invalidity or unenforceability of any part or all of the Note
Agreement or any Note or any other agreement; (ii) the absence
of any attempt by the Noteholders to collect the Indebtedness or
any portion thereof from Borrower or other action to enforce the
same; (iii) the waiver or consent by the Noteholders with
respect to any provision of the Note Agreement or any Note or
any other agreement or applicable law; (iv) any failure by the
Noteholders to acquire, perfect or maintain any security
interest or lien in, or take any steps to preserve its rights to
any security for the Indebtedness or any portion thereof or for
the liability of Guarantor hereunder; (v) any defense arising by
reason of any disability or other defense (other than a defense
of payment, unless the payment on which such defense is based
was or is subsequently invalidated, declared to be fraudulent or
preferential, otherwise avoided and/or required to be repaid to
Borrower, Guarantor, the estate of either Borrower or Guarantor,
a trustee, receiver or any other Person under any bankruptcy
law, state or federal law, common law or equitable cause, in
which case there shall be no defense of payment with respect to
such payment) of Borrower or any other Person liable on the
Indebtedness or any portion thereof; (vi) Lender's election, in
any proceeding instituted under Chapter 11 of Title 11 of the
Federal Bankruptcy Code (11 U.S.C. 101 et seq.) (the "Bankruptcy
Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code; (vii) any borrowing or grant of a security
interest to the Noteholders by Borrower, as
debtor-in-possession, or extension of credit, under Section 364
of the Bankruptcy Code; (viii) the disallowance or avoidance of
all or any portion of the Noteholders' claim(s) for repayment of
the Indebtedness under the Bankruptcy Code or any similar state
law or the avoidance of any security for the Indebtedness or any
security for the liability of Guarantor hereunder; (ix) any
amendment to, waiver or modification of, or consent under any
provision of the Note Agreement or any Note or any other
agreement; (x) any change in any provision of any applicable law
or regulation; (xi) any order, judgment, writ, award or decree
of any court, arbitrator or governmental authority, domestic or
foreign, binding on or affecting Guarantor or Borrower or any of
their assets; (xii) the charter or by-laws of Guarantor or
Borrower; (xiii) any mortgage, indenture, lease, contract, or
other agreement (including without limitation any agreement with
stockholders), instrument or undertaking to which Guarantor or
Borrower is a party or which purports to be binding on or affect
Guarantor or Borrower or any of their assets; or (xiv) any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
SECTION 2.3 NOTEHOLDERS' FREEDOM TO ACT. The
Noteholders are authorized, without notice and without affecting
the liability of Guarantor hereunder, from time to time to (i)
renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, the Indebtedness or any
portion thereof, or otherwise modify, amend or change the terms
of the Note Agreement or any Note or any other agreement; (ii)
accept partial payments on the Indebtedness; (iii) take and hold
security or additional guaranties or sureties for the
Indebtedness or any portion thereof or any other liabilities of
Borrower, the obligations of Guarantor under this Guaranty and
the obligations under any other guaranties and sureties of the
Indebtedness, and exchange, enforce, waive, release, sell,
transfer, assign or otherwise deal with any such security,
guaranty or surety; (iv) apply such security and direct the
order or manner of sale thereof as the Noteholders may determine
in their sole discretion; (v) settle, release, compromise,
collect or otherwise liquidate the Indebtedness or any portion
thereof and any security therefor in any manner; (vi) extend
additional loans, credit and financial accommodations and
otherwise create additional Indebtedness; (vii) waive strict
compliance with the terms of the Note Agreement or any Note or
any other agreement and otherwise forbear from asserting the
Noteholders' rights and remedies thereunder; (viii) enforce or
forbear from enforcing the guaranty or surety of any other
guarantor or surety of the Indebtedness, any portion thereof or
release any such guarantor or surety; and (ix) assign this
Guaranty in part or in whole in connection with any assignment
of the Indebtedness or any portion thereof.
SECTION 2.4 WAIVERS OF GUARANTOR. Guarantor waives
all set-offs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and diligence with respect to the
Indebtedness and the obligations of Guarantor hereunder, the
filing of any claims with a court in the event of receivership
or bankruptcy of Borrower, and notices of acceptance of this
Guaranty. Guarantor further waives all notices that the
principal amount, any payment or any portion thereof, any
interest or Make-Whole Amount on the Indebtedness or any portion
thereof is due, notices of any and all proceedings to collect
from Borrower, anyone primarily or secondarily liable with
respect to the Indebtedness or any portion thereof, or from
anyone else, and, to the extent permitted by law, notices of
exchange, sale, surrender or other handling of any security
securing payment of the Indebtedness or this Guaranty. The
Guarantor agrees that the Noteholders shall not be under any
obligation to marshall any assets in favor of Guarantor or
against or in payment of any or all of the Indebtedness.
Guarantor hereby waives and releases Borrower from any
and all "claims" (as defined in Section 101(4) of the Bankruptcy
Code) to which Guarantor is or would at any time be entitled by
virtue of its obligations under this Guaranty, including,
without limitation, any right of subrogation (whether
contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, indemnity, exoneration
or similar right against Borrower. Guarantor further waives any
right to demand security from Borrower and any benefit of, and
any right to participate in, any security given to the
Noteholders to secure payment of the Indebtedness or any other
liability of Borrower to the Noteholders.
SECTION 2.5 REVIVAL. To the extent that Borrower or
Guarantor makes a payment or payments, or a transfer of an
interest in any property to any Noteholder or any Noteholder
enforces its rights in any security for the liabilities of
Guarantor hereunder or exercises its right of set-off, and such
payment, payments, transfer, or the proceeds of such enforcement
or set-off, or any portion of such payment, payments, transfer
or proceeds are subsequently invalidated, declared to be
fraudulent or preferential, set aside, otherwise avoided or
required to be repaid to Borrower, Guarantor, the estate of
either Borrower or Guarantor, a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery,
avoidance or repayment, the obligation or part of such
obligation originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had
not been made or such payment, enforcement or set-off had not
occurred.
SECTION 2.6 OBLIGATION TO KEEP INFORMED. Guarantor
shall be responsible for keeping itself informed of the
financial condition of Borrower and any other Persons primarily
or secondarily liable on the Indebtedness or any portion
thereof, and of all other circumstances bearing upon the risk of
nonpayment of the Indebtedness or any portion thereof, and
Guarantor agrees that the Noteholders shall have no duty to
advise Guarantor of information known to the Noteholders
regarding such condition or any such circumstance. If any
Noteholder, in its discretion, undertakes at any time or from
time to time to provide any such information to Guarantor, such
Noteholder shall not be under any obligation (i) to undertake
any investigation, whether or not a part of its regular business
routine, (ii) to disclose any information which such Noteholder
wishes to maintain confidential, or (iii) to make any other or
future disclosures of such information or any other information
to Guarantor.
SECTION 2.7 BANKRUPTCY. If any Event of Default
specified in Subsection (H) to (J), inclusive, of 12.1 of the
Note Agreement shall occur and be continuing, any and all
obligations of Guarantor shall forthwith become due and payable
without notice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Guarantor represents, covenants and warrants as follows:
SECTION 3.1 ORGANIZATION. Guarantor is a corporation
duly organized and existing in good standing under the laws of
Barbados. Guarantor is duly qualified and authorized to
transact business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the
business conducted by it or the ownership of its properties or
assets makes such qualification necessary, except where the
failure to be in good standing or to be so qualified or
authorized would not have a material adverse effect on the
business, condition (financial or otherwise) or operations of
Guarantor.
SECTION 3.2 POWER AND AUTHORITY. Guarantor has all
requisite corporate power to conduct its business as currently
conducted and as currently proposed to be conducted. Guarantor
has all requisite corporate power to execute, deliver and
perform its obligations under this Guaranty. The execution,
delivery and performance by Guarantor of this Guaranty have been
duly authorized by all requisite corporate action on the part of
Guarantor. Guarantor has duly executed and delivered this
Guaranty and this Guaranty constitutes the legal, valid and
binding obligations of Guarantor, enforceable against Guarantor
in accordance with its terms.
SECTION 3.3 CONFLICTING AGREEMENTS AND OTHER MATTERS.
Guarantor is not 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 this
Guaranty nor fulfillment of nor compliance with the terms and
provisions hereof, 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 Guarantor
pursuant to, the charter or by-laws of Guarantor, any award of
any arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which Guarantor is subject.
Guarantor is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing Indebtedness
(as defined in the Note Agreement) of Guarantor, any agreement
relating thereto or any other contract or agreement (including
its charter) which limits the amount of, or otherwise imposes
restrictions on the creation of, any guarantee, except under the
Bank Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 SUCCESSORS, ASSIGNS AND PARTICIPANTS.
This Guaranty shall be binding upon Guarantor and its successors
and assigns and shall inure to the benefit of Teachers and its
successors, transferees and assigns and each other Noteholder;
all references herein to Guarantor shall be deemed to include
its successors and assigns, and all references herein to
Teachers or any other Noteholder shall be deemed to include its
successors and assigns. This Guaranty shall be enforceable by
the Noteholders and any of the Noteholders' successors, assigns
and participants, and any such successors and assigns shall have
the same rights and benefits with respect to the Borrower under
this Guaranty as Teachers hereunder.
SECTION 4.2 FURTHER ASSURANCES. Guarantor agrees, at
the sole cost and expense of Guarantor, to promptly do all such
things and execute all such documents as the Noteholders may
consider necessary or desirable to preserve the rights and
powers of the Noteholders hereunder.
SECTION 4.3 NOTICES. Except as otherwise expressly
provided herein, any notice required or desired to be served,
given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered five days
after deposit in the United States mails, with proper postage
prepaid, or upon delivery by courier or upon transmission by
telex, telecopy or similar electronic medium to the following
addresses:
(i) If to Teachers at:
730 Third Avenue
New York, New York 10017
Attention: Securities Division
Re: John B. Sanfilippo & Son, Inc.
Telecopy: (212) 916-6667
Telephone: (212) 916-4311
(ii) If to any other Noteholder, to the address of such
Noteholder as it appears in the note register maintained
pursuant to 14 of the Note Agreement;
(iii) If to Guarantor at:
JBS International, Inc.
c/o John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove Village, Illinois 60007
Attn: Michael J. Valentine, Chairman and President
Telecopy: (708) 593-9608
Telephone: (708) 593-2300
with a copy to:
Timothy R. Donovan, Esq.
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
or to such other address as each party designates to the other
in the manner herein prescribed.
SECTION 4.4 AMENDMENTS, WAIVERS AND CONSENTS. No
amendment or waiver of or consent to any departure by Guarantor
from any provision of this Guaranty, shall be binding on the
Noteholders except as expressly set forth and consented to in a
writing duly signed and delivered by the Required Holders of the
Notes, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between Guarantor
and the Noteholders, nor any failure on the part of the
Noteholders to exercise any right, power or remedy nor any delay
on the part of the Noteholders in exercising any right, power or
remedy shall operate as a waiver thereof, and no single or
partial exercise by the Noteholders of any right, power or
remedy shall preclude any further exercise thereof by the
Noteholders. No waiver of any right, power or remedy shall be
deemed to occur by any act or knowledge of any Noteholder, its
agents, trustees, officers or employees or be binding against
any Noteholder, except as expressly set forth in a writing duly
signed and delivered by the Required Holders of the Notes. No
waiver by the Required Holders of any default shall operate as a
waiver of any other default or the same default on a future
occasion, and no action by any Noteholder permitted hereunder
shall in any way affect or impair any of any Noteholders'
rights, powers or remedies or the obligations of Guarantor under
this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any part of the Indebtedness shall
be conclusive and binding on Guarantor irrespective of whether
Guarantor was a party to the suit or action in which such
determination was made. As used herein, the term "this Guaranty"
and references thereto shall mean this Guaranty as it may from
time to time be amended or supplemented.
SECTION 4.5 GOVERNING LAW. THIS GUARANTY SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
ILLINOIS.
SECTION 4.6 SUBMISSION TO JURISDICTION. GUARANTOR
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE CITY OF NEW YORK OR WITHIN THE COUNTY
OF COOK, STATE OF ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT
TO THE NOTEHOLDERS' SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS GUARANTY OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH TO WHICH GUARANTOR IS A PARTY
MAY BE LITIGATED IN SUCH COURTS, AND GUARANTOR WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR
MESSENGER ON JOHN B. SANFILIPPO & SON, INC. AT THE ADDRESS SET
FORTH IN SECTION 4.3 ABOVE AND THAT SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR
FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO
GUARANTOR'S ADDRESS AS SET FORTH IN SECTION 4.3. THE
NOTEHOLDERS AND GUARANTOR ACKNOWLEDGE THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED
FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
THE NOTEHOLDERS. NOTHING CONTAINED IN THIS SUBSECTION 4.6 SHALL
AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
NOTEHOLDERS TO BRING ANY ACTION OR PROCEEDING AGAINST GUARANTOR
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 4.7 COUNTERPARTS. This Guaranty may be
executed in any number of counterparts, each of which shall be
an original with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 4.8 INTERPRETATION; PARTIAL INVALIDITY.
Whenever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
SECTION 4.9 NO USURY. Nothing contained in this
Guaranty shall be construed or shall so operate either presently
or prospectively to require Guarantor to pay any amount under
this Guaranty on account of the Indebtedness that constitutes
interest in excess of the maximum amount of interest permitted
by law to be charged on all or any portion of the Indebtedness
and to be guaranteed by Guarantor hereunder. If any interest in
excess of the maximum amount of interest permitted by law to be
charged and to be guaranteed hereunder is provided for, or is
adjudicated to be provided for, with respect to all or any
portion of the Indebtedness, then in such event (i) the
provisions of this Section 4.9 shall govern and control; (ii)
Guarantor shall not be obligated to pay any amount under this
Guaranty that constitutes interest in excess of that so
permitted on all or any portion of the Indebtedness; (iii) any
amount paid by Guarantor to the Noteholders under this Guaranty
that constitutes interest in excess of that so permitted on all
or any portion of the Indebtedness shall, at the option of the
Noteholders, be (A) applied as a credit against the then unpaid
but due and owing amount under this Guaranty, (B) refunded to
the Guarantor or (C) applied or refunded pursuant to any
combination of the foregoing; (iv) this Guaranty shall have been
deemed to have been, and shall be, reformed and modified to
reflect, Guarantor's guarantee hereunder of the payment of the
Indebtedness to the extent interest included therein is
permitted by law to be charged and to be guaranteed by Guarantor
hereunder; and (v) Guarantor shall not have any action against
the Noteholders for any damages whatsoever arising out of the
payment or collection of any such amount.
SECTION 4.10 TAXES. (a) Any and all payments by the
Guarantor hereunder shall be made free and clear of and without
deduction for any and all present or future taxes, deductions,
charges or withholdings, and all liabilities with respect
thereto, including without limitation, such taxes, deductions,
charges, withholdings or liabilities whatsoever imposed,
assessed, levied or collected by any taxing authority and all
(other than to the extent due to the gross negligence or willful
misconduct of any Noteholder) interest, penalties, expenses or
similar liabilities with respect thereto ("Taxes"), excluding
however, from the definition of Taxes, in the case of each
Noteholder, taxes imposed on its income (including penalties and
interest payable in respect thereof), and franchise taxes
imposed on it by the jurisdiction under the laws of which such
Noteholder is organized or any political subdivision thereof.
If the Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any
Noteholder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 4.10) such Noteholder receives an amount
equal to the sum it would have received had no such deductions
been made and (ii) the Guarantor shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies that arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Guaranty
(hereinafter included within the definition of "Taxes").
(c) The Guarantor will indemnify each Noteholder for
the full amount of Taxes (including without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this
Section 4.10) paid by such Noteholder and any liability arising
therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall
be made within five days from the date such Noteholder makes
written demand therefor; provided however, to the extent that
any Noteholder is reimbursed for any Tax that was incorrectly or
illegally asserted in connection with this Guaranty, such
Noteholder shall promptly return to the Guarantor the amount of
such reimbursement net or any costs of recovery, together with
any interest that may have been paid by the taxing jurisdiction
with respect thereto, to the extent the Guarantor has actually
paid such Noteholder with respect thereto.
(d) Promptly after the date on which payment of any
Taxes are due pursuant to applicable law, the Guarantor will, at
the request of any Noteholder, furnish to such Noteholder
evidence in form and substance satisfactory to such Noteholder
that the Guarantor has met its obligations under this Section
4.10.
(e) Without prejudice to the survival of any other
agreement of the Guarantor, the agreement and obligations of the
Guarantor contained in this Section 4.10 shall survive the
payment in full of any other amounts due under this Guaranty.
SECTION 4.11 MISCELLANEOUS. The section headings
used in this Guaranty are for convenience of reference only and
shall not define or limit the provisions of this Guaranty. All
remedies under this Guaranty are cumulative and are not
exclusive of any other remedies provided by law.
[Signature pages to follow]
IN WITNESS WHEREOF, Guarantor and Teachers have caused
this Guaranty to be duly executed as of the date first above
written.
JBS INTERNATIONAL, INC.
By: /s/ Michael J. Valentine
-------------------------
Title: President
---------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
By: /s/ David G. Persky
-------------------------
Title: Associate Director
------------------
EXECUTION COPY
3/31/98
NY3:#7156046v3
This Guaranty Agreement (the "Guaranty"), dated as of
March 31, 1998, is made by JBS International, Inc., a Barbados
corporation ("Guarantor"), in favor of Teachers Insurance and
Annuity Association of America ("Teachers") and each other
holder from time to time of any of the Notes referred to below
(Teachers and each such other holder being collectively referred
to herein as the "Noteholders").
RECITALS:
WHEREAS, John B. Sanfilippo & Son, Inc., a Delaware
corporation ("Borrower"), has entered into that certain Note
Purchase Agreement dated as of August 30, 1995 (as in effect on
the date hereof, the "Note Agreement") under which Teachers
purchased, and the Borrower issued and sold, among other things,
$15,000,000 aggregate principal amount of 9.38% Senior
Subordinated Notes due 2005 (the "Notes"); and
WHEREAS, Borrower and Guarantor are parties to the
Bank Agreement and (in the case of the Borrower) the Amended and
Restated Prudential Note Purchase Agreement (each as defined in
the Note Agreement) pursuant to which Borrower has incurred (and
in the future may incur) Senior Indebtedness (as so defined) to
the Banks and Prudential (each as so defined) (and Guarantor may
be a co-obligor with respect to such Senior Indebtedness under
the Bank Agreement), and the Note Agreement contemplates that in
the future Borrower may incur, pursuant to the terms of the Note
Agreement, additional Senior Indebtedness;
WHEREAS, Guarantor has entered into a Guaranty dated
as of March 31, 1998 with Prudential (as in effect from time to
time, the "Prudential Guaranty") pursuant to which Guarantor has
guaranteed the obligations of Borrower under the Bank Agreement
and the Restated Prudential Note Purchase Agreement,
respectively, and Guarantor may in the future enter into
additional guarantees of Senior Indebtedness of Borrower
("Additional Guaranties");
WHEREAS, all parties acknowledge that the indebtedness
and obligations contemplated by the Note Agreement have been
incurred for and will inure, in part, to the benefit of
Guarantor; and
WHEREAS, in order to enter into an amendment of the
Note Agreement, Teachers requires that this Guaranty be executed
and delivered;
NOW THEREFORE, for value received, to satisfy one of
the conditions precedent to the amendment of Note Agreement, to
induce any transferee to accept the transfer of all or any part
of any Note, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged,
Guarantor agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Guaranty,
the following terms shall have the meanings set forth below:
"Additional Guaranties" shall have the meaning
specified in the Recitals hereto.
"Borrower" shall have the meaning specified in the
Recitals hereto.
"Guarantor" shall have the meaning specified in the
introductory paragraph hereof.
"Indebtedness" shall mean all of the indebtedness,
obligations and liabilities existing on the date hereof or
arising from time to time thereafter, whether direct or
indirect, joint or several, actual, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise,
of Borrower to the Noteholders under or in respect of the Note
Agreement (as such Agreement relates to the Notes) or the Notes,
including, without limitation, the principal of and interest and
Make-Whole Amount, if any, on the Notes.
"Note Agreement" shall have the meaning specified in
the Recitals hereto.
"Noteholders" shall have the meaning specified in the
introductory paragraph hereof.
"Notes" shall have the meaning specified in the
Recitals hereto.
"Prudential Guaranty" shall have the meaning specified
in the Recitals hereto.
"Senior Indebtedness" shall mean all obligations and
liabilities (including in respect of costs, expenses and fees)
of Guarantor on the date hereof or arising from time to time
thereafter under the Bank Agreement, the Prudential Guaranty and
any Additional Guaranty, provided, however, that, to the extent
that any portion of such Senior Indebtedness under the Bank
Agreement or any such Guaranty is in respect of interest owing
on any Senior Indebtedness (as defined in the Note Agreement),
such portion of such Senior Indebtedness under any such Guaranty
shall exclude interest accruing during any bankruptcy,
insolvency or similar proceeding more than two years after the
date of any filing by or against Borrower or the Guarantor, as
the case may be, of such proceeding.
"Subordinated Indebtedness" shall mean all obligations
and liabilities (including in respect of costs, expenses and
fees) of Guarantor on the date hereof or arising from time to
time thereafter under this Guaranty.
"Teachers" shall have the meaning specified in the
introductory paragraph hereof.
SECTION 1.2 OTHER DEFINITIONS. Capitalized terms
that are used in this Guaranty and not defined in this Guaranty
shall have the meaning ascribed to them in the Note Agreement.
ARTICLE II
THE GUARANTY
SECTION 2.1 GUARANTY OF PAYMENT AND PERFORMANCE OF
OBLIGATIONS. Guarantor absolutely, unconditionally and
irrevocably guarantees the full and prompt payment in United
States currency when due (whether at maturity, a stated
prepayment date or earlier by reason of acceleration or
otherwise) and at all times thereafter, and the due and punctual
performance, of all Indebtedness together with all costs and
expenses, including without limitation all court costs and
expenses and attorneys' fees, paid or incurred by the
Noteholders in endeavoring to enforce this Guaranty or in
pursuing any action against Borrower or Guarantor or enforcing
any rights of the Noteholders in the security, if any, for the
Indebtedness or for liabilities of Guarantor hereunder, and any
taxes, fees or penalties which may be paid or payable in
connection therewith. This is a continuing guaranty of payment
and performance not of collection.
Upon an Event of Default, the Noteholders may, at
their sole election and without notice, proceed directly and at
once against Guarantor to seek and enforce performance of, and
to collect and recover, the Indebtedness, or any portion
thereof, without first proceeding against Borrower, any other
Person, or any security for the Indebtedness or for the
liability of any such other Person or the Guarantor hereunder.
The Noteholders shall have the exclusive right to determine the
application of payments and credits, if any, from Guarantor,
Borrower or from any other Person on account of the Indebtedness
or otherwise.
SECTION 2.2 OBLIGATIONS UNCONDITIONAL. The
obligations of Guarantor under this Guaranty shall be
continuing, absolute and unconditional, irrespective of (i) the
invalidity or unenforceability of any part or all of the Note
Agreement or any Note or any other agreement; (ii) the absence
of any attempt by the Noteholders to collect the Indebtedness or
any portion thereof from Borrower or other action to enforce the
same; (iii) the waiver or consent by the Noteholders with
respect to any provision of the Note Agreement or any Note or
any other agreement or applicable law; (iv) any failure by the
Noteholders to acquire, perfect or maintain any security
interest or lien in, or take any steps to preserve its rights to
any security for the Indebtedness or any portion thereof or for
the liability of Guarantor hereunder; (v) any defense arising by
reason of any disability or other defense (other than a defense
of payment, unless the payment on which such defense is based
was or is subsequently invalidated, declared to be fraudulent or
preferential, otherwise avoided and/or required to be repaid to
Borrower, Guarantor, the estate of either Borrower or Guarantor,
a trustee, receiver or any other Person under any bankruptcy
law, state or federal law, common law or equitable cause, in
which case there shall be no defense of payment with respect to
such payment) of Borrower or any other Person liable on the
Indebtedness or any portion thereof; (vi) Lender's election, in
any proceeding instituted under Chapter 11 of Title 11 of the
Federal Bankruptcy Code (11 U.S.C. 101 et seq.) (the "Bankruptcy
Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code; (vii) any borrowing or grant of a security
interest to the Noteholders by Borrower, as
debtor-in-possession, or extension of credit, under Section 364
of the Bankruptcy Code; (viii) the disallowance or avoidance of
all or any portion of the Noteholders' claim(s) for repayment of
the Indebtedness under the Bankruptcy Code or any similar state
law or the avoidance of any security for the Indebtedness or any
security for the liability of Guarantor hereunder; (ix) any
amendment to, waiver or modification of, or consent under any
provision of the Note Agreement or any Note or any other
agreement; (x) any change in any provision of any applicable law
or regulation; (xi) any order, judgment, writ, award or decree
of any court, arbitrator or governmental authority, domestic or
foreign, binding on or affecting Guarantor or Borrower or any of
their assets; (xii) the charter or by-laws of Guarantor or
Borrower; (xiii) any mortgage, indenture, lease, contract, or
other agreement (including without limitation any agreement with
stockholders), instrument or undertaking to which Guarantor or
Borrower is a party or which purports to be binding on or affect
Guarantor or Borrower or any of their assets; or (xiv) any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
SECTION 2.3 NOTEHOLDERS' FREEDOM TO ACT. The
Noteholders are authorized, without notice and without affecting
the liability of Guarantor hereunder, from time to time to (i)
renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, the Indebtedness or any
portion thereof, or otherwise modify, amend or change the terms
of the Note Agreement or any Note or any other agreement; (ii)
accept partial payments on the Indebtedness; (iii) take and hold
security or additional guaranties or sureties for the
Indebtedness or any portion thereof or any other liabilities of
Borrower, the obligations of Guarantor under this Guaranty and
the obligations under any other guaranties and sureties of the
Indebtedness, and exchange, enforce, waive, release, sell,
transfer, assign or otherwise deal with any such security,
guaranty or surety; (iv) apply such security and direct the
order or manner of sale thereof as the Noteholders may determine
in their sole discretion; (v) settle, release, compromise,
collect or otherwise liquidate the Indebtedness or any portion
thereof and any security therefor in any manner; (vi) extend
additional loans, credit and financial accommodations and
otherwise create additional Indebtedness; (vii) waive strict
compliance with the terms of the Note Agreement or any Note or
any other agreement and otherwise forbear from asserting the
Noteholders' rights and remedies thereunder; (viii) enforce or
forbear from enforcing the guaranty or surety of any other
guarantor or surety of the Indebtedness, any portion thereof or
release any such guarantor or surety; and (ix) assign this
Guaranty in part or in whole in connection with any assignment
of the Indebtedness or any portion thereof.
SECTION 2.4 WAIVERS OF GUARANTOR. Guarantor waives
all set-offs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and diligence with respect to the
Indebtedness and the obligations of Guarantor hereunder, the
filing of any claims with a court in the event of receivership
or bankruptcy of Borrower, and notices of acceptance of this
Guaranty. Guarantor further waives all notices that the
principal amount, any payment or any portion thereof, any
interest or Make-Whole Amount on the Indebtedness or any portion
thereof is due, notices of any and all proceedings to collect
from Borrower, anyone primarily or secondarily liable with
respect to the Indebtedness or any portion thereof, or from
anyone else, and, to the extent permitted by law, notices of
exchange, sale, surrender or other handling of any security
securing payment of the Indebtedness or this Guaranty. The
Guarantor agrees that the Noteholders shall not be under any
obligation to marshall any assets in favor of Guarantor or
against or in payment of any or all of the Indebtedness.
Guarantor hereby waives and releases Borrower from any
and all "claims" (as defined in Section 101(4) of the Bankruptcy
Code) to which Guarantor is or would at any time be entitled by
virtue of its obligations under this Guaranty, including,
without limitation, any right of subrogation (whether
contractual, under Section 509 of the Bankruptcy Code or
otherwise), reimbursement, contribution, indemnity, exoneration
or similar right against Borrower. Guarantor further waives any
right to demand security from Borrower and any benefit of, and
any right to participate in, any security given to the
Noteholders to secure payment of the Indebtedness or any other
liability of Borrower to the Noteholders.
SECTION 2.5 REVIVAL. To the extent that Borrower or
Guarantor makes a payment or payments, or a transfer of an
interest in any property to any Noteholder or any Noteholder
enforces its rights in any security for the liabilities of
Guarantor hereunder or exercises its right of set-off, and such
payment, payments, transfer, or the proceeds of such enforcement
or set-off, or any portion of such payment, payments, transfer
or proceeds are subsequently invalidated, declared to be
fraudulent or preferential, set aside, otherwise avoided or
required to be repaid to Borrower, Guarantor, the estate of
either Borrower or Guarantor, a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery,
avoidance or repayment, the obligation or part of such
obligation originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had
not been made or such payment, enforcement or set-off had not
occurred.
SECTION 2.6 OBLIGATION TO KEEP INFORMED. Guarantor
shall be responsible for keeping itself informed of the
financial condition of Borrower and any other Persons primarily
or secondarily liable on the Indebtedness or any portion
thereof, and of all other circumstances bearing upon the risk of
nonpayment of the Indebtedness or any portion thereof, and
Guarantor agrees that the Noteholders shall have no duty to
advise Guarantor of information known to the Noteholders
regarding such condition or any such circumstance. If any
Noteholder, in its discretion, undertakes at any time or from
time to time to provide any such information to Guarantor, such
Noteholder shall not be under any obligation (i) to undertake
any investigation, whether or not a part of its regular business
routine, (ii) to disclose any information which such Noteholder
wishes to maintain confidential, or (iii) to make any other or
future disclosures of such information or any other information
to Guarantor.
SECTION 2.7 BANKRUPTCY. If any Event of Default
specified in Subsection (H) to (J), inclusive, of Section 12.1 of the
Note Agreement shall occur and be continuing, any and all
obligations of Guarantor shall forthwith become due and payable
without notice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Guarantor represents, covenants and warrants as
follows:
SECTION 3.1 ORGANIZATION. Guarantor is a corporation
duly organized and existing in good standing under the laws of
Barbados. Guarantor is duly qualified and authorized to
transact business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the
business conducted by it or the ownership of its properties or
assets makes such qualification necessary, except where the
failure to be in good standing or to be so qualified or
authorized would not have a material adverse effect on the
business, condition (financial or otherwise) or operations of
Guarantor.
SECTION 3.2 POWER AND AUTHORITY. Guarantor has all
requisite corporate power to conduct its business as currently
conducted and as currently proposed to be conducted. Guarantor
has all requisite corporate power to execute, deliver and
perform its obligations under this Guaranty. The execution,
delivery and performance by Guarantor of this Guaranty have been
duly authorized by all requisite corporate action on the part of
Guarantor. Guarantor has duly executed and delivered this
Guaranty and this Guaranty constitutes the legal, valid and
binding obligations of Guarantor, enforceable against Guarantor
in accordance with its terms.
SECTION 3.3 CONFLICTING AGREEMENTS AND OTHER MATTERS.
Guarantor is not 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 this
Guaranty nor fulfillment of nor compliance with the terms and
provisions hereof, 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 Guarantor
pursuant to, the charter or by-laws of Guarantor, any award of
any arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which Guarantor is subject.
Guarantor is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing Indebtedness
(as defined in the Note Agreement) of Guarantor, any agreement
relating thereto or any other contract or agreement (including
its charter) which limits the amount of, or otherwise imposes
restrictions on the creation of, any guarantee.
ARTICLE IV
SUBORDINATION OF SUBORDINATED INDEBTEDNESS
SECTION 4.1 SUBORDINATED INDEBTEDNESS SUBORDINATED TO
SENIOR INDEBTEDNESS. The provisions of this Article IV apply
notwithstanding anything to the contrary in this Guaranty.
Teachers and Guarantor, for themselves and their respective
successors and assigns, covenant and agree, and each holder of
any Note, by its acceptance thereof, shall be deemed to have
agreed, that the payment from whatever source of the
Subordinated Indebtedness, shall be subordinate and subject in
right of payment, to the extent and in the manner set forth in
this Article IV, to the prior payment in full in cash of all
Senior Indebtedness, and that each holder of such Senior
Indebtedness, with respect to Senior Indebtedness now existing
or hereafter arising, shall be deemed to have acquired such
Senior Indebtedness in reliance upon the covenants and
provisions contained in this Article IV.
SECTION 4.2 SUBORDINATED NOTES SUBORDINATED TO PRIOR
PAYMENT OF ALL SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION,
REORGANIZATION, ETC. Upon any payment or distribution of the
assets of Guarantor of any kind or character, whether in cash,
property or securities (including any collateral, whether the
proceeds thereof or in kind, at any time securing the
Subordinated Indebtedness), to creditors upon any dissolution,
or winding-up, or total or partial liquidation, or
reorganization, or recapitalization or readjustment of Guarantor
or its securities (whether voluntary or involuntary, or in
bankruptcy, insolvency, reorganization, liquidation,
receivership proceedings, or upon an assignment for the benefit
of creditors, or any other marshalling of the assets and
liabilities of Guarantor or otherwise), then in such event:
(A) all Senior Indebtedness shall first be paid in
full in cash or have provision made for such payment (any
such provision having been agreed to in writing by the
holders of the Senior Indebtedness), before any payment is
made on account of Subordinated Indebtedness from any
source whatsoever;
(B) any payment or distribution of assets of
Guarantor of any kind or character from any source what-
soever, whether in cash, property or securities (other than
equity securities of Guarantor as reorganized or
readjusted or equity securities of Guarantor or any other
company, trust or corporation provided for by a plan of
reorganization or readjustment, or securities the payment
of which is subordinate, at least to the extent provided in
this Article IV with respect to the Subordinated
Indebtedness, to the payment of all Senior Indebtedness at
the time outstanding and to the payment of all securities
issued in exchange therefor to holders of such Senior
Indebtedness at the time outstanding), to which the holders
of the Subordinated Indebtedness would be entitled except
for the provisions of this Article IV, shall be paid or
delivered by any debtor, custodian or other person making
such payment or distribution, directly to the holders of
such Senior Indebtedness, or their representative or
representatives, ratably according to the aggregate amounts
remaining unpaid on account of such Senior Indebtedness
held or represented by each, for application to payment of
all such Senior Indebtedness remaining unpaid, to the
extent necessary to pay all such Senior Indebtedness in
full in cash after giving effect to any concurrent payment
or distribution, or provision therefor, to, the holders of
such Senior Indebtedness; and
(C) in the event that, notwithstanding the foregoing
provisions of this Section 4.2, any payment or distribution
of assets of Guarantor of any kind or character from any
source whatsoever, whether in cash, property or securities
(other than equity securities of Guarantor as reorganized
or readjusted or equity securities of Guarantor or any
other company, trust or corporation provided for by a plan
of reorganization or readjustment, or securities the
payment of which is subordinate, at least to the extent
provided for in this Article IV with respect to the
Subordinated Indebtedness, to the payment of all Senior
Indebtedness at the time outstanding and to the payment of
all securities issued in exchange therefor to the holders
of such Senior Indebtedness at the time outstanding), shall
be received by any Noteholder before all such Senior
Indebtedness is paid in full in cash, or provision made for
its payment (any such provision having been agreed to in
writing by the holders of the Senior Indebtedness), such
payment or distribution shall be held in trust for the
benefit of, and shall be immediately paid or delivered by
such Noteholder to, as the case may be, the holders of such
Senior Indebtedness remaining unpaid or unprovided for, or
their representative or representatives, for application to
the payment of all such Senior Indebtedness remaining
unpaid, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held
or represented by each, to the extent necessary to pay all
such Senior Indebtedness in full in cash after giving
effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior
Indebtedness.
Guarantor shall give prompt notice to each Noteholder
of any dissolution, winding-up, liquidation, reorganization,
recapitalization or readjustment of Guarantor.
Upon any distribution of assets of Guarantor referred
to in this Article IV, the Noteholders shall be entitled to rely
upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation,
reorganization, recapitalization or readjustment proceeding is
pending, or a certificate of the liquidating trustee or agent or
other Person making any distribution to such holders, for the
purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article IV.
SECTION 4.3 NO PAYMENTS WITH RESPECT TO SUBORDINATED
INDEBTEDNESS IN CERTAIN CIRCUMSTANCES.
(A) No payment on account of the Subordinated
Indebtedness shall be made (directly or indirectly, by set-
off, redemption, repurchase or in any other manner) at any
time when the Noteholders are not entitled to receive
payments in respect of the Notes pursuant to 13.3(A) of
the Note Agreement.
(B) At any time when the Noteholders are not entitled
to receive payments in respect of the Subordinated
Indebtedness thereof pursuant to the foregoing Subsection
(A) and so long as the maturity of no Senior Indebtedness
(as defined in the Note Agreement) has been accelerated,
the Noteholders shall not be entitled to declare any amount
due hereunder or institute or maintain any proceeding
seeking any other remedy against Guarantor or any of its
subsidiaries in respect of the Subordinated Indebtedness,
whether contractual, at law or in equity or otherwise.
(C) Following any acceleration of the maturity of any
Senior Indebtedness (as defined in the Note Agreement) and
as long as such acceleration shall continue unrescinded and
unannulled, the Senior Indebtedness shall first be paid in
full in cash or have provision made for such payment (any
such provision having been agreed to in writing by the
holders of the Senior Indebtedness), before any payment is
made (directly or indirectly, by set-off, redemption,
repurchase or in any other manner) on account of or applied
on the Subordinated Indebtedness from any source
whatsoever.
(D) Following any acceleration of the maturity of all
or any portion of the Notes and so long as such
acceleration shall continue unrescinded and unannulled, all
Senior Indebtedness then due, or becoming due by
acceleration or otherwise, shall be first paid in full in
cash, or provision made for such payment (any such
provision having been agreed to in writing by the holders
of the Senior Indebtedness), before any payment is made
(directly or indirectly, by set-off, redemption, repurchase
or in any other manner) on the Subordinated Indebtedness.
(E) In furtherance of the provisions of this Article
IV, in the event that any payment on the Subordinated
Indebtedness shall be made (from any source whatsoever) and
received by any Noteholder, which is not then permitted by
the foregoing provisions of this Section 4.3, such payment
shall be held in trust for the benefit of, and shall be
immediately paid over to the holders of Senior Indebtedness
or their representative or representatives, ratably
according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior
Indebtedness remaining unpaid, whether or not then due and
payable.
SECTION 4.4 NO IMPAIRMENT OF SUBORDINATION;
REINSTATEMENT. No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of Guarantor or by any act or
failure to act by any such holder (including any exercise or
non-exercise of any right, power or remedy under or in respect
of the Senior Indebtedness or any document relating thereto or
any release or discharge by any holder of Senior Indebtedness of
any guaranty thereof or security therefor), or by any non-
compliance by Guarantor with the terms, provisions and covenants
of this Guaranty and any other document relating thereto,
regardless of any knowledge thereof which any such holder may
have. Each Noteholder agrees that the rights of the holders of
Senior Indebtedness under this Article IV shall be automatically
reinstated if and to the extent that any payment by Guarantor or
any other Person to the holders of Senior Indebtedness is
rescinded or must otherwise be returned by any holder of Senior
Indebtedness as a result of any proceedings in bankruptcy or
reorganization.
SECTION 4.5 HOLDERS OF SUBORDINATED NOTES TO BE
SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS. Subject
to the prior payment in full in cash of all Senior Indebtedness,
the Noteholders shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments or distributions of
assets of Guarantor applicable to the Senior Indebtedness until
Subordinated Indebtedness shall be paid in full, and for
purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness of assets, whether in cash,
property or securities, distributable to the holders of Senior
Indebtedness under the provisions hereof to which the
Noteholders would be entitled except for the provisions of this
Article IV, and no payment pursuant to the provisions of this
Article IV to the holders of Senior Indebtedness by the
Noteholders shall, as between Guarantor, its creditors other
than the holders of its Senior Indebtedness, and the Noteholders
be deemed to be a payment by Guarantor to or on account of such
Senior Indebtedness, it being understood that the provisions of
this Article IV are, and are intended, solely for the purpose of
defining the relative rights of the Noteholders, on the one
hand, and the holders of its Senior Indebtedness, on the other
hand.
SECTION 4.6 OBLIGATIONS OF GUARANTOR UNCONDITIONAL.
Nothing contained in this Article IV or elsewhere in this
Guaranty is intended to or shall impair, as between Guarantor
and its creditors, other than the holders of its Senior
Indebtedness, the obligations of Guarantor, which are absolute
and unconditional, to pay to the Noteholders the Subordinated
Indebtedness as and when the Subordinated Indebtedness shall
become due and payable in accordance with the terms of this
Guaranty, or to affect the relative rights of the Noteholders
and creditors of Guarantor other than the holders of its Senior
Indebtedness, nor, except as otherwise expressly provided in
this Article IV shall anything herein or therein prevent any
Noteholder from exercising all remedies otherwise permitted by
applicable law upon the happening of an Event of Default under
the Note Agreement, subject to the rights, if any, under this
Article IV of the holders of Senior Indebtedness.
Nothing contained in this Article IV or elsewhere in
this Guaranty shall, except during the pendency of any
dissolution, winding-up, liquidation, reorganization,
recapitalization or readjustment of Guarantor, affect the
obligation of Guarantor to make, or prevent Guarantor from
making at any time (except under the circumstances described
under Sections 4.2 and 4.3) payment of the Subordinated
Indebtedness.
SECTION 4.7 HOLDERS OF SUBORDINATED NOTES ENTITLED TO
ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF NOTICE. No
Noteholder shall at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any
payment to it, unless and until such Noteholder shall have
received written notice thereof at its principal office from
Guarantor or from one or more holders of Senior Indebtedness or
from any representative or representatives thereof; and prior to
the receipt of any such written notice each such Noteholder
shall be entitled to assume conclusively that no such facts
exist, without, however, limiting any such rights of holders of
Senior Indebtedness under this Article IV to recover from the
Noteholders any payment made to any such Noteholder which it is
not entitled under this Article IV to retain.
Each Noteholder shall be entitled to rely on the
delivery to it of a written notice by a Person representing
itself to be a holder of Senior Indebtedness to establish that
such notice has been given by a holder of Senior Indebtedness.
In the event that any Noteholder determines in good faith that
further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article IV, such
Noteholder may request such Person to furnish evidence to the
reasonable satisfaction of such Noteholder as to the amount of
Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such
Person under this Article IV, and if such evidence is not
furnished such Noteholder may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment.
SECTION 4.8 INFORMATION AS TO SUBORDINATION.
Guarantor will not, and will not permit any of its subsidiaries
or agents to, publish or give to any creditor or prospective
creditor of Guarantor or any of its subsidiaries any copy,
statement or summary (or acquiesce in the publication or giving
of any such copy, statement or summary) as to the subordination
of the rights of the Noteholders without also stating, or
causing to be stated (in a conspicuous manner in the case of any
document) that such subordination is solely for the benefit of
the holders of Senior Indebtedness and not for the benefit of
any other creditor of Guarantor or any of its subsidiaries.
SECTION 4.9 AMENDMENT TO ARTICLE IV. Notwithstanding
anything to the contrary in this Guaranty, no amendment or
modification may be made with respect to the provisions of
(i) this Article IV or (ii) any other provisions of this
Agreement if such amendment or modification would alter or
impair the rights of the holders of the Senior Indebtedness
under this Article IV, in either case without the written
consent of the Agent (so long as any Senior Indebtedness under
the Bank Agreement is outstanding) and the Required Prudential
Holders (so long as any Senior Indebtedness under the Existing
Prudential Notes or the Private Shelf Notes is outstanding) and
the holders of a majority of the outstanding principal amount of
the Senior Indebtedness.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 SUCCESSORS, ASSIGNS AND PARTICIPANTS.
This Guaranty shall be binding upon Guarantor and its successors
and assigns and shall inure to the benefit of Teachers and its
successors, transferees and assigns and each other Noteholder;
all references herein to Guarantor shall be deemed to include
its successors and assigns, and all references herein to
Teachers or any other Noteholder shall be deemed to include its
successors and assigns. This Guaranty shall be enforceable by
the Noteholders and any of the Noteholders' successors, assigns
and participants, and any such successors and assigns shall have
the same rights and benefits with respect to the Borrower under
this Guaranty as Teachers hereunder.
SECTION 5.2 FURTHER ASSURANCES. Guarantor agrees, at
the sole cost and expense of Guarantor, to promptly do all such
things and execute all such documents as the Noteholders may
consider necessary or desirable to preserve the rights and
powers of the Noteholders hereunder.
SECTION 5.3 NOTICES. Except as otherwise expressly
provided herein, any notice required or desired to be served,
given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered five days
after deposit in the United States mails, with proper postage
prepaid, or upon delivery by courier or upon transmission by
telex, telecopy or similar electronic medium to the following
addresses:
(i) If to Teachers at:
730 Third Avenue
New York, New York 10017
Attention: Securities Division
Re: John B. Sanfilippo & Son, Inc.
Telecopy: (212) 916-6667
Telephone: (212) 916-4311
(ii) If to any other Noteholder, to the address of
such Noteholder as it appears in the note register maintained
pursuant to 14 of the Note Agreement;
(iii) If to Guarantor at:
JBS International, Inc.
c/o John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove Village, Illinois 60007
Attn: Michael J. Valentine, Chairman and
President
Telecopy: (708) 593-9608
Telephone: (708) 593-2300
with a copy to:
Timothy R. Donovan, Esq.
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
or to such other address as each party designates to the other
in the manner herein prescribed.
SECTION 5.4 AMENDMENTS, WAIVERS AND CONSENTS. No
amendment or waiver of or consent to any departure by Guarantor
from any provision of this Guaranty, shall be binding on the
Noteholders except as expressly set forth and consented to in a
writing duly signed and delivered by the Required Holders of the
Notes, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between Guarantor
and the Noteholders, nor any failure on the part of the
Noteholders to exercise any right, power or remedy nor any delay
on the part of the Noteholders in exercising any right, power or
remedy shall operate as a waiver thereof, and no single or
partial exercise by the Noteholders of any right, power or
remedy shall preclude any further exercise thereof by the
Noteholders. No waiver of any right, power or remedy shall be
deemed to occur by any act or knowledge of any Noteholder, its
agents, trustees, officers or employees or be binding against
any Noteholder, except as expressly set forth in a writing duly
signed and delivered by the Required Holders of the Notes. No
waiver by the Required Holders of any default shall operate as a
waiver of any other default or the same default on a future
occasion, and no action by any Noteholder permitted hereunder
shall in any way affect or impair any of any Noteholders'
rights, powers or remedies or the obligations of Guarantor under
this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any part of the Indebtedness shall
be conclusive and binding on Guarantor irrespective of whether
Guarantor was a party to the suit or action in which such
determination was made. As used herein, the term "this Guaranty"
and references thereto shall mean this Guaranty as it may from
time to time be amended or supplemented.
SECTION 5.5 GOVERNING LAW. THIS GUARANTY SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
ILLINOIS.
SECTION 5.6 SUBMISSION TO JURISDICTION. GUARANTOR
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE CITY OF NEW YORK OR WITHIN THE COUNTY
OF COOK, STATE OF ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT
TO THE NOTEHOLDERS' SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS GUARANTY OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH TO WHICH GUARANTOR IS A PARTY
MAY BE LITIGATED IN SUCH COURTS, AND GUARANTOR WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR
MESSENGER ON JOHN B. SANFILIPPO & SON, INC. AT THE ADDRESS SET
FORTH IN SECTION 5.3 ABOVE AND THAT SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR
FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO
GUARANTOR'S ADDRESS AS SET FORTH IN SECTION 5.3. THE
NOTEHOLDERS AND GUARANTOR ACKNOWLEDGE THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED
FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
THE NOTEHOLDERS. NOTHING CONTAINED IN THIS SUBSECTION 5.6 SHALL
AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
NOTEHOLDERS TO BRING ANY ACTION OR PROCEEDING AGAINST GUARANTOR
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 5.7 COUNTERPARTS. This Guaranty may be
executed in any number of counterparts, each of which shall be
an original with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 5.8 INTERPRETATION; PARTIAL INVALIDITY.
Whenever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
SECTION 5.9 NO USURY. Nothing contained in this
Guaranty shall be construed or shall so operate either presently
or prospectively to require Guarantor to pay any amount under
this Guaranty on account of the Indebtedness that constitutes
interest in excess of the maximum amount of interest permitted
by law to be charged on all or any portion of the Indebtedness
and to be guaranteed by Guarantor hereunder. If any interest in
excess of the maximum amount of interest permitted by law to be
charged and to be guaranteed hereunder is provided for, or is
adjudicated to be provided for, with respect to all or any
portion of the Indebtedness, then in such event (i) the
provisions of this Section 4.9 shall govern and control; (ii)
Guarantor shall not be obligated to pay any amount under this
Guaranty that constitutes interest in excess of that so
permitted on all or any portion of the Indebtedness; (iii) any
amount paid by Guarantor to the Noteholders under this Guaranty
that constitutes interest in excess of that so permitted on all
or any portion of the Indebtedness shall, at the option of the
Noteholders, be (A) applied as a credit against the then unpaid
but due and owing amount under this Guaranty, (B) refunded to
the Guarantor or (C) applied or refunded pursuant to any
combination of the foregoing; (iv) this Guaranty shall have been
deemed to have been, and shall be, reformed and modified to
reflect, Guarantor's guarantee hereunder of the payment of the
Indebtedness to the extent interest included therein is
permitted by law to be charged and to be guaranteed by Guarantor
hereunder; and (v) Guarantor shall not have any action against
the Noteholders for any damages whatsoever arising out of the
payment or collection of any such amount.
SECTION 5.10 TAXES. (a) Any and all payments by the
Guarantor hereunder shall be made free and clear of and without
deduction for any and all present or future taxes, deductions,
charges or withholdings, and all liabilities with respect
thereto, including without limitation, such taxes, deductions,
charges, withholdings or liabilities whatsoever imposed,
assessed, levied or collected by any taxing authority and all
(other than to the extent due to the gross negligence or willful
misconduct of any Noteholder) interest, penalties, expenses or
similar liabilities with respect thereto ("Taxes"), excluding
however, from the definition of Taxes, in the case of each
Noteholder, taxes imposed on its income (including penalties and
interest payable in respect thereof), and franchise taxes
imposed on it by the jurisdiction under the laws of which such
Noteholder is organized or any political subdivision thereof.
If the Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any
Noteholder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 5.10) such Noteholder receives an amount
equal to the sum it would have received had no such deductions
been made and (ii) the Guarantor shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies that arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Guaranty
(hereinafter included within the definition of "Taxes").
(c) The Guarantor will indemnify each Noteholder for
the full amount of Taxes (including without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this
Section 5.10) paid by such Noteholder and any liability arising
therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall
be made within five days from the date such Noteholder makes
written demand therefor; provided however, to the extent that
any Noteholder is reimbursed for any Tax that was incorrectly or
illegally asserted in connection with this Guaranty, such
Noteholder shall promptly return to the Guarantor the amount of
such reimbursement net or any costs of recovery, together with
any interest that may have been paid by the taxing jurisdiction
with respect thereto, to the extent the Guarantor has actually
paid such Noteholder with respect thereto.
(d) Promptly after the date on which payment of any
Taxes are due pursuant to applicable law, the Guarantor will, at
the request of any Noteholder, furnish to such Noteholder
evidence in form and substance satisfactory to such Noteholder
that the Guarantor has met its obligations under this Section
5.10.
(e) Without prejudice to the survival of any other
agreement of the Guarantor, the agreement and obligations of the
Guarantor contained in this Section 5.10 shall survive the
payment in full of any other amounts due under this Guaranty.
SECTION 5.11 MISCELLANEOUS. The section headings
used in this Guaranty are for convenience of reference only and
shall not define or limit the provisions of this Guaranty. All
remedies under this Guaranty are cumulative and are not
exclusive of any other remedies provided by law.
[Signature pages to follow]
IN WITNESS WHEREOF, Guarantor and Teachers have caused
this Guaranty to be duly executed as of the date first above
written.
JBS INTERNATIONAL, INC.
By: /s/ Michael J. Valentine
-------------------------
Title: President
---------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
By: /s/ David G. Persky
-------------------------
Title: Associate Director
------------------
AMENDMENT NO. 7 TO CREDIT AGREEMENT
This Amendment No. 7 is dated as of March 26, 1998 by
and among John B. Sanfilippo & Son, Inc. (the "Borrower"),
the Lenders parties hereto and Bank of America National
Trust and Savings Association, as successor by merger to
Bank of America Illinois, as Agent for the Lenders
("Amendment No. 7").
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, that
certain Amendment No. 2 and Waiver to Credit Agreement
dated as of October 30, 1996, that certain Amendment No. 3
to Credit Agreement dated as of January 24, 1997, that
certain Amendment No. 4 to Credit Agreement dated as of
April 25, 1997, that certain Amendment No. 5 dated as of
May 16, 1997 and that certain Amendment No. 6 dated as of
July 25, 1997 (the "Agreement");
WHEREAS, the Borrower has requested that the Lenders
extend the Commitment Termination Date;
WHEREAS, the Borrower and the Lenders desire to amend
the 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 Agreement.
2. Amendments to Credit Agreement. Subject to the
terms and conditions set forth in Section 6 of this
Amendment No. 7, the Agreement is hereby amended as
follows:
(a) The definition of "Applicable Margin" in Section
1.1 of the Agreement is amended and restated in its
entirety to read as follows:
""Applicable Margin" means at any date, the
applicable percentage amount set forth in the
following table opposite the applicable ratio of
Senior Funded Indebtedness to EBITDA on a trailing
four quarter basis as shown in the Compliance
Certificate most recently delivered to the Agent:
RATIO OF SENIOR FUNDED APPLICABLE
INDEBTEDNESS TO EBITDA MARGIN
More than 3.5 2.00%
Less than or equal to 3.5 but
more than or equal to 2.75 1.75%
Less than 2.75 but more
than or equal to 2.0 1.50%
Less than 2.0 1.25%
provided, however, that the Applicable Margin shall be
deemed to be 2.00% on or after March 26, 1998;
provided further that, if the Borrower shall have
failed to deliver to the Agent by the date required
hereunder its Compliance Certificate pursuant to
Section 8.1.1 (c), then until such delivery, the
Applicable Margin shall be deemed to be 2.0%. Each
change in the Applicable Margin shall take effect on
the first day of the month immediately succeeding the
month in which such Compliance Certificate is received
by the Agent. Notwithstanding the foregoing, no
reduction in the Applicable Margin shall be effected
if a Default shall have occurred and be continuing on
the date when such change would otherwise occur."
(b) The definition of "Commitment Termination Date"
in Section 1.1 of the Agreement is amended by deleting the
reference therein to "March 27, 1998" and replacing such
reference with a reference to "April 30, 1998."
(c) Section 2.8.1 of the Agreement is amended and
restated in its entirety to read as follows:
"SECTION 2.8.1 Nonuse Fee. The Borrower agrees
to pay the Agent for the account of each Lender, for
the period (including any portion thereof when its
Commitment is suspended by reason of the Borrower's
inability to satisfy any condition of Article VI)
commencing on the Effective Date and continuing
through the final Commitment Termination Date, a
Nonuse Fee ("Nonuse Fee") at the Nonuse Fee Rate on
such Lender's Percentage of the average daily unused
portion of the applicable amount specified in Section
8.2.15. Such Nonuse Fee shall be payable by the
Borrower in arrears on each Quarterly Payment Date,
commencing with the first such day following the
Effective Date, and on the Commitment Termination
Date. The "Nonuse Fee Rate" means at any date, the
applicable percentage amount set forth in the
following table opposite the applicable ratio of
Senior Debt to EBITDA on a trailing four quarter basis
as shown in the Compliance Certificate most recently
delivered to the Agent:
RATION OF SENIOR FUNDED
INDEBTEDNESS TO EBITDA NONUSE FEE RATE
More than or equal to 2.75 0.375%
Less than 2.75 0.25%
provided, however, that the Nonuse Fee Rate shall be
deemed to be 0.375% on and after March 26, 1998;
provided further that, if the Borrower shall have
failed to deliver to the Agent by the date required
hereunder its Compliance Certificate pursuant to
Section 8.1.1(c), then until such delivery, the Nonuse
Fee Rate shall be deemed to be 0.375%. Each change in
the Nonuse Fee Rate shall take effect on the first day
of the month immediately succeeding the month in which
such Compliance Certificate is received by the Agent.
Notwithstanding the foregoing, no reduction in the
Nonuse Fee Rate shall be effected if a Default shall
have occurred and be continuing on the date when such
change would otherwise occur."
(d) Schedule E to the Agreement is amended by
appending as Attachment 6 thereto the text contained in
Schedule I hereto.
3. AMENDMENTS TO NOTES. Subject to the terms and
conditions set forth in Section 6 of this Amendment No. 7,
each of the Notes is hereby amended by deleting the
reference therein to "March 27, 1998" and replacing such
reference with a reference to "April 30, 1998."
4. The Borrower agrees that it shall pay to Agent and
amendment fee in the amount of Ten Thousand Dollars
($10,000) on April 1, 1998, which fee is fully earned and
nonrefundable; provided, however that payment of such fee
shall be waived in the event that the Obligations are
repaid in full and the Commitment is terminated on or
before March 31, 1998.
5. The Borrower represents and warrants that, after
giving effect to this Amendment No. 7, no Default or Event
of Default exists and is continuing under the Agreement and
no default exists under the Teachers Note Agreement and the
Prudential Note Agreement.
6. This Amendment No. 7 shall become effective as of
March 26, 1998 upon satisfaction of the following
conditions:
(i) the Borrower, the Agent, Sunshine, Quantz and
each of the Lenders shall have executed and
delivered a counterpart of this Amendment No. 7.
(ii) the Agent shall have received, in sufficient
copies for each Lender, the following in form
and substance satisfactory to the Agent and its
counsel:
(A) a board of directors resolution
authorizing the execution and delivery of this
Amendment No. 7.
(B) a certificate from the Borrower's chief
financial Authorized Officer certifying that on
the date hereof and after giving effect to this
Amendment No. 7 no Default or Event of Default
has occurred and is continuing.
(iii) the Borrower shall have paid the outstanding
fees and out-of-pocket costs and expenses of
counsel for the Agent incurred in connection
with the negotiation, preparation, execution
and delivery of this Amendment No. 7.
7. Except as specifically set forth in this
Amendment No. 7, the 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 aspects.
8. Upon the effectiveness of this Amendment No. 7,
each reference in the Agreement to "this Agreement",
"hereof", "herein" or "hereunder" or words of like import,
and all references to the Agreement in any other Loan
Documents shall mean and be a reference to the Agreement as
amended hereby.
9. This Amendment No. 7 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. 7 SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS.
(Signature pages follow)
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 7 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 NATIONAL TRUST AND
SAVINGS ASSOCIATION, as successor
by merger to Bank of America
Illinois, in its capacity as Agent
By /s/ Jay McKeown
--------------------------------
Title: Agency Management Services
Senior Agency Officer
--------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as successor
by merger to Bank of America
Illinois, in its capacity as a
Lender, Issuing Lender and Issuer
By /s/ Randolph T. Kohler
--------------------------------
Title: Senior Vice President
---------------------
THE NORTHERN TRUST COMPANY, in its
capacity as a Lender
By /s/ Daniel Toll
---------------------------------
Title: Second 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. 7,
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/ Michael J. Valentine
----------------------------
Title: Assistant Secretary
-------------------
The undersigned acknowledges
receipt of a copy of the foregoing
Amendment No. 7, consents to the
terms thereof, and ratifies and
confirms its Guaranty, dated as of
January 24, 1997, in favor of the
Lenders, and all documents,
instruments and agreements executed
in connection therewith.
QUANTZ ACQUISITION CO., INC.
By: /s/ Michael J. Valentine
----------------------------
Title: Assistant Secretary
-------------------
Schedule I to Amendment No. 7 to Credit Agreement
ATTACHMENT 6
(to __/__/__ Compliance
Certificate)
RATIO OF SENIOR FUNDED INDEBTEDNESS TO
EBITDA FOR DETERMING APPLICABLE MARGIN
AND NONUSE FEE RATE
ON ____________, _________
COMPUTATION DATE
On a Consolidated basis for Borrower and its Subsidiaries,
all determined on a trailing four quarter basis:
1. Senior Funded Indebtedness $________
2. EBITDA $________
3. Ratio of Item 1 to Item 2 ____%
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (as amended, replaced, restated or
supplemented from time to time, this "Agreement") is made as of the
31st day of March, 1998 by and among JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation ("Sanfilippo"), SUNSHINE NUT CO.,
INC., a Texas corporation ("Sunshine"), JBS INTERNATIONAL, INC., a
Barbados corporation ("JBS") and QUANTZ ACQUISITION CO., INC., a
Delaware corporation ("Quantz" and collectively with Sanfilippo,
Sunshine and JBS, the "Borrower"), the financial institutions
listed on the signature pages hereof and each other financial
institution that may hereafter become a party hereto in accordance
with the provisions hereof (collectively "Lenders" and individually
a "Lender") and U.S. BANCORP AG CREDIT, INC. f/k/a FBS Ag Credit,
Inc., a Colorado corporation ("U.S. Bancorp"), in its capacity as
Agent for the Lenders and for the Issuer (in such capacity, the
"Agent").
RECITAL
The Borrower has requested that Lenders make loans, advances,
extensions of credit and/or other financial accommodations to or
for the benefit of the Borrower, and Lenders are willing to do so
on the terms and conditions herein contained.
NOW, THEREFORE, in consideration of the foregoing and of the
terms and conditions contained in this Agreement, and of any loans
or extensions of credit or other financial accommodations at any
time made to or for the benefit of the Borrower by Lenders, the
Borrower and Lenders agree as follows:
1 DEFINITIONS.
1.1 GENERAL DEFINITIONS. When used herein, the following
capitalized terms shall have the meanings indicated, whether used
in the singular or the plural:
"ACCOUNTS" shall mean all present and future rights (including
without limitation, rights under any Margin Accounts) of the
Borrower to payment for Inventory or other goods sold or leased or
for services rendered, which rights are not evidenced by instru-
ments or chattel paper, regardless of whether such rights have been
earned by performance.
"ADJUSTED FUNDED DEBT" shall mean, without duplication, the
outstanding principal amount of all interest bearing indebtedness
for borrowed money (including without limitation, capitalized
leases and all current maturities of long term debt), minus all of
the Liabilities.
"AFFILIATE" shall mean any Person: (a) that directly or
indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the Borrower; (b)
that directly or beneficially owns or holds ten percent (10%) or
more of any class of the voting stock of the Borrower; (c) ten
percent (10%) or more of the voting stock (or in the case of a
Person which is not a corporation, ten percent (10%) or more of the
equity interest) of which is owned directly or beneficially or held
by the Borrower; or (d) that is a director or officer of the
Borrower. Notwithstanding the foregoing, neither the Agent nor any
Lender shall be deemed to be an Affiliate of the Borrower.
"AGENT" shall have the meaning set forth in the introduction
hereto and shall include any successor agent which has been
appointed in accordance with Section 12.7.
"AGENT'S LETTER" shall mean the letter agreement between the
Agent and the Borrower of even date with this Agreement.
"ANNIVERSARY DATE" shall mean April 1, 1999 and each April 1
thereafter.
"APPLICABLE MARGIN" shall mean with respect to Revolving Loans
which are Reference Rate Loans or Eurodollar Rate Loans, the rates
per annum set forth below for the then applicable Financial
Performance Level:
Financial
Performance Level Reference Rate Eurodollar Rate
Level 1 0.25% 2.0%
Level 2 0.0% 1.50%
Level 3 0.0% 1.25%
Level 4 0.0% 1.0%
Level 5 0.0% 0.75%
"AVAILABLE AMOUNT" shall mean, at any time, an amount equal
to the excess of: (a) the Loan Commitment minus (b) the sum of
(i) the aggregate amount of the Loan Liabilities, and (ii) the
aggregate amount of the LC Obligations.
"BAINBRIDGE BONDS" shall mean the bonds now or hereafter
issued pursuant to the Bainbridge Indenture.
"BAINBRIDGE BOND DOCUMENTS" shall mean all agreements,
instruments and documents as now in effect and executed or
delivered in connection with the Bainbridge Indenture, and as the
same may be amended, replaced, restated and/or supplemented from
time to time hereafter, including without limitation, the
Bainbridge Loan Agreement.
"BAINBRIDGE INDENTURE" shall mean that certain Trust
Indenture dated as of June 1, 1987 between the Decatur County -
Bainbridge Industrial Development Authority and Trust Company
Bank, as now in effect and as the same may be amended, replaced,
restated and/or supplemented from time to time hereafter.
"BAINBRIDGE LC" shall mean any LC now in existence or
hereafter issued pursuant to this Agreement for the purpose of
securing the payment of principal or interest on the Bonds.
"BAINBRIDGE LOAN AGREEMENT" shall mean that certain Loan
Agreement dated as of June 1, 1987, between the Decatur County -
Bainbridge Industrial Development Authority and Sanfilippo, as
now in effect and as the same may be amended, replaced, restated
and/or supplemented hereafter.
"BAINBRIDGE LOAN DOCUMENTS" shall mean all agreements,
instruments and documents executed or delivered in connection
with the Bainbridge Loan Agreement, as now in existence and as
the same may be amended, replaced, restated and/or supplemented
from time to time.
"BAINBRIDGE TRUSTEE" shall mean the trustee under the
Bainbridge Indenture.
"BANK OF AMERICA" shall mean Bank of America Illinois,
individually and as collateral agent pursuant to that certain
Intercreditor and Collateral Agency Agreement dated as of January
24, 1997 among Bank of America Illinois, Sanfilippo, Sunshine,
Quantz Acquisition Co., Inc., and the other parties that were
signatories thereto.
"BUSINESS DAY" shall mean any day other than a day on which
commercial banks are authorized or required to close in Denver,
Colorado and, if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a conversion of or
into, or an Interest Period for, a Eurodollar Rate Loan or a
notice by the Borrower with respect to any such borrowing,
payment, prepayment or Interest Period, any day which is also a
day on which dealings in Dollar deposits are carried on the
interbank market selected by the Agent for purposes of selling
the Eurodollar Rate.
"CAPITAL EXPENDITURES" shall mean, as to any Person for any
period, payments which are made by such Person for the lease,
purchase, improvement, construction or use of any property, the
value or cost of which under GAAP is required to be capitalized
and appear on such Person's balance sheet in the category of
property, plant or equipment, without regard to the manner in
which such payments or the instrument pursuant to which they are
made are characterized by such Person or any other Person, and
shall include without limitation, payments for the installment
purchase of property and payments under Capital Lease
Obligations.
"CAPITAL LEASE OBLIGATION" shall mean, at the time of any
determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be required
to be capitalized on a balance sheet in accordance with GAAP.
"CLOSING DATE" shall mean March 31, 1998.
"COMMITMENT" shall mean, as to any Lender, such Lender's
Loan Commitment and/or such Lender's LC Commitment, and
"COMMITMENTS" shall mean collectively, the Commitments for all
the Lenders.
"DEFAULT" shall mean the occurrence or existence of: (a) an
event which, through the passage of time or the service of notice
or both, would (assuming no action is taken by the Borrower or
any other Person to cure the same) mature into a Matured Default;
(b) an event which requires neither the passage of time nor the
service of notice to mature into a Matured Default; or (c) the
occurrence of a breach or a default under any other agreement at
any time in existence between the Borrower and the Agent or any
of the Lenders, including without limitation, any of the
Financing Agreements.
"DOLLARS" AND "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, for any period of determination and
with respect to any Person, the net income of such Person before
provision for income taxes, interest expense (including without
limitation, implicit interest expense on capitalized leases),
depreciation, amortization and other noncash expenses or charges,
excluding (to the extent otherwise included): (a) nonoperating
gains (including without limitation, extraordinary or
nonrecurring gains, gains from discontinuance of operations and
gains arising from the sale of assets other than Inventory or
property, plant and equipment) during the applicable period; and
(b) similar nonoperating losses during such period.
"EQUIPMENT" shall mean any and all goods, other than
Inventory (including without limitation, equipment, machinery,
implements, tools, parts and accessories) which are at any time
owned by the Borrower, together with any and all accessions,
parts and appurtenances.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended and in effect at any time.
"EURODOLLAR RATE" shall mean, with respect to each day
during each Interest Period pertaining to a Eurodollar Rate Loan,
the rate per annum equal to the rate at which Dollar deposits are
offered for such Interest Period as set forth on, at the option
of the Agent either the Reuters Screen LIBO Page or the Telerate
Screen LIBO Page, in both cases at or about 9:00 a.m. (Denver
time), two Business Days prior to the beginning of such Interest
Period.
"EURODOLLAR RATE LOAN" shall mean any Loan which bears
interest at the Eurodollar Rate plus the Applicable Margin.
"EXTENDED LC'S" shall mean any of the following: (a) any LC
issued for the purpose of securing industrial development bond
obligations of the Borrower; (b) the Bainbridge LC; or (c) any LC
issued to the Commodity Credit Corporation or G.F.A./Commodity
Credit Corporation PGCMA and having an expiration date more than
twelve months after its issuance date.
"FARM PRODUCTS" shall mean all of the Borrower's seed and
harvested or unharvested crops of all types and descriptions,
whether annual or perennial and all other personal property of
the Borrower used or for use in farming operations, including
without limitation, native grass, grain, harvested crops, feed,
feed additives, feed ingredients, feed supplements, fertilizer,
hay, silage, supplies (including without limitation, veterinary
supplies and related goods) and livestock (including without
limitation, the offspring of such livestock and livestock in
gestation) and any other "farm products" (as defined in the Code-
).
"FINANCIAL PERFORMANCE LEVEL" shall mean the applicable
level of the Borrower's financial performance determined in
accordance with the table and paragraph set forth below.
FINANCIAL PERFORMANCE LEVEL RATIO OF ADJUSTED FUNDED DEBT TO EBITDA
Level 1 Greater than or equal to 4.01 to 1.0
Level 2 Less than 4.01 to 1.0 but greater than
or equal to 3.51 to 1.0
Level 3 Less than 3.51 to 1.0 but greater than
or equal to 3.01 to 1.0
Level 4 Less than 3.01 to 1.0 but greater than
or equal to 2.51 to 1.0
Level 5 Less than 2.51 to 1.0
The initial Financial Performance Level shall be Level 3.
Beginning with the Borrower's fiscal quarter ending in March,
1998, the Agent will review the Borrower's financial performance
as of each fiscal quarter end, after its receipt of the
Borrower's financial statements and compliance certificate for
such fiscal quarter, and will confirm the Borrower's calculation
of its ratio of quarter end Adjusted Funded Debt to rolling four
quarter EBITDA for such fiscal quarter. Any change in the
Financial Performance Level will be effective thirty (30) days
after Borrower's quarter end and Agent's receipt of the financial
statements and compliance certificate supporting such change. If
Borrower's financial statements and compliance certificate for
any fiscal quarter are not delivered to the Agent on a timely
basis, the Agent may, at its option, deem the Borrower's
Financial Performance Level to be Level 1 until ten (10) Business
Days after the Agent's receipt of such financial statements and
compliance certificate.
"FINANCING AGREEMENTS" shall mean this Agreement, the Notes,
the Agent's Letter and all agreements, instruments and documents,
including without limitation, all security agreements, loan
agreements, notes, letter of credit applications, guarantees,
mortgages, deeds of trust, chattel mortgages, subordination
agreements, pledges, guaranties, assignments of proceeds,
assignments of income, assignments of contract rights,
assignments of partnership interest, assignments of royalty
interests, assignments of performance or other collateral
assignments, completion or surety bonds, standby agreements,
undertakings, powers of attorney, consents, assignments,
contracts, notices, leases, financing statements and all other
documents, agreements, instruments and other written matter at
any time executed by or on behalf of the Borrower and delivered
to the Agent or any of the Lenders pursuant to this Agreement,
whether as security for the payment or performance of the Notes
or the Liabilities or otherwise, together with any and all
amendments, modifications, supplements, renewals, extensions,
increases and rearrangements of, and substitutions for, any of
the foregoing, and together with all agreements, instruments and
documents referred to therein or contemplated thereby.
"FISCAL YEAR" shall mean the fiscal year of the Borrower,
which shall be the twelve month period ending on the last
Thursday in June in each year.
"FIXED CHARGE COVERAGE RATIO" shall mean for any period of
determination, the ratio of: (a) Unallocated Cash Flow plus
interest paid during such period; over (b) the amount of
scheduled principal payments actually made during such period
with respect to long term debt, plus interest paid during such
period.
"GAAP" shall mean generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of
the accounting profession in the United States, which are
applicable to the circumstances as of the date of determination.
"GENERAL INTANGIBLES" shall mean all of the Borrower's
right, title and interest in and to any bank deposit accounts,
customer deposit accounts, deposits, rights related to prepaid
expenses, negotiable or nonnegotiable instruments or securities,
chattel paper, choses in action, causes of action and all other
intangible personal property of every kind and nature (other than
Accounts), including without limitation, corporate or other
business records, inventions, designs, patents, patent applica-
tions, trademarks, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, franchises, customer lists,
tax refunds, tax refund claims, customs claims, guarantee claims,
cooperative memberships or patronage benefits, rights to any
government subsidy, set aside, diversion, deficiency or disaster
payment or payment in kind, milk bases, brands and brand
registrations, water rights (including without limitation, water
stock, ditch rights, well permits, water permits, applications
and the like), Commodity Credit Corporation storage agreements or
contracts, leasehold interests in real and personal property and
any security interests or other security held by or granted to
the Borrower to secure payment by any account debtor of any of
the Accounts, and any other "general intangibles" (as defined in
the Code).
"GOVERNMENTAL AUTHORITY" shall mean any nation or
government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, including without limitation, any arbitration panel,
any court or any commission.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute,
code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license,
authorization or other directive or requirement of any federal,
state, county, municipal, parish, provincial or other
Governmental Authority or any department, commission, board,
court, agency or any other instrumentality of any of them.
"HIGHEST LAWFUL RATE" shall mean, with respect to each
Lender, the maximum nonusurious interest rate, if any, that at
any time or from time to time may be contracted for, taken,
reserved, charged, or received with respect to the Notes or on
other amounts, if any, payable to such Lender pursuant to this
Agreement or any other Financing Agreements, under laws
applicable to such Lender which are presently in effect, or, to
the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.
"INTEREST PERIOD" shall mean with respect to Eurodollar Rate
Loans, the period of time for which the Eurodollar Rate shall be
in effect as to any Eurodollar Rate Loan and which shall be a 1,
2, 3 or 6 month period of time, commencing with the borrowing
date of the Eurodollar Rate Loan or the expiration date of the
immediately preceding Interest Period, as the case may be,
applicable to and ending on the effective date of any rate change
or rate continuation made as provided in Section 3.2 as the
Borrower may specify in the notice of borrowing delivered
pursuant to Section 2.1 or the notice of interest conversion
delivered pursuant to Section 3.2; provided however, that: (a)
any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next succeeding
Business Day; (b) no Interest Period shall extend beyond the
Maturity Date; and (c) there shall be no more than 5 Interest
Periods at any one time.
"INVENTORY" shall mean any and all goods which shall at any
time constitute "inventory" (as defined in the Code) or Farm
Products of the Borrower, wherever located (including without
limitation, goods in transit), or which from time to time are
held for sale, lease or consumption, furnished under any contract
of service or held as raw materials, work in process, finished
inventory or supplies (including without limitation, packaging
and/or shipping materials).
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, as in effect at any time, together with all regulations,
rulings and interpretations thereof or thereunder issued by the
Internal Revenue Service.
"ISSUER" shall mean any party that issues an LC pursuant to
this Agreement.
"LC" shall mean each letter of credit issued pursuant to
this Agreement.
"LC COMMITMENT" shall mean as to any Lender, such Lender's
Pro Rata Percentage of $20,000,000 using the percentage set forth
opposite such Lender's name under the heading "Loan Commitments"
on Exhibit 1A, as such amount may be reduced or terminated from
time to time pursuant to Section 4.4 or 11.1, less such Lender's
Pro Rata Percentage of payments received with respect to the LC
Obligations, and "LC Commitments" shall mean collectively, the LC
Commitments for all the Lenders.
"LC OBLIGATIONS" shall mean, at any time, an amount equal to
the sum of (a) the aggregate undrawn and unexpired amount of the
outstanding LC's plus (b) the aggregate amount of drawings under
LC's which have not been reimbursed pursuant to Section 2.2(f).
"LIABILITIES" shall mean any and all liabilities,
obligations and indebtedness of the Borrower to the Agent, the
Lenders or the Issuer under the Financing Agreements of any and
every kind and nature, at any time owing, arising, due or payable
and howsoever evidenced, created, incurred, acquired or owing,
whether primary, secondary, direct, contingent, fixed or
otherwise (including without limitation, LC Obligations and
obligations of performance) and whether arising or existing under
this Agreement or any of the other Financing Agreements or by
operation of law.
"LOAN COMMITMENT" shall mean as to any Lender, such Lender's
Pro Rata Percentage of $70,000,000 as set forth opposite such
Lender's name under the heading "Loan Commitments" on Exhibit 1A,
as such amount may be reduced or terminated from time to time
pursuant to Section 4.4 or 11.1, and "LOAN COMMITMENTS" shall
mean collectively, the Loan Commitments for all the Lenders.
"LOAN LIABILITIES" shall mean all of the Liabilities other
than the LC Obligations.
"LOANS" shall mean all loans made pursuant to this
Agreement, whether Reference Rate Loans or Eurodollar Rate Loans.
"MARGIN ACCOUNTS" shall mean all futures contracts or funds
and other property related to such futures contracts, which the
Borrower or the Borrower's authorized attorney-in-fact may
acquire, accumulate, withdraw or pay out, and which may be held
with any broker, including without limitation, any balance
credited to any Margin Account upon its closing.
"MATURED DEFAULT" shall mean the occurrence or existence of
any one or more of the following events: (a) the Borrower fails
to pay any of the Liabilities consisting of principal or interest
within five (5) Business Days after the time such Liabilities
have become due or are declared due; (b) the Borrower fails to
pay any of the Liabilities (other than principal and interest)
within ten (10) Business Days after the time such Liabilities
have become due or are declared due; (c) the Borrower fails or
neglects to perform, keep or observe any of the covenants,
conditions, promises or agreements contained in Sections 10.1,
10.2 or 10.4; (d) the Borrower fails or neglects to perform, keep
or observe any of the covenants, conditions, promises or agree-
ments contained in this Agreement or in any of the other
Financing Agreements (other than those covenants, conditions,
promises and agreements referred to or covered in (a), (b), and
(c) above and other than the covenants set forth in Section 9.6),
and such failure or neglect continues for more than thirty (30)
days after the earlier of the date the Agent gives the Borrower
written notice thereof or the date the Borrower first learns of
such failure or neglect, provided however, that such grace period
shall not apply, and a Matured Default shall be deemed to have
occurred and to exist immediately if such failure or neglect may
not, in the Agent's reasonable determination, be cured by the
Borrower during such thirty (30) day grace period; (e)
[intentionally omitted]; (f) any warranty or representation at
any time made by or on behalf of the Borrower in connection with
this Agreement or any of the other Financing Agreements is untrue
or incorrect in any material respect, or any schedule,
certificate, statement, report, financial data, notice, or
writing furnished at any time by or on behalf of the Borrower to
the Agent or the Lenders is untrue or incorrect in any material
respect on the date as of which the facts set forth therein are
stated or certified; (g) a judgment in excess of $1,000,000 is
rendered against the Borrower and such judgment remains
unsatisfied or undischarged and in effect for thirty (30)
consecutive days without a stay of enforcement or execution,
provided however, that this clause (g) shall not apply to any
judgment for which the Borrower is fully insured and with respect
to which the insurer has admitted liability in writing for such
judgment; (h) all or any part of the Borrower's assets come
within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors; (i) a proceeding under any
bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law or statute is filed
against the Borrower or any guarantor of any of the Liabilities
and such proceeding is not dismissed within sixty (60) days of
the date of its filing, or a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute is filed by the Borrower or
any guarantor of any of the Liabilities, or the Borrower or any
guarantor of the Liabilities makes an assignment for the benefit
of creditors; (j) the Borrower or any guarantor of any of the
Liabilities voluntarily or involuntarily dissolves or is dis-
solved, terminates or is terminated or dies; (k) the Borrower is
enjoined, restrained, or in any way prevented by the order of any
court or any administrative or regulatory agency or by the
termination or expiration of any permit or license, from
conducting all or any material part of the Borrower's business
affairs; (l) the Borrower or any guarantor of any of the
Liabilities fails to make any payment due or otherwise defaults
on any other obligation for borrowed money in excess of
$1,000,000 and the effect of such failure or default is to cause
or permit the holder of such obligation or a trustee to cause
such obligation to become due prior to its date of maturity; (m)
any guarantor of any of the Liabilities purports to terminate its
guaranty or to limit the application thereof to then existing
Liabilities; (n) the Agent makes an expenditure under
Section 13.3 and the Borrower fails to reimburse the Agent for
such an expenditure in accordance with Section 13.3; (o) the
occurrence of a default, an event of default or a matured default
under any other agreement, instrument or document at any time
entered into between the Borrower and the Agent; or (p) the
Borrower fails or neglects to perform, keep or observe any of the
covenants, conditions, promises or agreements contained in
Section 9.6 of this Agreement, and such failure or neglect
continues for more than thirty (30) days after such failure or
neglect first occurs, provided however, that such grace period
shall not apply, and a Matured Default shall be deemed to have
occurred and to exist immediately if such failure or neglect may
not, in the Agent's reasonable determination, be cured by the
Borrower during such thirty (30) day grace period.
"MATURITY DATE" shall mean March 31, 2001, or such later
date as may be agreed upon in writing by the Borrower, the Agent
and the Lenders, or the earlier date of termination in whole of
the Commitments pursuant to Section 4.4 or 11.1.
"NOTES" shall mean the notes of the Borrower executed and
delivered pursuant to this Agreement.
"PENSION PLAN" shall mean any employee pension benefit plan
as defined in Section 3(2) of ERISA in which any personnel of the
Borrower or an Affiliate which is under common control with the
Borrower (within the meaning of Section 414 of the IRC)
participate and which is subject to Title IV of ERISA or Section
412 of the IRC.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, limited
liability partnership, institution, entity, party or government
(whether national, federal, state, provincial, county, city,
municipal or otherwise, including without limitation, any
instrumentality, division, agency, body or department thereof).
"PRO RATA PERCENTAGE" shall mean a fraction (expressed as a
percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the
aggregate amount of all the Commitments of the Lenders, as
adjusted from time to time in accordance with Section 13.24.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AGREEMENT" shall mean that certain Second
Amended and Restated Note Agreement dated as of January 24, 1997
between Sanfilippo and Prudential, as the same may be amended,
replaced, restated and/or supplemented from time to time.
"PRUDENTIAL NOTES" shall mean the "Notes" as such term is
defined in the Prudential Agreement.
"REFERENCE RATE" shall mean the reference rate quoted by
U.S. Bank as of 12:00 Noon on a given day in Minneapolis,
Minnesota, which is a base rate that U.S. Bank from time to time
establishes and which serves as a basis upon which effective
rates of interest are calculated for those loans which make
reference thereto. The Borrower acknowledges that said Reference
Rate is not necessarily the lowest index rate used or the lowest
rate made available to customers by said U.S. Bank.
"REQUIRED LENDERS" shall mean at any time, the Lenders
having at least sixty-three percent (63%) of the aggregate amount
of all of the Lenders' Commitments.
"TANGIBLE NET WORTH" shall mean as of any particular date,
the difference between: (a) the Borrower's combined total assets
as they would normally be shown on the balance sheet of the
Borrower in accordance with GAAP, adjusted by deducting: (i) all
values attributable to general intangibles, except: bank deposit
accounts; Margin Accounts; government subsidy, set aside,
diversion, deficiency or disaster payments receivable which are
properly assigned to the Agent; and Commodity Credit Corporation
storage agreement or contract receivables that are properly
assigned to the Agent; and by deducting (ii) Accounts due from
Affiliates with no further adjustment required for Accounts due
from Affiliates already eliminated in combination except Accounts
due from Affiliates which the Borrower could legally collect by
setoff against Accounts due to Affiliates; and (b) the Borrower's
combined total liabilities as they would normally be shown on the
balance sheet of the Borrower, adjusted by adding as liabilities:
(i) all capitalized leases and guarantees of the indebtedness of
Affiliates, with no further adjustment required for guaranteed
indebtedness already included in the combined balance sheet, and
by deducting from liabilities: (ii) any and all liabilities which
are expressly subordinated on terms satisfactory to the Agent.
"TEACHERS" shall mean Teachers Insurance and Annuity
Association of America.
"TEACHERS AGREEMENT" shall mean that certain Note Purchase
Agreement dated as of August 30, 1995 between Sanfilippo and
Teachers, as the same may be amended, replaced, restated and/or
supplemented from time to time.
"TEACHERS NOTES" shall mean the "Notes" as such term is
defined in the Teachers Agreement.
"TYPE" shall mean, with respect to any Loan, whether such
Loan is a Reference Rate Loan or a Eurodollar Rate Loan.
"UNALLOCATED CASH FLOW" shall mean for any period of
determination (a) EBITDA during such period, plus (b) net new
long term debt incurred during such period, plus (c) net capital
contributions during such period, minus (d) the amount of cash
income taxes paid during such period, minus (e) the amount of
cash dividends paid during such period, minus (f) the amount of
cash interest paid during such period, minus (g) the net amount
of capital expenditures during such period.
"U.S. BANK" shall mean a national banking association with
its principal place of business in Minneapolis, Minnesota and an
Affiliate of the Agent, which now or in the past is or has been
known as U.S. Bank, and its successors and assigns, whether or
not it or any such successor or assign is then known by such
name.
"WORKING CAPITAL" shall mean as of any particular date, the
amount of the Borrower's combined current assets, less the
Borrower's combined current liabilities (including without
limitation, the aggregate amount of Loans outstanding) determined
in accordance with GAAP, adjusted by deducting: (i) all values
attributable to general intangibles, except: bank deposit
accounts; Margin Accounts; government subsidy, set aside,
diversion, deficiency or disaster payments receivable which are
properly assigned to the Agent; and Commodity Credit Corporation
storage agreement or contract receivables that are properly
assigned to the Agent; and by deducting (ii) Accounts due from
Affiliates with no further adjustment required for Accounts due
from Affiliates already eliminated in combination except Accounts
due from Affiliates which the Borrower could legally collect by
setoff against Accounts due to Affiliates, and treating as equity
any and all liabilities which are expressly subordinated on terms
satisfactory to the Agent.
"WORKING CAPITAL RATIO" shall mean as of any particular
date, the ratio of the Borrower's combined current assets, to the
Borrower's combined current liabilities determined in accordance
with GAAP, treating all amounts currently owing to Affiliates as
current liabilities and giving no value as assets to any amounts
currently owing from Affiliates.
1.2 INDEX TO OTHER DEFINITIONS. When used herein, the
following capitalized terms shall have the meanings given in the
indicated portions of this Agreement:
TERM LOCATION
Agreement introduction
Application Section 2.2(c)
Assignee Section 13.24
Assignment and Acceptance Section 13.24
Borrower introduction
Code Section 1.4
Default Rate Section 3.1(c)
Environmental Laws Section 7.9
Equalization Transfer Section 2.1(c)
ERISA Section 7.19
Excess Section 13.19
U.S. Bancorp introduction
Issuer Section 2.2
Lenders introduction
Loan Section 2.1(a)
Loan Account Section 2.1(o)
Note
Section 2.1(h)Purchasing Section 2.1(f)
Lender
Selling Lender Section 2.1(f)
Taxes Section 5.5(a)
UCP Section 2.2(d)
1.3 ACCOUNTING TERMS. Any accounting terms used in this
Agreement which are not specifically defined in this Agreement
shall have the meanings customarily given them in accordance
with GAAP.
1.4 OTHERS DEFINED IN COLORADO UNIFORM COMMERCIAL CODE.
All other terms contained in this Agreement (which are not
specifically defined in this Agreement) shall have the meanings
set forth in the Uniform Commercial Code of Colorado ("Code") to
the extent the same are used or defined therein.
2 LOANS AND LETTERS OF CREDIT.
2.1 LOANS.
(a) Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Lender
severally agrees to make revolving credit loans (each a "Loan"
and more than one Loan, the "Loans") to the Borrower on any one
or more Business Days prior to the Maturity Date, up to an
aggregate principal amount of Loans not exceeding each such
Lender's Pro Rata Percentage of the Available Amount on such
Business Day. Within such limits and during such period and
subject to the terms and conditions of this Agreement, the
Borrower may borrow, repay and reborrow Loans.
(b) It is anticipated that on each Business Day the
Borrower may wish to borrow and repay Reference Rate Loans. To
minimize the number of transfers of funds to and from the
Lenders resulting from such borrowings and repayments, the Agent
will fund daily Reference Rate Loans for the accounts of the
Lenders and will apply daily repayments of Reference Rate Loans
to the accounts of the Lenders, other than according to the
Lenders' Pro Rata Percentages (i.e., without receiving from the
other Lenders their Pro Rata Percentage of a Reference Rate Loan
on the date of disbursement thereof or without paying the other
Lenders their Pro Rata Percentage of a repayment of a Reference
Rate Loan on the date of payment thereof), provided however,
that no such Reference Rate Loan shall be made and no repayment
of a Reference Rate Loan shall be applied other than according
to the Lenders' Pro Rata Percentages, if: (i) at the time of
such Reference Rate Loan or repayment the Agent has actual
knowledge of a Matured Default, or (ii) after giving effect to
the requested Reference Rate Loan or after applying the
repayment, the absolute value of the amount that would have to
be reallocated to make the Reference Rate Loans held according
to the Lenders' Pro Rata Percentages, would exceed $5,000,000.
(c) At any time in the discretion of the Agent and in any
event on the next to last Business Day of each week if the
outstanding Reference Rate Loans are not held according to the
Lenders' Pro Rata Percentages, the Agent shall give notice to
the Lenders of the amount of funds to be transferred from the
Agent to the Lenders, or from the Lenders to the Agent, or from
one Lender to another, as the case may be (each such transfer,
an "Equalization Transfer") required to cause the Reference Rate
Loans to be held by the Lenders according to their Pro Rata
Percentages. On the next Business Day following such notice the
necessary Equalization Transfers shall be made in immediately
available funds not later than 11:00 a.m. (Denver time).
(d) Except as provided in Section 2.1(e), any Equalization
Transfer by the Lenders to the Agent shall be deemed to
constitute Reference Rate Loans by such Lenders to the Borrower
the proceeds of which will immediately be used to make
repayments of Reference Rate Loans held by the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be
deemed to constitute Reference Rate Loans by the Agent to the
Borrower the proceeds of which will immediately be used to make
repayments of Reference Rate Loans held by the Lenders.
(e) In the event that on the date on which any Equalization
Transfer is required to be made pursuant to Section 2.1(c), a
Matured Default of the type described in clause (i) of the
definition thereof shall have occurred and be continuing, any
Equalization Transfer by the Lenders to the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be
deemed to constitute a purchase by the Lenders or the Agent, as
the case may be, of a direct interest, in the amount of such
Equalization Transfer, in outstanding Reference Rate Loans of
the Lenders to the Borrower, to the end that each of the Lenders
shall have an interest therein equal to their respective Pro
Rata Percentages as of the date of occurrence of such Matured
Default.
(f) At any time after any Lender (a "Selling Lender") has
received any Equalization Transfer that constitutes a purchase
by any other Lender (a "Purchasing Lender") of a direct interest
in such Selling Lender's Reference Rate Loans pursuant to
Section 2.1(e), if such Selling Lender receives any payment on
account of its Reference Rate Loans, such Selling Lender will
distribute to such Purchasing Lender its proportionate share of
such payment (appropriately adjusted in the case of interest
payments, to reflect the period of time during which such
Purchasing Lender's direct interest was outstanding and funded);
provided however, that in the event that such payment received
by such Selling Lender is required to be returned, such
Purchasing Lender will return to such Selling Lender any portion
thereof previously distributed to it by such Selling Lender.
(g) Each Lender's obligation to make Equalization Transfers
pursuant to Section 2.1(c) shall be absolute and unconditional
and shall not be affected by any circumstance, including without
limitation, (i) any set-off, counterclaim, recoupment, defense
or other right which such Lender or any other Person may have
against the Agent or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or a Matured
Default or the termination of the Commitments; (iii) any adverse
change in the condition (financial or otherwise) of the Borrower
or any other Person; (iv) any breach of this Agreement by the
Borrower or any other Lender, including without limitation, any
other Lender's failure to make any Equalization Transfer; or (v)
any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.
(h) The Borrower shall execute and deliver to the Agent for
each Lender to evidence the Loans made by each Lender under such
Lender's Loan Commitment, a revolving credit note (each such
note, a "Note" and more than one Note, the "Notes"), which shall
be (i) dated the date of the Closing Date; (ii) in the principal
amount of such Lender's maximum Loan Commitment; and (iii) in
substantially the form attached as Exhibit 2A, appropriately
completed. Each Lender shall post (iv) the date and principal
amount of each Loan made under such Note; (v) the rate of
interest each such Loan will bear; and (vi) each payment of
principal thereon; provided however, that any failure of such
Lender to so post shall not affect the Borrower's obligations
thereunder; and provided further, that such Lender's records as
to such matters shall be controlling whether or not such Lender
has so posted. The outstanding principal balance of each Note
shall be payable on or before the Maturity Date.
(i) In the event that the Borrower fails to pay any
principal or interest on the date the same is due and payable,
the Agent may notify the Lenders to make a Loan to pay such past
due amount and each Lender shall post its records with respect
to such Loan in accordance with Section 2.1(h) of this
Agreement; provided however, that any failure of such Lender to
so post shall not affect the Borrower's obligations hereunder or
under the Notes; and provided further, that such Lender's
records as to such matters shall be controlling.
(j) Each borrowing under this Agreement shall in the case
of any Eurodollar Rate Loan, be in an aggregate amount of not
less than $1,000,000 or in integral multiples of $100,000 in
excess thereof; and at the option of the Borrower, any borrowing
may be comprised of two or more Loans bearing different rates of
interest; provided however, that Loans made on the Closing Date
or on the first Business Day after the Closing Date shall bear
interest from the date of such Loan at a rate per annum equal to
the lesser of (i) the Reference Rate in effect from time to time
plus the Applicable Margin, or (ii) the Highest Lawful Rate,
unless and until the Borrower gives notice under Section 3.2,
and provided further that the Borrower may not have more than
five (5) Eurodollar Rate Loans outstanding at any one time.
Each Loan shall be made upon prior written notice from the
Borrower to the Agent delivered not later than 11:00 a.m.
(Denver time) on the Closing Date with respect to any Loans to
be made on the first Business Day after the Closing Date, or
with respect to any Loans made thereafter, on the same Business
Day as the proposed Loan if such borrowing is a Loan which is a
Reference Rate Loan, or two Business Days prior to the proposed
Loan if such borrowing is a Loan which is a Eurodollar Rate
Loan. Each such notice of borrowing with respect to the Loans
shall be irrevocable and shall specify (iii) the amount of the
proposed borrowing; (iv) the date of the proposed borrowing; (v)
the Type of each such Loan; and (vi) with respect to any
Eurodollar Rate Loan, the Interest Period with respect to each
such Loan and the expiration date of each such Interest Period.
The Borrower shall give the Agent written (including
facsimile) notice by the required time of any proposed
borrowing. Neither the Agent nor any Lender shall incur any
liability to the Borrower in acting upon any facsimile notice
referred to above which the Agent believes in good faith to have
been given by the Borrower, or for otherwise acting in good
faith under this Section 2.1(j).
(k) The Agent shall promptly notify each Lender of any
notice received by the Agent from the Borrower pursuant to
Section 2.1(j). In the case of a proposed borrowing of a Loan
comprised of Eurodollar Rate Loans, the Agent shall also
promptly notify each Lender of the applicable interest rate.
Each Lender shall, before 11:00 a.m. (Denver time) on the date
for any proposed Eurodollar Rate Loan and before 12:00 noon
(Denver time) on the date for any proposed Reference Rate Loan,
make available for the account of the Agent at its address set
forth in Section 13.18, in same day funds, its Pro Rata
Percentage of such borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set
forth in Article 8, on the date for the proposed Loan, the Agent
shall make the borrowing available to the Borrower in
immediately available funds. Any Loan made by the Agent
pursuant to a request believed by the Agent to be an authorized
request by the Borrower for a Loan shall be deemed to be a Loan
for all purposes with the same effect as if the Borrower had in
fact requested the Agent to make such Loan.
(l) Unless the Agent shall have received notice from a
Lender prior to the date of any borrowing of a Loan that such
Lender will not make available to the Agent such Lender's Pro
Rata Percentage of such Loan, the Agent may assume that such
Lender has made such portion available to the Agent on the date
of such Loan in accordance with Section 2.1 and the Agent may,
in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that
such Lender shall not have so made its Pro Rata Percentage
available to the Agent, such Lender and the Borrower severally
agree to repay to the Agent, within five (5) Business Days after
demand therefor, such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid
to the Agent, (i) in the case of the Borrower, at the interest
rate applicable at the time the Loans comprising such borrowing
were made, and (ii) in the case of such Lender, at the federal
funds rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute
such Lender's Loan as part of such borrowing for purposes of
this Agreement.
(m) The failure of any Lender to make the Loan or
Equalization Transfer to be made by it as required by this
Agreement shall not relieve any other Lender of its obligation,
if any, to make its Loan or Equalization Transfer on the date
the same is required to be made, but no Lender shall be
responsible for the failure of any other Lender to make the Loan
or Equalization Transfer to be made by such other Lender on the
date required for the same.
(n) Loans may be made by the Agent on the Agent's receipt
of written notice from the Chairman of the Board, the President
or the Chief Financial Officer of Sanfilippo (provided that the
Agent shall have received a satisfactory incumbency certificate
containing a specimen signature of any such officer giving such
notice), who are authorized to request Loans and direct the
disposition of any such Loans until written notice of the
revocation of such authority is received by the Agent at its
address designated below. Any such Loans shall be conclusively
presumed to have been made to or for the benefit of the Borrower
when the Agent believes in good faith that such notice was made
by authorized persons, or when said Loans are deposited to the
credit of the account of the Borrower regardless of the fact
that Persons other than those authorized hereunder may have
authority to draw against such account.
(o) The Agent shall maintain a loan account ("Loan
Account") on its books in which shall be recorded: (a) all Loans
to the Borrower pursuant to this Agreement; (b) all payments
made by the Borrower on all Loans; and (c) all other appropriate
debits and credits as provided in this Agreement, including
without limitation, all fees, charges, expenses and interest.
All entries in the Borrower's Loan Account shall be made in
accordance with the Agent's customary accounting practices as in
effect from time to time. The Borrower promises to pay the
amount reflected as owing by and under its Loan Account and all
other obligations hereunder as such amounts become due or are
declared due pursuant to the terms of this Agreement.
(p) All Loans to the Borrower, and all other debits and
credits provided for in this Agreement, shall be evidenced by
entries made by the Agent in its internal data control systems
showing the date and amount of each such debit or credit. The
balance in the Borrower's Loan Account, as set forth on the
Agent's most recent printout, shall be rebuttable presumptive
evidence of the amounts due and owing the Agent, the Lenders and
the Issuer by the Borrower.
(q) The purpose of the Loans is to provide working capital
for the Borrower's operations and for the making of capital
expenditures and acquisitions otherwise permitted by this
Agreement.
2.2 LC'S.
(a) Subject to the terms and conditions of this Agreement,
the Borrower may from time to time request that the Agent issue
or cause to be issued by an Affiliate of the Agent one or more
LC's for the Borrower's account for any proper business purpose
as determined by the Agent in its reasonable discretion (the
Agent or its Affiliate thereby becoming the "Issuer"); provided
however, that except as provided in Section 2.2(b), the Agent
shall not issue or cause its Affiliate to issue any such LC if
(i) such issuance would cause the LC Obligations to exceed
$20,000,000 at the time of such issuance, (ii) the face amount
of such LC exceeds the Available Amount at the time of such
issuance, or (iii) the proposed expiry date for the LC is on or
after a date which is the earlier of (A) twelve (12) months
after its date of issuance or (B) the Maturity Date.
(b) Subject to the terms and conditions of this Agreement,
the Borrower may from time to time request that the Agent issue
or cause to be issued by an Affiliate of the Agent Extended LC's
for the Borrower's account (the Agent or its Affiliate thereby
becoming the "Issuer"); provided however, that the Agent shall
not issue or cause its Affiliate to issue any such Extended LC's
if (i) such issuance would cause the LC Obligations to exceed
$20,000,000 at the time of such issuance, (ii) the face amount
of such LC exceeds the Available Amount at the time of such
issuance, or (iii) the proposed expiry date for the Extended LC
is on or after June 1, 2002.
(c) In order to effect the issuance of each LC, the
Borrower shall deliver to the Agent a letter of credit
application (the "Application") not later than 11:00 a.m.
(Denver time), five (5) Business Days prior to the proposed date
of issuance of the LC. The Application shall be duly executed
by a responsible officer of the Borrower, shall be irrevocable
and shall (i) specify the day on which such LC is to be issued
(which shall be a Business Day), and (ii) be accompanied by a
certificate executed by a responsible officer stating that all
conditions precedent to such issuance have been satisfied and
setting forth calculations evidencing availability for any LC as
required pursuant to Section 2.2(a).
(d) Upon receipt of the Application, and satisfaction of
the applicable terms and conditions of this Agreement, and
provided however, that no Default or Matured Default exists, or
would, after giving effect to the issuance of the LC, exist, the
Agent or its Affiliate shall issue such LC no later than the
close of business, in Denver, Colorado or Minneapolis,
Minnesota, on the date so specified. The Agent shall provide the
Borrower and each Lender with a copy of the LC which has been
issued. Each LC shall (i) provide for the payment of drafts
presented for honor thereunder by the beneficiary in accordance
with the terms thereof, when such drafts are accompanied by the
documents described in the LC, if any, and (ii) to the extent
not inconsistent with the express terms hereof or the applicable
Application, be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (together with any subsequent
revisions thereof approved by a Congress of the International
Chamber of Commerce and adhered to by the Agent or its
Affiliate, the "UCP"), and shall, as to matters not governed by
the UCP, be governed by, and construed and interpreted in
accordance with, the laws of the State of Minnesota.
(e) Upon the issuance date of each LC, the Agent shall be
deemed, without further action by any party hereto, to have sold
to each other Lender, and each other Lender shall be deemed,
without further action by any party hereto, to have purchased
from the Agent, a participation, to the extent of such Lender's
Pro Rata Percentage, in the LC, the obligations thereunder and
in the reimbursement obligations of the Borrower due in respect
of drawings made under the LC. If requested by the Agent, the
other Lenders will execute any other documents reasonably
requested by the Agent to evidence the purchase of such
participations.
(f) Upon the presentment of a draft for honor under any LC
by the beneficiary thereof which the Issuer has determined is in
compliance with the conditions for payment thereunder, the
Issuer shall promptly notify the Borrower, the Agent (as
applicable) and each Lender of the intended date of honor of
such draft, the amount due and owing in respect of such draft
shall automatically and without any action by any Person be due
and payable by the Borrower on the intended date of honor, and
each Lender shall, notwithstanding any other provision of this
Agreement (including the occurrence and continuance of a Default
or a Matured Default), make available to the Agent for the
benefit of the Issuer an amount equal to its Pro Rata Percentage
of the presented draft on the day the Issuer is required to
honor such draft. If such amount is not in fact made available
to the Agent by such Lender on such date, such amount shall bear
interest at the lesser of (i) the federal funds rate or (ii) the
Highest Lawful Rate, payable on demand by the Agent. Each
drawing under any LC shall constitute a request by the Borrower
to the Agent for a borrowing pursuant to Section 2.1(a) of Loans
in the amount of such drawing.
(g) The Borrower's obligation to reimburse the Issuer for
the amount of any draft drawn under an LC shall be absolute,
unconditional and irrevocable and shall be paid immediately to
the Agent for the account of the Lenders upon demand by the
Agent, and otherwise strictly in accordance with the terms of
this Agreement, under all circumstances whatsoever, including
without limitation, the following circumstances:
(i) The existence of any claim, set-off, defense or
other rights which the Borrower may have at any time against any
beneficiary or any transferee of any LC (or any Person for whom
any such beneficiary or any such transferee may be acting), the
Issuer, any Lender or any other Person, whether in connection
with this Agreement, any other Financing Agreement, the
transactions contemplated herein or therein or any unrelated
transaction, unless otherwise provided by the terms of such LC;
(ii) Any statement or any other document presented
under any LC proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in
any respect;
(iii) Payment by the Issuer under any LC against
presentation of a draft or certificate which does not comply
with the terms of such LC, provided however, that such payment
shall not have constituted gross negligence or willful
misconduct of the Issuer; and
(iv) Any other circumstance or event whatsoever,
whether or not similar to the foregoing, provided however, that
such other circumstance or event shall not have been the result
of gross negligence or willful misconduct of the Issuer.
(h) The Borrower assumes all risks of the acts or omissions
of the beneficiary and any transferee of each LC with respect to
its use of such LC. Neither the Issuer, the Agent nor any Lender
shall be liable or responsible for, and the Borrower indemnifies
and holds the Issuer, the Agent and each Lender harmless for:
(i) the use which may be made of any LC or for any acts or
omissions of the beneficiary and any transferee thereof in
connection therewith, or (ii) the validity or genuineness of
documents, or of any endorsement(s) thereon, even if such
documents should, in fact prove to be in any or all respects
invalid, fraudulent or forged, or any other circumstances
whatsoever in making or failing to make payment, against the
Issuer, the Agent or any Lender, except damages determined to
have been caused by gross negligence or willful misconduct of
the Issuer in determining whether documents presented under an
LC comply with the terms of such LC and there shall have been a
wrongful payment as a result thereof; provided however, that it
is the intention of the Borrower to indemnify the Issuer, the
Agent and each Lender for the negligence of the Issuer, the
Agent or each Lender respectively, other than negligence
constituting gross negligence or willful misconduct. In
furtherance and not in limitation of the foregoing, the Issuer
may accept documents that appear on their face to be in order,
without responsibility for investigation, regardless of any
notice or information to the contrary.
(i) In the event that any provision of an Application is
inconsistent, or in conflict with, any provision of this
Agreement, including provisions for the rate of interest
applicable to draws thereunder, delivery of collateral or rights
of set-off or any representations, warranties, covenants or any
events of default set forth therein, the provisions of this
Agreement shall govern.
(j) If any LC to be issued has an expiration date after the
Maturity Date, then as a condition to the issuance thereof, the
Borrower shall deposit with the Agent, for the ratable benefit
of the Lenders and the Issuer, cash collateral or other liquid
collateral, of a type and in an amount which is satisfactory to
the Lenders, in their sole discretion, to secure the LC
Obligations relating to such LC.
3 INTEREST.
3.1 INTEREST.
The Borrower shall pay interest on the unpaid principal
amount of each Loan made by each Lender from the date of such
Loan until such principal amount shall be paid in full, at the
times and at the rates per annum set forth below:
(a) So long as no Matured Default has occurred or is
continuing, during such periods as such Loan is a Reference Rate
Loan, a rate per annum equal to the lesser of (i) the sum of the
Reference Rate in effect from time to time plus the Applicable
Margin and (ii) the Highest Lawful Rate, payable monthly in
arrears on the first day of each month commencing April 1, 1998,
and on the Maturity Date. With respect to each Reference Rate
Loan, the rate of interest accruing shall change concurrently
with each change in the Reference Rate as announced by U.S.
Bank.
(b) So long as no Matured Default has occurred or is
continuing, during such periods as such Loan is a Eurodollar
Rate Loan, a rate per annum during each Interest Period for such
Loan, equal to the lesser of (i) the sum of the Eurodollar Rate
for such Interest Period for such Loan plus the Applicable
Margin and (ii) the Highest Lawful Rate, payable monthly in
arrears on the first day of each month during the applicable
Interest Period, and on the last day of such Interest Period.
(c) After the occurrence of a Matured Default the Agent
may notify the Borrower that for so long as such Matured Default
is continuing, any amount due hereunder, under the Notes or
under any other Financing Agreements, whether for principal,
interest (to the extent permitted by applicable law), fees,
expenses or otherwise, shall bear interest, from the date on
which such Matured Default occurs and during the continuation of
such Matured Default, payable on demand, at a rate per annum
(the "Default Rate") equal to the lesser of (i) the sum of three
percent (3.0%) per annum plus the Reference Rate in effect from
time to time and (ii) the Highest Lawful Rate.
(d) All computations of interest pursuant to this Section
3.1 shall be made by the Agent on the basis of a year of 360
days, unless the foregoing would result in a rate exceeding the
Highest Lawful Rate, in which case such computations shall be
based on a year of 365 or 366 days, as the case may be.
Interest, whether based on a year of 360, 365 or 366 days, shall
be charged for the actual number of days (including the first
day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Agent
of an interest rate hereunder shall be conclusive and binding
for all purposes, absent manifest error.
3.2 VOLUNTARY CONVERSION OF LOANS.
The Borrower may on any Business Day, upon the Borrower's
written (including facsimile) notice given by the Borrower to
the Agent not later than 11:00 a.m. (Denver time) on the day
which is two Business Days prior to the date of any proposed
interest conversion or rollover, convert Loans from one Type to
another Type, or continue or rollover existing Eurodollar Rate
Loans; provided however, (a) with respect to any conversion into
or rollover of a Eurodollar Rate Loan, no Default or Matured
Default shall have occurred and be continuing, (b) with respect
to any facsimile notice of interest conversion, the Borrower
shall promptly confirm such notice by sending the original
notice to the Agent, and (c) any continuation or rollover of
Eurodollar Rate Loans for the same or a different Interest
Period or into Reference Rate Loans, shall be made on, and only
on, the last day of the Interest Period for such Eurodollar Rate
Loans. Each such notice of interest conversion shall specify
therein (d) the requested date of such conversion, and (e) if
such interest conversion is into Loans constituting Eurodollar
Rate Loans, the duration of the requested Interest Period for
each such Loan. The Agent shall promptly deliver a copy of each
such notice to each Lender. Each such notice shall be
irrevocable and binding on the Borrower. If the Borrower shall
fail to give a notice of interest conversion with respect to any
Eurodollar Rate Loan as set forth above, such Loan shall
automatically convert to a Reference Rate Loan on the last day
of the Interest Period with respect thereto.
4 PAYMENTS; PREPAYMENTS; TERMINATION OF COMMITMENTS; ETC.
4.1 PAYMENT OF LOANS.
(a) Whenever any payment hereunder or under any Note shall
be due on a day other than a Business Day, the date for payment
of such amounts shall be extended to the next succeeding
Business Day, and such extension of time shall be included in
the computation of payment of interest.
(b) The Borrower shall make each payment hereunder and
under the Notes not later than 11:00 a.m. (Denver time) on the
day when due in lawful money of the United States and in
immediately available funds to the Agent for the account of the
Lenders. Subject to Section 2.1, the Agent will promptly
distribute in lawful money of the United States and in
immediately available funds to each Lender its ratable (based on
the respective Pro Rata Percentages of the Lenders) share of
each such payment received by the Agent for the account of the
Lenders.
4.2 OPTIONAL PREPAYMENTS ON THE LOANS.
The Borrower may at any time prepay the outstanding
principal amount of any Loan, in either case in whole or in
part, in accordance with this Section 4.2. The Borrower shall
give prior notice of any such prepayment to the Agent, which
notice shall be written for any prepayment of a Eurodollar Rate
Loan, and which notice shall state the proposed date of such
prepayment (which shall be a Business Day), and which notice
shall be delivered to the Agent not later than 11:00 a.m.
(Denver time): (a) with respect to any Loan which is a Reference
Rate Loan, on the date of prepayment, and (b) with respect to
any Loan which is a Eurodollar Rate Loan, two (2) Business Days
prior to the date of prepayment. All prepayments of Reference
Rate Loans shall be without premium or penalty of any kind. All
prepayments of Eurodollar Rate Loans shall be made together with
accrued and unpaid interest (if any) to the date of such
prepayment on the principal amount prepaid without premium or
penalty thereon, provided however, that funding losses incurred
by any Lender as described in Section 5.3 shall be payable with
respect to each such prepayment. All notices of prepayment
shall be irrevocable and the payment amount specified in each
such notice shall be due and payable on the prepayment date
described in such notice, together with, in the case of
Eurodollar Rate Loans, accrued and unpaid interest (if any) on
the principal amount prepaid and any amounts due under Section
5.3. The Borrower shall have no optional right to prepay the
principal amount of any Eurodollar Rate Loan other than as
provided in this Section 4.2.
4.3 INTENTIONALLY OMITTED.
4.4 TERMINATION OF THE COMMITMENTS.
The Agent shall have the right, with the consent of the
Required Lenders and without notice to the Borrower, to
terminate the Commitments immediately upon a Matured Default, or
upon the repayment in full of all of the Liabilities. In
addition, the Loan Commitments shall be deemed immediately
terminated and all of the Liabilities shall be immediately due
and payable, without notice to the Borrower, on the Maturity
Date. In the event any of the Commitments are terminated, the
remainder of this Agreement shall remain in full force and
effect until the indefeasible full payment and full satisfaction
of the Liabilities. Notwithstanding the foregoing, in the event
that a proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt or
receivership law or statute is filed by or against the Borrower,
or the Borrower makes an assignment for the benefit of
creditors, the Commitments shall be deemed to be terminated
immediately, and all the Liabilities shall be due and payable,
provided however, that in the event a proceeding against the
Borrower is dismissed within sixty (60) days of the date of its
filing and there is then no other basis for the termination of
the Commitments or the acceleration of the Liabilities, then the
Commitments shall be deemed to be reinstated and the
acceleration of the Liabilities shall be deemed to be rescinded,
both as of the date the order of dismissal becomes final and the
Agent is given notice thereof.
5 INTEREST; INCREASED COSTS; TAXES; ETC.
5.1 EURODOLLAR RATE LOANS.
Anything in this Agreement to the contrary notwithstanding:
(a) If any Lender shall notify the Agent that the
introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or that any central bank or
other Governmental Authority asserts that it is unlawful, for
such Lender to perform its obligations to make Eurodollar Rate
Loans or to fund or maintain Eurodollar Rate Loans (whether or
not such assertion carries the force of law), the obligation of
such Lender to make, rollover or to convert Loans into
Eurodollar Rate Loans shall be suspended until the circumstances
causing such suspension no longer exist and the Agent shall have
so notified the Borrower, and the existing Eurodollar Rate Loans
of such Lender shall automatically convert, on and as of the
date of such suspension, into Reference Rate Loans; provided
that each Lender represents and warrants to the Borrower that as
of the later of (i) the Closing Date or (ii) the date on which
it shall have executed an Assignment and Acceptance pursuant to
Section 13.24(a), it has no actual knowledge that it would be
unlawful for such Lender to make Eurodollar Rate Loans as
contemplated.
(b) If the Required Lenders shall, not later than 11:00
a.m. (Denver time) one Business Day before the date of any
requested borrowing consisting of Eurodollar Rate Loans, notify
the Agent that the Eurodollar Rate for Eurodollar Rate Loans
comprising such borrowing will not adequately reflect the cost
to such Required Lenders of making or funding their respective
Eurodollar Rate Loans for such borrowing, the right of the
Borrower to select Eurodollar Rate Loans for such borrowing or
any subsequent borrowing respectively shall be suspended until
the Required Lenders shall notify the Agent that the
circumstances causing such suspension no longer exist, and the
Eurodollar Rate Loans comprising such requested borrowing shall
be Reference Rate Loans.
5.2 INCREASED COSTS.
If, due to either (a) the introduction of or any change in
or in the interpretation of any law or regulation or (b) the
compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force
of law), there shall be any increase in the cost or reduction in
yield or rate of return to any Lender of agreeing to make or
making or maintaining any Eurodollar Rate Loan or maintaining
its Commitment with respect thereto (other than any increase in
income or franchise taxes imposed on it by the jurisdiction
under the laws of which such Lender is organized or the
jurisdiction in which such Lender's relevant office is located),
then the Borrower shall from time to time, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost,
reduction in yield or rate of return, provided however, that
similar compensation is also customarily demanded by such Lender
from other borrowers similarly situated and under similar
circumstances. Any request for payment under this Section 5.2
will be submitted to the Borrower and the Agent by such Lender
identifying with reasonable specificity the basis for and the
amount of such increased cost, and shall be conclusive and
binding for all purposes, absent manifest error.
5.3 FUNDING LOSSES.
The Borrower will indemnify each Lender against, and
reimburse each Lender on demand for, any loss, cost or expense
incurred or sustained by such Lender (including without
limitation, any loss or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired
by such Lender to fund or maintain any Loan) as a result of (a)
any payment, conversion, rollover, or prepayment (whether
authorized or required hereunder or otherwise) of all or a
portion of any Loan on a day other than the last day of an
Interest Period for such Loan; (b) any payment, conversion,
rollover or prepayment (whether required hereunder or otherwise)
of such Lender's Loan made after the delivery of a notice of
borrowing delivered pursuant to Section 2.1(j) (whether oral or
written) but before the proposed date for such Eurodollar Rate
Loan if such payment or prepayment prevents the proposed
borrowing from becoming fully effective; (c) after receipt by
the Agent of a notice of borrowing delivered pursuant to
Section 2.1(j), the failure of any Loan to be made or effected
by such Lender due to any condition precedent to a borrowing not
being satisfied or due to any other action or inaction of the
Borrower; or (d) any rescission of a notice of borrowing
delivered pursuant to Section 2.1(j) or a notice of interest
conversion delivered pursuant to Section 3.2. Any Lender
demanding payment under this Section 5.3 shall deliver to the
Borrower and the Agent a statement reasonably setting forth the
amount and manner of determining such loss, cost or expense,
which statement shall be conclusive and binding for all
purposes, absent manifest error. Compensation owing to a Lender
as a result of any such loss, cost or expense resulting from a
payment, prepayment, conversion or rollover of a Eurodollar Rate
Loan shall include without limitation, an amount equal to the
sum of the amount of the interest that, but for such event, such
Lender would have earned for the remainder of the applicable
Interest Period plus any expense or penalty incurred by such
Lender.
5.4 CAPITAL ADEQUACY REQUIREMENTS.
(a) If any Lender shall have determined that the adoption
after the date of this Agreement of any applicable law, rule or
regulation regarding capital adequacy, or any change therein
after the date of this Agreement, or any change in the
interpretation or administration thereof after the date of this
Agreement by any Governmental Authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency issued after the date of this Agreement,
affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation
controlling such Lender, and that the amount of such capital
requirement is increased, or has or would have the effect of
reducing the rate of return on such Lender's or such
corporation's capital to a level below that which such Lender or
such corporation could have achieved but for such adoption,
change or compliance, in each case as a consequence of its
obligations hereunder (taking into consideration such Lender's
policies with respect to capital adequacy), then the Borrower
shall pay to such Lender such additional amount or amounts as
are reasonably determined by such Lender to be sufficient to
compensate such Lender or such corporation in the light of such
circumstances, provided however, that similar compensation is
also customarily demanded by such Lender from other borrowers
similarly situated and under similar circumstances.
(b) A certificate of such Lender setting forth such amount
or amounts as shall be necessary to compensate such Lender as
specified in Section 5.4(a) above shall be delivered as soon as
practicable to the Borrower and shall be conclusive and binding,
absent manifest error. The Borrower shall pay such Lender the
amount shown as due on any such certificate within fifteen (15)
days after such Lender delivers such certificate. In preparing
such certificate, such Lender may employ such assumptions and
allocations of costs and expenses as it shall in good faith deem
reasonable and may use any reasonable averaging and attribution
method.
5.5 TAXES.
(a) Any and all payments by the Borrower hereunder or under
the Notes shall be made free and clear of and without deduction
for any and all present or future taxes, deductions, charges or
withholdings, and all liabilities with respect thereto,
including without limitation, such taxes, deductions, charges,
withholdings or liabilities whatsoever imposed, assessed, levied
or collected by any taxing authority and all (other than to the
extent due to the gross negligence or willful misconduct of any
Lender) interest, penalties, expenses or similar liabilities
with respect thereto ("Taxes"), excluding however, from the
definition of Taxes, in the case of each Lender and the Agent,
taxes imposed on its income (including penalties and interest
payable in respect thereof), and franchise taxes imposed on it
by the jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or any political
subdivision thereof. If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent, (i) the
sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this Section 5.5) such Lender
or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made
and (ii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any
payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter included within the
definition of "Taxes").
(c) The Borrower will indemnify each Lender and the Agent
for the full amount of Taxes (including without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this
Section 5.5) paid by such Lender or the Agent (as the case may
be) and any liability arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
This indemnification shall be made within five (5) days from the
date such Lender or the Agent (as the case may be) makes written
demand therefor; provided however, to the extent that any Lender
is reimbursed for any Tax that was incorrectly or illegally
asserted in connection with this Agreement or the Notes, such
Lender shall promptly return to the Borrower the amount of such
reimbursement net of any costs of recovery, together with any
interest that may have been paid by the taxing jurisdiction with
respect thereto, to the extent the Borrower has actually paid
such Lender with respect thereto.
(d) Promptly after the date on which payment of any Taxes
are due pursuant to applicable law, the Borrower will, at the
request of the Agent or any Lender, furnish to the Agent or such
Lender evidence in form and substance satisfactory to the Agent
or such Lender, that the Borrower has met its obligations under
this Section 5.5.
(e) Without prejudice to the survival of any other
agreement of the Borrower, the agreement and obligations of the
Borrower contained in this Section 5.5 shall survive the payment
in full of principal and interest hereunder and under the Notes.
6 FEES.
6.1 NON-USE FEE WITH RESPECT TO ALL COMMITMENTS.
The Borrower agrees to pay to the Agent for distribution to
the Lenders (based on their respective Pro Rata Percentages) a
quarterly non-use fee from the Closing Date to the Maturity
Date, on the daily average unused amount of the Commitments
(accrued on the basis of a 360 day year, and charged for actual
days elapsed). The rate at which the non-use fee is calculated
during any quarter shall be the rate set forth below for the
then applicable Financial Performance Level:
Financial
Performance Level Non-Use Fee Rate
Level 1 0.375%
Level 2 0.25%
Level 3 0.25%
Level 4 0.25%
Level 5 0.125%
The quarterly non-use fee shall be due and payable in arrears on
the first day of each January, April, July and October hereafter
through the Maturity Date, unless the Borrower has fully
terminated the Commitment in accordance with Section 4.4 and
there are then no outstanding Letter of Credit Obligations. A
pro-rated non-use fee shall also be due and payable on the
Maturity Date and on any date on which the Borrower terminates
the Commitment in full in accordance with Section 4.4. Each
quarterly non-use fee shall be earned as it accrues and, at the
option of the Agent, shall be paid by Agent initiated Loans.
6.2 ADDITIONAL FEES WITH RESPECT TO LC'S.
The Borrower agrees to pay to the Agent for distribution to
the Lenders (based on their respective Pro Rata Percentages) a
quarterly fee in respect of each LC issued hereunder from the
Closing Date to the Maturity Date, on the face amount of such LC
(accrued on the basis of a 360 day year, and charged for actual
days elapsed). The rate at which the LC fee is calculated
during any quarter shall be the rate set forth below for the
then applicable Financial Performance Level:
RATE FOR LC'S
FINANCIAL RATE FOR LC'S EXPIRING EXPIRING MORE THAN 12
PERFORMANCE LEVEL WITHIN 12 MONTHS OF ISSUANCE MONTHS AFTER ISSUANCE
Level 1 2.0% 2.25%
Level 2 1.5% 1.75%
Level 3 1.25% 1.5%
Level 4 1.0% 1.25%
Level 5 0.75% 1.0%
The quarterly LC fee shall be due and payable in arrears on the
first day of each January, April, July and October hereafter
through the Maturity Date, unless the Borrower has fully
terminated the Commitment in accordance with Section 4.4 and
there are then no outstanding Letter of Credit Obligations. A
pro-rated LC fee shall also be due and payable on the Maturity
Date and on any date on which the Borrower terminates the
Commitment in full in accordance with Section 4.4. Each
quarterly LC fee shall be earned as it accrues and, at the
option of the Agent, shall be paid by Agent initiated Loans. The
Borrower shall also pay to the Agent for the account of the
Affiliate of the Agent issuing any LC, the normal and customary
processing fees charged by such Affiliate in connection with the
issuance of or drawings under each such LC.
6.3 AGENT'S FEES.
The Borrower agrees to pay to the Agent, in respect of its
administrative duties hereunder, fees in the amounts set forth
in the Agent's Letter. The closing fee, the initial annual
arranger fee and the initial annual audit fee (all as described
therein) shall be due and payable in advance on the date of this
Agreement. The subsequent annual arranger and audit fees shall
be due and payable in advance on each Anniversary Date hereafter
as long as any Liabilities are outstanding under this Agreement.
All of the Agent's fees set forth in the Agent's Letter shall
be fully earned on the dates they become payable and, at the
option of the Agent, shall be paid by Agent initiated Loans. No
Persons other than the Agent shall have any interest in such
Agent's fees.
6.4 FEES NOT INTEREST; NONPAYMENT.
The fees described in this Agreement represent compensation
for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not
constitute compensation for the use, detention, or forbearance of
money The obligation of the Borrower to pay each fee described
herein shall be in addition to, and not in lieu of, the
obligation of the Borrower to pay interest, other fees described
in this Agreement, and expenses otherwise described in this
Agreement. Fees shall be payable when due in Dollars and in
immediately available funds. All fees shall be non-refundable.
7 REPRESENTATIONS AND WARRANTIES.
In order to induce the Agent and the Lenders to enter into
this Agreement, and to induce the Issuer to issue LC's, the
Borrower represents and warrants to the Agent, the Lenders and
the Issuer that the following statements are and, after giving
effect to the Loans, will be, true and correct:
7.1 LITIGATION AND PROCEEDINGS.
Except as set forth on Part 1 of Exhibit 7, no judgments are
outstanding against the Borrower, nor is there now pending or
threatened any litigation, contested claim, or governmental
proceeding by or against the Borrower, except for judgments and
pending or threatened litigation, contested claims and
governmental proceedings which are not, in the aggregate,
material to the Borrower's financial condition, results of
operations or business.
7.2 OTHER AGREEMENTS.
Except as set forth on Part 2 of Exhibit 7, the Borrower is
not in default under any contract, lease or commitment to which
the Borrower is a party or by which the Borrower is bound except
for contracts, leases or commitments which are not, in the
aggregate, material to the Borrower's financial condition,
results of operations or business. The Borrower knows of no
dispute, except as set forth on Part 2 of Exhibit 7 or as
previously disclosed to the Agent and the Lenders in writing,
relating to any contract, lease, or commitment which is material
to the continued financial success and well-being of the
Borrower.
7.3 LICENSES, PATENTS, ETC.
All of the Borrower's licenses, patents, copyrights,
trademarks and trade names and all of the Borrower's applications
for any of the foregoing are set forth on Part 3 of Exhibit 7.
There is no action, proceeding, claim or complaint pending or
threatened to be brought against the Borrower by any Person which
might jeopardize any of the Borrower's interest in any of the
foregoing licenses, patents, copyrights, trademarks, trade names
or applications.
7.4 TITLE TO ASSETS.
Except as permitted by Section 10.1 or elsewhere in this
Agreement and except as set forth on Part 4 of Exhibit 7, the
Borrower owns all of its assets free and clear of all security
interests, liens, claims, and encumbrances.
7.5 TAX LIABILITIES.
Except for taxes as to which the amount, applicability or
validity is being contested in good faith by appropriate
proceedings diligently conducted by or on behalf of the Borrower
and, if required under GAAP, as to which the Borrower shall have
set up adequate reserves therefor, the Borrower has filed all
federal, state and local tax reports and returns required by any
law or regulation to be filed by the Borrower and except as
described on Part 5 of Exhibit 7, has either duly paid all taxes,
duties and charges indicated to be due on the basis of such
returns and reports or has made adequate provision for the
payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not
expected. The reserves for taxes reflected on the Borrower's
balance sheet are adequate in amount for the payment of all
liabilities for all taxes (whether or not disputed) of the
Borrower accrued through the date of such balance sheet. There
are no material unresolved questions or claims concerning any tax
liability of the Borrower, except as described on Part 5 of
Exhibit 7.
7.6 INDEBTEDNESS.
Except (i) for the Loans and the LC's, (ii) as disclosed on
Part 6 of Exhibit 7; and (iii) as disclosed on the financial
statements identified in Section 7.15 of this Agreement, the
Borrower has no other indebtedness, contingent obligations or
liabilities, outstanding bonds, letters of credit or acceptances
to any other Person or loan commitments from any other Person.
7.7 OTHER NAMES.
The Borrower has not, during the preceding five (5) years,
been known by or used any other name, except as disclosed on Part
7 of Exhibit 7.
7.8 AFFILIATES.
The Borrower has no Affiliates, other than those Persons
disclosed on Part 8 of Exhibit 7, and the legal relationships of
the Borrower to each such Affiliate are accurately and completely
described thereon.
7.9 ENVIRONMENTAL MATTERS.
(a) Except as disclosed on Part 9 of Exhibit 7, the Borrower
has not received any notice to the effect, or has any knowledge,
that its operations are not in compliance with any of the
requirements of applicable federal, state and local
environmental, health and safety statutes and regulations
("Environmental Laws") or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action
could have a material adverse effect on the business, operations,
assets or condition (financial or otherwise) of the Borrower; (b)
there have been no releases of hazardous materials at, on or
under the Borrower's premises that, singly or in the aggregate,
have, or may reasonably be expected to have, a material adverse
effect on the financial condition, operations, assets, business
or prospects of the Borrower; (c) there are no underground
storage tanks, active or abandoned, including petroleum storage
tanks, on or under the Borrower's premises that, singly or in the
aggregate, have, or may reasonably be expected to have, a
material adverse effect on the financial condition, operations,
assets, business or prospects of the Borrower; (d) the Borrower
has not directly transported or directly arranged for the
transportation of any hazardous material to any location which is
listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list
or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to material claims
against the Borrower for any remedial work, damage to natural
resources or personal injury, including claims under CERCLA; and
(e) except as disclosed on Part 9 of Exhibit 7, no conditions
exist at, on or under the Borrower's premises which, with the
passage of time, or the giving of notice or both, would rise to
any material liability under any Environmental Laws.
7.10 BANK ACCOUNTS.
Part 10 of Exhibit 7 sets forth, as of the Closing Date, the
account numbers and location of all bank accounts (including
lockbox accounts) of the Borrower.
7.11 INTENTIONALLY OMITTED.
7.12 EXISTENCE.
Sanfilippo is a corporation duly organized, in existence and
in good standing under the laws of the State of Delaware and is
duly licensed to do business in all states where the nature and
extent of the business transacted by it or the ownership of its
assets makes such licensing necessary, except for those
jurisdictions in which the failure to be so licensed would not,
in the aggregate, have a material adverse effect on the
Borrower's financial condition, results of operations or
business. Sunshine is a corporation duly organized, in
existence and in good standing under the laws of the State of
Texas and is duly licensed to do business in all states where
the nature and extent of the business transacted by it or the
ownership of its assets makes such licensing necessary, except
for those jurisdictions in which the failure to be so licensed
would not, in the aggregate, have a material adverse effect on
the Borrower's financial condition, results of operations or
business. Quantz is a corporation duly organized, in existence
and in good standing under the laws of the State of Delaware and
is duly licensed to do business in all states where the nature
and extent of the business transacted by it or the ownership of
its assets makes such licensing necessary, except for those
jurisdictions in which the failure to be so licensed would not,
in the aggregate, have a material adverse effect on the
Borrower's financial condition, results of operations or
business. JBS is a corporation duly organized, in existence
and in good standing under the laws of Barbados and is duly
licensed to do business in all jurisdictions where the nature and
extent of the business transacted by it or the ownership of its
assets makes such licensing necessary, except for those
jurisdictions in which the failure to be so licensed would not,
in the aggregate, have a material adverse effect on the
Borrower's financial condition, results of operations or
business.
7.13 AUTHORITY.
The execution and delivery by the Borrower of this Agreement
and all of the other Financing Agreements and the performance of
the Borrower's obligations hereunder and thereunder (a) are
within the Borrower's corporate powers; (b) are duly authorized
by the Borrower's board of directors and, if necessary, the
Borrower's shareholders; (c) are not in contravention of any law
or laws, or the terms of the Borrower's articles or certificates
of incorporation or by-laws, or of any indenture, agreement or
undertaking to which the Borrower is a party or by which the
Borrower or any of the Borrower's property is bound, or of any
other agreement, instrument or document relating to the
Borrower's governance; (d) do not require any governmental
consent, registration or approval; (e) do not contravene any
contractual or governmental restriction binding upon the Borrower
for which a consent has not been obtained; and (f) will not,
except as contemplated or permitted by this Agreement, result in
the imposition of any lien, charge, security interest or encum-
brance upon any property of the Borrower under any existing
indenture, mortgage, deed of trust, loan or credit agreement or
other material agreement or instrument to which the Borrower is a
party or by which the Borrower or any of the Borrower's property
may be bound or affected.
7.14 DUE EXECUTION; BINDING EFFECT.
This Agreement and all of the other Financing Agreements
proposed to be executed and delivered as of the Closing Date have
been duly executed by the Borrower and set forth the legal, valid
and binding obligations of the Borrower and are enforceable
against the Borrower in accordance with their respective terms,
except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally, and except as such
enforcement may be limited by general principles of equity.
7.15 CORRECTNESS OF FINANCIAL STATEMENTS.
The financial statements delivered by the Borrower to the
Agent and the Lenders present fairly the financial condition of
the Borrower as of the dates thereof and for the periods covered
thereby, and have been prepared in accordance with GAAP consis-
tently applied. As of the date of such financial statements, and
since such date, there has been no materially adverse change in
the condition or operation of the Borrower, nor has the Borrower
mortgaged, pledged or granted a security interest in or
encumbered any of the Borrower's assets or properties since such
date.
7.16 EMPLOYEE CONTROVERSIES.
There are no controversies pending or threatened between the
Borrower or any of the Borrower's employees, other than employee
grievances arising in the ordinary course of the Borrower's
business which are not, in the aggregate, material to the
continued financial success and well-being of the Borrower.
7.17 COMPLIANCE WITH LAWS AND REGULATIONS.
The Borrower is in compliance with all laws, orders,
regulations and ordinances of all federal, foreign, state and
local governmental authorities relating to the business
operations and the assets of the Borrower, except for laws,
orders, regulations and ordinances, the violation of which, in
the aggregate, would not have a material adverse effect on the
Borrower's financial condition, results of operations or
business.
7.18 SOLVENCY.
The Borrower is solvent, able to pay the Borrower's debts
generally as such debts mature, and has capital sufficient to
carry on the Borrower's business and all businesses in which the
Borrower is about to engage. The saleable value of the
Borrower's total assets at a fair valuation, and at a present
fair saleable value, is greater than the amount of the Borrower's
total obligations to all Persons. The Borrower will not be
rendered insolvent by the execution or delivery of this Agreement
or of any of the other Financing Agreements or by the
transactions contemplated hereunder or thereunder.
7.19 PENSION REFORM ACT.
No events, including without limitation, any "Reportable
Event" or "Prohibited Transactions," as those terms are defined
in ERISA have occurred in connection with any Pension Plan of the
Borrower which might constitute grounds for the termination of
any such Pension Plan by the Pension Benefit Guaranty Corporation
or for the appointment by the appropriate United States District
Court of a trustee to administer any such Pension Plan. All of
the Borrower's Pension Plans meet the minimum funding standards
of Section 302 of ERISA.
7.20 MARGIN SECURITY.
The Borrower does not own any margin security and none of
the Loans shall be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase any
margin securities or for any other purpose not permitted by
Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
7.21 CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS.
The Borrower is not a party to any contract or agreement or
subject to any restriction which restricts the conduct of its
business which could have a material adverse effect on the
financial condition, operations, assets, business or prospects
of the Borrower. The Borrower is not in default under or in
violation of any Governmental Requirement related to the Loans or
any other Governmental Requirement which default could have a
material adverse effect on the financial condition, operations,
assets, business or prospects of the Borrower. Neither the
execution and delivery of the Financing Agreements nor the
consummation of the transactions contemplated thereby, nor
fulfillment of and compliance with the respective terms,
conditions and provisions thereof, will conflict with or result
in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or
result in the creation or imposition of any lien or security
interest on any of the Borrower's assets pursuant to: (a) the
charter or bylaws of the Borrower; (b) any Governmental
Requirement; (c) any order, writ, injunction or decree of any
court; or (d) the terms, conditions or provisions of any material
agreement or instrument to which the Borrower is a party or by
which it or its property is bound or to which it or its property
is subject in any material respect, except such agreements or
instruments as to which a consent has been obtained.
7.22 INVESTMENT COMPANY ACT NOT APPLICABLE.
The Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
7.23 PUBLIC UTILITY HOLDING COMPANY ACT NOT APPLICABLE.
The Borrower is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company", or an affiliate of a "subsidiary company" of a "holding
company", or a "public utility", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
7.24 NO CONSENT.
The execution, delivery and performance by the Borrower of,
and the effectuation of the transactions contemplated under, this
Agreement, the Notes and the other Financing Agreements, and the
borrowings hereunder by the Borrower as contemplated herein, do
not require the consent or approval of any other Person, except
such consents or approvals as have been obtained. The Borrower
has not otherwise failed to obtain any material governmental
consent, approval, license, permit, franchise or other
governmental authorization necessary to the ownership of any of
its properties or the conduct of its business.
7.25 FULL DISCLOSURE.
All factual information taken as a whole in the materials
furnished by or on behalf of the Borrower to the Agent or any
Lender for purposes of or in connection with the transactions
contemplated under this Agreement and the other Financing
Agreements, does not contain any untrue statement of a material
fact or omit to state any material fact necessary to keep the
statements contained therein from being misleading as of the date
of this Agreement. The financial projections and other financial
information furnished to the Agent or any Lender by the Borrower
and to be delivered under Section 9.1 of this Agreement, were
prepared in good faith on the basis of information and
assumptions that the Borrower believes to be reasonable as of the
date of such information, provided however, that the Agent and
the Lenders acknowledge that financial projections are not a
guaranty of future results.
7.26 INTELLECTUAL PROPERTY.
The Borrower owns or possesses (or will be licensed or
otherwise have the full right to use) all intellectual property
which is necessary for the operation of its business, without any
known conflict with the rights of others. No product of the
Borrower infringes upon any intellectual property owned by any
other Person and no claim or litigation is pending or (to the
knowledge of the Borrower) threatened against or affecting such
Person, contesting its right to sell or to use any product or
material, in any case which could have a material adverse effect
on the financial condition, operations, assets, business or
prospects of the Borrower. There is no violation by the Borrower
of any right of the Borrower with respect to any material patent,
trademark, trade name, service mark, copyright or license owned
or used by the Borrower.
7.27 BAINBRIDGE WARRANTIES.
The Bainbridge Bonds have not been redeemed in whole or in
part. All sinking fund payments required to be made in
connection with the Bainbridge Bonds through the date of this
Agreement have been made. There are no Bainbridge Bonds held by
or for the account of the Borrower or for the account of
Sanfilippo.
7.28 SURVIVAL OF WARRANTIES.
All representations and warranties contained in this
Agreement or any of the other Financing Agreements shall survive
the execution and delivery of this Agreement and shall be true
from the date of this Agreement until the Liabilities shall be
paid in full and the Commitments have been fully terminated in
accordance with the provisions of this Agreement.
8 CONDITIONS.
8.1 CONDITIONS PRECEDENT TO ALL LOANS.
The obligations of each Lender to advance its Pro Rata
Percentage of any Loan and the obligation of the Agent to issue
or cause to be issued any LC's are subject to the satisfaction of
the following conditions precedent:
(a) Documents.
The Borrower shall have executed and/or delivered to
the Agent, appropriately dated and in form and substance
satisfactory to the Agent, together with original counterparts or
copies for each Lender, as the case may be, all of the documents
listed on Part A of the List of Closing Documents attached as
Exhibit 8A.
(b) Actions and Events.
(i Payment of Expenses.
There shall have been paid all fees due on the Closing
Date and all fees and expenses of or incurred by the Agent and
its counsel to the extent billed as of the Closing Date and
payable pursuant to this Agreement.
(ii Insurance.
The Agent shall have received evidence satisfactory to
the Agent that the Borrower has insurance meeting the
requirements of Sections 9.4 and 9.5.
(iii No Prohibitions.
No law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall prohibit,
and no litigation shall be pending or threatened which would
enjoin, prohibit, restrain or otherwise adversely affect the
consummation of the transactions contemplated under the Financing
Agreements, or which would otherwise have a material adverse
effect on the Borrower's financial condition, results of
operations or business.
(iv Material Adverse Change.
No material adverse change shall have occurred with
respect to the financial condition, business, operations or
prospects of the Borrower since the dates of the most recent
financial statement delivered to the Agent and the Lenders.
(v) Prior Indebtedness.
The Agent shall have received evidence or assurances
satisfactory to the Agent that any prior indebtedness listed on
Exhibit 8B shall be paid in full on or before the Closing Date or
concurrently with and from the proceeds of the initial Loan, and
that any liens, encumbrances or security interests securing such
prior indebtedness shall be released of record or assigned to the
Agent substantially contemporaneously with the Closing Date.
(vi Wiring Instructions.
The Agent shall have received wiring instructions with
respect to the proceeds of the initial Loan.
(vii Other Actions and Documents.
The Borrower shall have taken such actions, and the
Agent shall have received such other documents, as the Agent may
reasonably request.
(viii Approval of the Agent's Counsel.
Legal matters, if any, relating to the Loans to be made
on the Closing Date shall have been reviewed by and shall be
satisfactory to counsel for the Agent.
(ix Compliance.
All representations and warranties contained in this
Agreement shall be true and correct in all material respects as
though made on and as of any date the Borrower requests any Loan
to be made and on and as of the date of such Loan.
(x) Budgets.
The Borrower shall have delivered to the Agent annual
operating and capital budgets through the Borrower's 1998 Fiscal
Year, which budgets shall be satisfactory in form and substance
to the Agent.
(xi) Licenses and Permits.
The Agent shall have received evidence satisfactory to
the Agent that the Borrower has all necessary licenses and
permits for the operation of its business.
8.2 ADDITIONAL CONDITIONS PRECEDENT TO ISSUANCE OF
BAINBRIDGE LC.
The obligation of the Agent to issue or cause to be issued
any Bainbridge LC is subject to the satisfaction of the following
conditions precedent, in addition to those set forth in
Section 8.1:
(a) Documents.
The Borrower shall have executed and/or delivered to
the Agent, appropriately dated and in form and substance
satisfactory to the Agent, together with original counterparts or
copies for each Lender, as the case may be, all of the documents
listed on Part B of the List of Closing Documents attached as
Exhibit 8A.
(b) Actions and Events.
(i Payment of Expenses.
There shall have been paid all fees due in connection
with the issuance of such Bainbridge LC.
(ii No Prohibitions.
No law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall prohibit,
and no litigation shall be pending or threatened which would
enjoin, prohibit, restrain or otherwise adversely affect the
issuance of the Bainbridge LC.
(iii Other Actions and Documents.
The Borrower shall have taken such actions, and the
Agent shall have received such other documents, as the Agent may
reasonably request.
(iv Approval of the Agent's Counsel.
Legal matters, if any, relating to the Bainbridge LC
shall have been reviewed by and shall be satisfactory to counsel
for the Agent.
9. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that until the Liabilities
are paid in full and the Commitments, the LC's and all other
obligations of the Lenders and the Issuer are finally terminated,
the Borrower will:
9. 1. FINANCIAL STATEMENTS AND OTHER INFORMATION.
Except as otherwise expressly provided for in this
Agreement, the Borrower shall keep proper books of record and
account in which full and true entries will be made of all
dealings and transactions of or in relation to the business and
affairs of the Borrower, in accordance with GAAP consistently
applied, and the Borrower shall cause to be furnished to the
Agent and the Lenders, from time to time and in a form acceptable
to the Agent, such information as the Agent may reasonably
request, including without limitation, the following:
(a) as soon as practicable and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of
the Borrower: (i) audited consolidated statements of income,
retained earnings and changes in the financial condition of
Sanfilippo for each year, and a consolidated balance sheet of
Sanfilippo for such year, setting forth in each case, in compara-
tive form, corresponding figures as of the end of the preceding
Fiscal Year, all in reasonable detail and satisfactory in scope
to the Agent and certified to the Borrower by Price Waterhouse
LLP or such other independent public accountants as are selected
by the Borrower and are reasonably satisfactory to the Agent,
whose opinion shall be unqualified, and (ii) a compliance
certificate of the chief financial officer of the Borrower in the
form attached as Exhibit 9A;
(b) as soon as practicable and in any event within sixty
(60) days after the end of each Fiscal Year of the Borrower:
operating and capital budgets for the next Fiscal Year;
(c) as soon as practicable and in any event within thirty
(30) days after the end of each monthly accounting period in each
Fiscal Year of the Borrower: (i) consolidated statements of
income and retained earnings of Sanfilippo for such monthly
period and for the period from the beginning of the then current
Fiscal Year to the end of such monthly period, and a consolidated
balance sheet of Sanfilippo as of the end of such monthly period,
setting forth in each case, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year, all in
reasonable detail and certified as accurate by the chief
financial officer of the Borrower, subject to changes resulting
from normal year-end adjustments, (ii) copies of all operating
statements for such month prepared by the Borrower for its
internal use, including without limitation, statements of cash
flow, and (iii) a compliance certificate of the chief financial
officer of the Borrower in the form attached as Exhibit 9A; and
(d) as soon as distributed, copies of all financial reports
and filings submitted to Governmental Authorities, including
without limitation, copies of all Securities and Exchange
Commission Forms 10K and 10Q
9. 2. CONDUCT OF BUSINESS.
Except as contemplated by this Agreement, the Borrower
shall: (a) maintain the Borrower's corporate existence and
maintain in full force and effect all licenses, bonds,
franchises, leases, patents, contracts and other rights necessary
or desirable to the profitable conduct of the Borrower's
business; (b) continue in, and limit the Borrower's operations
to, the same general line of business as that presently conducted
by the Borrower; (c) comply with all applicable laws and
regulations of any federal, state or local governmental
authority, except for such laws and regulations the violation of
which would not, in the aggregate, have a material adverse effect
on the Borrower's financial condition, results of operations or
business; and (d) keep and conduct the Borrower's business
separate and apart from the business of the Borrower's
Affiliates.
9. 3. MAINTENANCE OF PROPERTIES.
The Borrower shall keep the Borrower's real estate,
leaseholds, equipment and other fixed assets in good condition,
repair and working order, normal wear and tear excepted.
9. 4. LIABILITY INSURANCE.
The Borrower shall maintain, at the Borrower's expense, such
public liability and property damage insurance as is ordinarily
maintained by other companies in similar businesses, provided
however, that in no event shall such public liability insurance
provide for coverage less than $2,000,000 per occurrence for
personal injury and $2,000,000 per occurrence for property
damage. The Borrower's public liability insurance may provide
for a deductible of not more than $10,000 per occurrence. All
such policies of insurance shall be in form and with insurers
reasonably acceptable to the Agent and copies thereof, together
with all amendments and schedules thereto, shall be provided to
the Agent within ten (10) days of receipt thereof.
9. 5. PROPERTY INSURANCE.
At the Borrower's own cost and expense, the Borrower shall
keep all of its assets fully insured, with carriers, and in
amounts acceptable to the Agent, against the hazards of fire,
theft, collision, spoilage, hail, those covered by extended or
all risk coverage insurance and such others as may be required by
the Agent. The Borrower shall cause to be delivered to the Agent
the insurance policies therefor or proper certificates evidencing
the same. Each such policy shall include a provision for thirty
(30) days' prior written notice to the Agent of any cancellation
or expiration thereof. If the Borrower fails to procure insurance
as provided in this Agreement, or to keep the same in force, then
the Agent may, at the Agent's option, and without obligation to
do so, obtain such insurance and pay the premium thereon for the
account of the Borrower, or make whatever other payments the
Agent may deem. Any such payments shall be additional
Liabilities of the Borrower to the Lenders, payable on demand.
9. 6. FINANCIAL COVENANTS AND RATIOS.
The Borrower shall maintain: (a) Tangible Net Worth as of
the end of each month of not less than $55,000,000, plus for each
Fiscal Year beginning with the Borrower's 1999 Fiscal Year, 50%
of the Borrower's positive net income during the previous Fiscal
Year; (b) a Working Capital Ratio as of the end of each month of
not less than 1.5 to 1.0; (c) as of the end of each fiscal
quarter for the four fiscal quarters then ending, EBITDA of not
less than $16,500,000 through the end of the Borrower's 1998
Fiscal Year and not less than $20,000,000 thereafter; and
(d) Working Capital as of the end of each month of not less than
$40,000,000.
9. 7. PENSION PLANS.
The Borrower shall: (a) keep in full force and effect any
and all Pension Plans which are presently in existence or may,
from time to time, come into existence under ERISA, unless such
Pension Plans can be terminated without material liability to the
Borrower in connection with such termination (as distinguished
from any continuing funding obligation); (b) make contributions
to all of the Borrower's Pension Plans in a timely manner and in
an amount sufficient to comply with the requirements of ERISA;
(c) comply with all requirements of ERISA which relate to such
Pension Plans; (d) notify the Agent immediately upon receipt by
the Borrower of any notice of the institution of any proceeding
or other action which may result in the termination of any
Pension Plans; and (e) acquire and maintain, when available, the
contingent employer liability coverage insurance provided for
under Section 4023 of ERISA, such insurance to be satisfactory to
the Agent in coverage and amount.
9. 8. NOTICE OF SUIT, ADVERSE CHANGE OR DEFAULT.
The Borrower shall, as soon as possible, and in any event
within five (5) days after the Borrower learns of the following,
give written notice to the Agent of (a) any proceeding being
instituted or threatened to be instituted by or against the
Borrower in any federal, state, local or foreign court or before
any commission or other regulatory body (federal, state, local or
foreign) for which claimed damages exceed $1,000,000; (b) any
material adverse change in the business, assets or condition,
financial or otherwise, of the Borrower; and (c) the occurrence
of any Default.
9. 9. USE OF PROCEEDS.
The Borrower shall use the Loans only for the purposes set
forth in this Agreement.
9. 10. BOOKS AND RECORDS; SEPARATE EXISTENCE.
The Borrower shall maintain proper books of record and
account in accordance with GAAP consistently applied in which
true, full and correct entries will be made of all their
respective dealings and business affairs. If any changes in
accounting principles from those used in the preparation of the
financial statements referenced in Section 7.15 are hereafter
required or permitted by GAAP and are adopted by the Borrower
with the concurrence of its independent certified public accounts
and such changes in GAAP result in a change in the method of
calculation or the interpretation of any of the financial
covenants, standards or terms found in Section 9.6 or any other
provision of this Agreement, the Borrower and the Required
Lenders agree to amend any such affected terms and provisions so
as to reflect such changes in GAAP with the result that the
criteria for evaluating the Borrower's financial condition shall
be the same after such changes in GAAP as if such changes in GAAP
had not been made. Borrower shall do all things necessary to
maintain the separate corporate existence of each of Sanfilippo,
Sunshine, Quantz and JBS.
9. 11. LAWS AND OBLIGATIONS.
The Borrower shall comply with all Governmental Requirements
in all material respects; and pay all taxes, assessments,
governmental charges, claims for labor, supplies and rent,
including without limitation, taxes, assessments, governmental
charges, claims for labor, supplies and rent imposed upon or
against or with respect to the ownership, use, occupancy or
enjoyment of any real property owned by the Borrower, or any
utility service thereon; provided however, that the Borrower
shall not be required to pay any ad valorem or other real
property taxes up to an aggregate amount at any time of
$1,000,000 or any other taxes, assessments, governmental charges
or claims if, in either case, the amount, applicability or
validity thereof shall currently be contested in good faith by
appropriate proceedings diligently conducted by or on behalf of
the Borrower and, if required under GAAP, the Borrower shall have
set up adequate reserves therefor; provided further, that, with
respect to such other taxes, assessments, governmental charges or
claims, no lien has been filed by the United States or any state
or other political subdivision thereof which could have priority
over any liens and security interests granted to the Agent
pursuant to the Financing Agreements.
9. 12. ENVIRONMENTAL LAWS.
The Borrower shall at all times:
(a use and operate all of its businesses and Properties in
compliance in all material respects with all environmental laws;
keep all necessary permits relating to environmental and safety
and health matters in effect and remain in compliance in all
material respects therewith; handle all hazardous materials in
compliance in all material respects with all applicable
environmental laws; and dispose of all hazardous materials
generated by the Borrower or at any property owned or leased by
the Borrower at facilities or with carriers that maintain valid
permits for such disposal or transportation under applicable
environmental laws;
(b promptly notify the Agent (and provide copies upon
receipt) of all material claims, complaints, notices or inquiries
relating to the environmental condition of the facilities and
properties of the Borrower or its compliance with environmental
laws; and
(c provide such other information and certifications which
the Lenders may reasonably request from time to time to evidence
compliance with this Section 9.12.
9. 13. TRADE ACCOUNTS PAYABLE.
The Borrower shall pay all trade accounts payable on a basis
not more than sixty (60) days past due the amount, except for
those being contested in good faith by appropriate proceedings
diligently conducted by or on behalf of the Borrower and, if
required under GAAP, as to which the Borrower shall have set up
adequate reserves therefor.
9. 14. COMPLIANCE WITH FEDERAL FOOD SECURITY ACT.
The Borrower shall take all such actions as may be necessary
to insure that they purchase all farm products (as defined in 7
USCA 1631(c)(5)) free and clear of all liens, claims, security
interests and encumbrances, including the security interests of
secured parties of the sellers of such farm products other than
such liens, claims, security interests or encumbrances permitted
under Section 10.1 of this Agreement.
9. 15. ACCESS TO ACCOUNTANTS.
The Borrower authorizes its independent public accountants
to discuss the financial condition of the Borrower with the
Lenders after reasonable notice to the Borrower of their
intention to do so. Prior to such discussions, the Borrower shall
be given the reasonable opportunity to participate in any such
discussion. The Borrower shall deliver a letter to such
accountants authorizing them to comply with the provisions of
this Section 9.15.
9. 16. BAINBRIDGE COVENANTS.
The Borrower shall keep, observe and perform all of its
obligations pursuant to the Bainbridge Loan Documents and the
Bainbridge Bond Documents to which the Borrower or Sanfilippo is
a party.
10. NEGATIVE COVENANTS.
The Borrower covenants and agrees that until the Liabilities
are paid in full and the Commitments, the LC's and all other
obligations of the Lenders and the Issuer are finally terminated,
the Borrower will not:
10.1 ENCUMBRANCES.
Except for those liens, security interests and encumbrances
presently in existence and reflected in the Borrower's financial
statements referred to in Section 7.15 and permitted under
Section 7.4, the Borrower shall not create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien,
levy, assessment, attachment, seizure, writ, distress warrant, or
other encumbrance of any nature whatsoever on or with regard to
any of the Borrower's assets other than: (a) liens securing the
payment of taxes, either not yet due or the validity of which is
being contested in good faith by appropriate proceedings, and as
to which the Borrower shall, if appropriate under GAAP, have set
aside on the Borrower's books and records adequate reserves; (b)
liens securing deposits under workmen's compensation,
unemployment insurance, social security and other similar laws,
or securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or securing
indemnity, performance or other similar bonds for the performance
of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or securing statutory obligations or
surety or appeal bonds, or securing indemnity, performance or
other similar bonds in the ordinary course of the Borrower's
business; (c) [intentionally omitted]; (d) zoning restrictions,
easements, licenses, covenants and other restrictions affecting
the use of the Borrower's real property, and other liens,
security interests and encumbrances on property which are
subordinate to any liens and security interests of the Agent and
which do not, in the Agent's reasonable determination (i)
materially impair the use of such property or (ii) materially
lessen the value of such property for the purposes for which the
same is held by the Borrower; (e) [intentionally omitted]; (f)
purchase money security interests securing indebtedness permitted
to be incurred under Section 10.4(d); and (g) any liens, security
interests or other encumbrances in favor of the Agent for the
ratable benefit of the Lenders and liens, security interests and
other encumbrances existing by operation of law in favor of any
Lender and securing the Liabilities.
10.2. CONSOLIDATIONS, MERGERS OR ACQUISITIONS.
The Borrower shall not without the prior written consent of
the Required Lenders, recapitalize or consolidate with, merge
with, or otherwise acquire all or substantially all of the assets
or properties of any other Person. Sanfilippo shall not have any
subsidiaries other than Sunshine, JBS and Quantz, and Sunshine,
JBS and Quantz shall not have any subsidiaries.
10.3. DEPOSITS, INVESTMENTS, ADVANCES OR LOANS.
The Borrower shall not make or permit to exist deposits,
investments, advances or loans (other than loans existing on the
date of the execution of this Agreement and disclosed to the
Lenders in writing on or prior to such date) in or to Affiliates
or any other Person, except: (a) investments in short-term
direct obligations of the United States Government; (b)
investments in negotiable certificates of deposit issued by a
bank satisfactory to the Agent in the Agent's reasonable
determination, made payable to the order of the Borrower or to
bearer; (c) loans to officers, directors, partners, employees or
Affiliates as and when permitted by Section 10.9 of this
Agreement; and (d) demand deposits held by a bank satisfactory to
the Agent in the Agent's reasonable discretion. Without limiting
the generality of the foregoing, the Borrower shall not make or
permit to exist deposits or investments in Margin Accounts.
10.4. INDEBTEDNESS.
Except for those obligations and that indebtedness presently
in existence and reflected in the Borrower's financial statements
referred to in Section 7.15 or referred to in Section 7.6, the
Borrower shall not incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any obligations
or indebtedness, direct or indirect, fixed or contingent, except:
(a) the Liabilities; (b) obligations secured by liens or
security interests permitted under Section 10.1 or contingent
obligations permitted under Section 10.5; (c) trade obligations
and normal accruals in the ordinary course of the Borrower's
business not yet due and payable, or with respect to which the
Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings, and then only to the extent
that the Borrower has set aside on the Borrower's books adequate
reserves therefor, if appropriate under GAAP; (d) other
indebtedness secured by liens permitted under clause (f) of
Section 10.1, not exceeding $1,500,000 in the aggregate during
any one Fiscal Year; and (e) other unsecured indebtedness not
exceeding the following amount: $3,750,000 less the amount of
indebtedness incurred under the preceding clause (d) of this
Section 10.4.
10.5. GUARANTEES AND OTHER CONTINGENT OBLIGATIONS.
The Borrower shall not guarantee, endorse or otherwise in
any way become or be responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of such
Person or through the purchase of goods, supplies or services, or
maintenance of working capital or other balance sheet covenants
or conditions, or by way of stock purchase, capital contribution,
advance or loan for the purpose of paying or discharging any
indebtedness or obligation of such Person or otherwise, except:
(a) for endorsements of negotiable instruments for collection in
the ordinary course of business; (b) that the Borrower may
indemnify the Borrower's officers and directors to the extent
permitted under the laws of the State in which the Borrower is
organized; (c) guaranties and other contingent obligations not
exceeding $1,000,000 in the aggregate during any one Fiscal Year;
and (d) guaranties by Sanfilippo's subsidiaries of the Prudential
Notes and the Teachers Notes.
10.6. DISPOSITION OF PROPERTY.
The Borrower shall not sell, lease, transfer or otherwise
dispose of any of the Borrower's properties, assets or rights, to
any Person, except (a) in the ordinary course of the Borrower's
business; (b) as permitted in the Financing Agreements; or (c)
sales of obsolete, worn out or unusable assets.
10.7. CAPITAL INVESTMENT LIMITATIONS.
The Borrower shall not make any Capital Expenditures at any
time when there exists a Default or a Matured Default or if such
Capital Expenditure would result in a Default or a Matured
Default. At any time when there does not exist a Default or a
Matured Default, the Borrower may make Capital Expenditures in
any Fiscal Year in any amount which does not exceed the greater
of: (a) such amount as will permit the Borrower's Fixed Charge
Coverage Ratio during such Fiscal Year to not be less than 1.0 to
1, or (b) $7,500,000.
10.8. INTENTIONALLY OMITTED.
10.9. LOANS TO AFFILIATES.
The Borrower shall not make any loans to any officers,
directors, Affiliates or shareholders of the Borrower, except for
(a) advances for travel and expenses to the Borrower's officers,
directors or employees in the ordinary course of the Borrower's
business; and (b) loans to the Borrower's officers, directors or
employees not exceeding $500,000 in the aggregate at any one time
outstanding.
10.10. DISTRIBUTIONS, PREPAYMENTS OF DEBT. The Borrower
shall not directly or indirectly: (a) redeem any of the
Borrower's shares of capital stock; (b) declare any dividends in
any year on any class of the Borrower's capital stock, except
that during each Fiscal Year, the Borrower may make, declare and
pay dividends to its shareholders in amounts up to the lesser of
(i) 25% of Sanfilippo's consolidated net income during the
previous Fiscal Year, or (ii) $5,000,000; or (c) prepay, redeem,
purchase or deposit funds for the prepayment, redemption or
purchase of any principal, interest or other obligations related
to any indebtedness of the Borrower for borrowed money other than
the Liabilities.
10.11. CHANGE OF CONTROL; AMENDMENT OF ORGANIZATION
DOCUMENTS.
The Borrower shall not enter into any transaction which
would result in 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
Sanfilippo, on a fully diluted basis, representing the right to
elect a majority of the directors of Sanfilippo. The Borrower
shall not enter into any transaction which would result in the
failure of Sanfilippo to own directly and beneficially, 100% of
the outstanding shares of all classes of common stock of
Sunshine, Quantz and JBS. The Borrower shall not amend the Bor-
rower's articles or certificate of incorporation, bylaws or any
other agreement, instrument or document affecting the Borrower's
organization, management or governance, without the prior written
consent of the Required Lenders, which consent shall not be
unreasonably withheld.
10.12. INTENTIONALLY OMITTED.
10.13. USE OF NAMES.
Except to the extent that Agent has been notified in
advance, the Borrower shall not use any names other than those
referred to in Section 7.7, nor shall the Borrower change any of
said names.
10.14. PAYMENT OF CERTAIN DEBT.
The Borrower shall not directly or indirectly, pay, prepay,
redeem or purchase, or deposit funds or property for the payment,
prepayment, redemption or purchase of the indebtedness of the
Borrower which is subordinated to the payment of any portion of
the Liabilities. The Borrower shall not directly or indirectly,
prepay, redeem or purchase, or deposit funds or property for the
prepayment, redemption or purchase of the Prudential Notes and/or
the Teachers Notes.
10.15. FISCAL YEAR.
The Borrower shall not change its Fiscal Year without the
prior written consent of the Required Lenders.
10.16. AMENDMENT OF BAINBRIDGE BOND DOCUMENTS AND
BAINBRIDGE LOAN DOCUMENTS.
Neither the Borrower nor Sanfilippo shall amend the
Bainbridge Bond Documents or the Bainbridge Loan Documents
without the prior written consent of the Agent and the Required
Lenders.
11. DEFAULT AND RIGHTS AND REMEDIES OF THE AGENT.
11.1. ACCELERATION.
Upon a Matured Default, the Agent shall promptly give notice
of such Matured Default to the Borrower and each Lender and (a)
with respect to any Matured Default described in clause (h) or
clause (i) of the definition thereof, all of the Liabilities
shall automatically become immediately due and payable and the
obligations of the Lenders to make Loans and the Commitments
shall automatically terminate, without presentment, demand,
protest or further notice (including without limitation, notice
of intent to accelerate and notice of acceleration) of any kind,
all of which are expressly waived by the Borrower; and (b) with
respect to any other Matured Default, the Agent may with the
consent of the Required Lenders, and shall at the request of the
Required Lenders, by notice to the Borrower and the Lenders, (i)
declare the several obligations of the Lenders to make Loans to
be terminated, whereupon such obligations and the Commitments of
each Lender shall forthwith terminate, and (ii) declare all of
the Liabilities to be due and payable, whereupon the Liabilities
shall become and be due and payable, without presentment, demand,
protest or further notice (including without limitation, notice
of intent to accelerate and notice of acceleration) of any kind,
all of which are expressly waived by the Borrower.
11.2. OTHER REMEDIES.
Upon the occurrence and during the continuance of any
Matured Default, the Agent may, with the consent of the Required
Lenders (subject to the provisions of the other Financing
Agreements), and shall at the request of the Required Lenders,
proceed to protect and enforce the rights of the Lenders by suit
in equity, by action at law or both, whether for the specific
performance of any covenant or agreement contained in this
Agreement or in any other Financing Agreement or in aid of the
exercise of any power granted in this Agreement or any other
Financing Agreement, or may proceed to enforce the payment of the
Liabilities, or may proceed to foreclose upon any liens, claims,
security interests and/or encumbrances granted pursuant to the
Financing Agreements in the manner set forth therein, it being
intended that no remedy conferred herein or in any of the other
Financing Agreements is to be exclusive of any other remedy, and
each and every remedy contained herein or in any other Financing
Agreement shall be cumulative and shall be in addition to every
other remedy given hereunder and under the other Financing
Agreements, or at any time existing at law or in equity or by
statute or otherwise.
12. THE AGENT AND THE LENDERS.
12.1. AUTHORIZATION AND ACTION.
Each Lender appoints the Agent as its Agent under, and
irrevocably authorizes the Agent (subject to Section 12.7) to
take such action on its behalf and to exercise such powers under
any Financing Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably
incidental thereto. Without limiting the generality of the
foregoing, each Lender expressly authorizes the Agent to execute,
deliver, and perform the Agent's obligations under each of the
Financing Agreements to which the Agent is a party, and to
exercise all rights, powers, and remedies that the Agent may have
thereunder. As to any matters not expressly provided for by this
Agreement (including without limitation, enforcement or
collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required
to act, or to refrain from acting (and shall be fully protected
in so acting or refraining from acting), upon the instructions of
the Required Lenders, and such instructions shall be binding upon
all the Lenders and all holders of any Notes; provided however,
that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the
Borrower pursuant to the terms of any Financing Agreement.
12.2. AGENT'S RELIANCE, ETC.
Neither the Agent nor any of its directors, officers, agents
or employees shall be liable to any Lender for any action taken
or omitted to be taken by it or them under or in connection with
any Financing Agreement, except for its or their own gross
negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may treat the
original or any successor holder of any Note as the holder
thereof until it receives notice from the Lender which is the
payee of such Note concerning the assignment of such Note; (b)
may employ and consult with legal counsel (including counsel for
the Borrower), independent public accountants, and other experts
selected by it and shall not be liable to any Lender for any
action taken, or omitted to be taken, in good faith by it or them
in accordance with the advice of such counsel, accountants or
experts received in such consultations and shall not be liable
for any negligence or misconduct of any such counsel, accountants
or other experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any
opinions, certifications, statements, warranties or
representations made in or in connection with any Financing
Agreement by Persons other than the Agent; (d) shall not have any
duty to any Lender to ascertain or to inquire as to the
performance or observance of any of the terms, covenants, or
conditions of any Financing Agreement or any other instrument or
document furnished pursuant thereto or to satisfy itself that all
conditions to and requirements for any Loan have been met or that
the Borrower is entitled to any Loan or to inspect the property
(including the books and records) of the Borrower; (e) shall not
be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of
any Financing Agreement or any other instrument or document
furnished pursuant thereto; and (f) shall incur no liability
under or in respect of this Agreement by acting upon any notice,
consent, certificate, or other instrument or writing (which may
be by telegram, cable, telex, or otherwise) believed by it to be
genuine and signed or sent by the proper party or parties.
12.3. DEFAULTS.
The Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than, with respect to the Agent
only, the nonpayment of principal of or interest hereunder or of
any fees) unless the Agent has received written notice from a
Lender or the Borrower specifying such Default and stating that
such notice is a "Notice of Default". In the event that the
Agent receives such a notice of the occurrence of a Default, the
Agent shall give prompt notice thereof to the Lenders (and the
Agent shall give each Lender prompt notice of each such
nonpayment). The Agent shall (subject to Section 11.1) take such
action with respect to such Default as may be directed by the
Required Lenders; provided however, that unless and until the
Agent shall have received the directions referred to in Section
11.1, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default as it shall deem advisable and in the best interest of
the Lenders.
12.4. THE AGENT AS A LENDER, AFFILIATES.
With respect to its Commitment, any Loan made by it, and the
Note issued to it, the Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include
the Agent in its individual capacity. The Agent and its
affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of
business with, the Borrower, any of its respective Affiliates and
any Person who may do business with or own securities of the
Borrower or any such Affiliate, all as if the Agent were not the
Agent and without any duty to account therefor to the Lenders.
12.5. NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without
reliance on the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and its decision to enter
into the transactions contemplated by the Financing Agreements
and that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking
action under any Financing Agreement. The Agent shall not be
required to keep itself informed as to the performance or
observance by the Borrower or any other Person of any Financing
Agreement or to inspect the properties or books of the Borrower.
Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the
Borrower (or any of their Affiliates) which may come into the
possession of the Agent or any of its affiliates.
12.6. INDEMNIFICATION.
Notwithstanding anything to the contrary herein contained,
the Agent shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of its
taking or continuing to take any action. Each Lender agrees to
indemnify the Agent (to the extent not reimbursed by the
Borrower), according to such Lender's Commitment, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of any Financing Agreement or any
action taken or omitted by the Agent under any Financing
Agreement; provided however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the gross negligence or wilful
misconduct of the Person being indemnified; and provided further,
that it is the intention of each Lender to indemnify the Agent
against the consequences of the Agent's own negligence, whether
such negligence be sole, joint, concurrent, active or passive.
Without limiting the generality of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for its Pro
Rata Percentage of any out-of-pocket expenses (including
attorneys' fees) incurred by the Agent in connection with the
preparation, administration, or enforcement of, or legal advice
in respect of rights or responsibilities under, any Financing
Agreement, to the extent that the Agent is not reimbursed for
such expenses by the Borrower.
12.7. SUCCESSOR AGENT.
The Agent may resign at any time as Agent under the
Financing Agreements by giving written notice thereof to the
Lenders and the Borrower and may be removed at any time with or
without cause by the Required Lenders. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders or shall have accepted such
appointment within sixty (60) days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal
of the Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial
bank or other financial institution organized under the laws of
the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall thereafter be
discharged from any duties and obligations under the Financing
Agreements. After the retiring Agent's resignation or removal as
Agent, the provisions of this Section 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
12.8. AGENT'S RELIANCE.
The Borrower shall notify the Agent in writing of the names
of the Persons authorized to request a Loan on behalf of the
Borrower and shall provide the Agent with a specimen signature
for each such Person. The Agent shall be entitled to rely
conclusively on such Person's authority to request a Loan on
behalf of the Borrower until the Agent receives written notice
from the Borrower to the contrary. The Agent shall have no duty
to verify the authenticity of the signature appearing on any
notice of borrowing, and with respect to any oral request for a
Loan, the Agent shall have no duty to verify the identity of any
Person representing himself as one of the Persons authorized to
make such request on behalf of the Borrower. Neither the Agent
nor any Lender shall incur any liability to the Borrower in
acting upon any telephonic notice referred to above which the
Agent or such Lender believes in good faith to have been given by
a duly authorized Person authorized to borrow on behalf of the
Borrower or for otherwise acting in good faith.
12.9. ACTION UPON INSTRUCTIONS OF THE REQUIRED LENDERS.
The Agent agrees, upon the written request of the Required
Lenders, to take any action of the type specified in the
Financing Agreements as being within the Agent's rights, duties,
power or discretion. The Agent shall in all cases be fully
protected in acting, or in refraining from acting in accordance
with written instructions signed by the Required Lenders, and
such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Required Lenders and on
all holders of the Notes. In the absence of a request by the
Required Lenders, the Agent shall have authority, in its sole
discretion, to take or not to take any action, unless the
Financing Agreements specifically require the consent of the
Required Lenders or of all of the Lenders.
13. MISCELLANEOUS.
13.1 TIMING OF PAYMENTS.
For purposes of determining the outstanding balance of the
Liabilities, including the computations of interest which may
from time to time be owing to the Lenders, the receipt by the
Agent of any check or any other item of payment whether through a
blocked account or lockbox or otherwise, shall not be treated as
a payment on account of the Liabilities until such check or other
item of payment is actually received by the Agent at its office
in Denver, Colorado and is paid to the Agent in cash or a cash
equivalent.
13.2 ATTORNEYS' FEES AND COSTS.
If at any time or times hereafter the Agent or any Lender
employs counsel in connection with any matters contemplated by or
arising out of this Agreement, whether: (a) to commence, defend,
or intervene in any litigation or to file a petition, complaint,
answer, motion or other pleading; (b) to take any other action in
or with respect to any suit or proceeding (bankruptcy or
otherwise); (c) to consult with officers of the Agent or such
Lender to advise the Agent or such Lender or to draft documents
in connection with any of the foregoing or in connection with any
release of the Agent's or any Lender's claims or the Agent's
security interests or any proposed extension, amendment, waiver
or refinancing of the Liabilities; or (d) to attempt to enforce
any rights of the Agent, the Lenders or the Issuer to collect any
of the Liabilities; then in any of such events, all of the
reasonable attorneys' fees arising from such services, and any
expenses, costs and charges relating thereto, including without
limitation, all fees of all paralegals, legal assistants and
other staff employed by such attorneys, together with interest at
the default rate provided for in Section 3.1(c) if a Matured
Default has occurred, or at the highest interest rate set forth
in any promissory note referred to herein, shall constitute
additional Liabilities, payable on demand.
13.3 EXPENDITURES BY THE AGENT.
In the event that the Borrower shall fail to pay taxes,
insurance, assessments, costs or expenses which the Borrower is,
under any of the terms hereof or of any of the other Financing
Agreements, required to pay, or fails to keep its assets free
from other security interests, liens or encumbrances, except as
permitted herein, the Agent may, in its sole discretion and
without obligation to do so, make expenditures for any or all of
such purposes, and the amount so expended, together with interest
at the default rate provided for in Section 3.1(c), shall
constitute additional Liabilities, payable ten (10) days after
demand.
13.4 THE AGENT'S COSTS AND EXPENSES AS ADDITIONAL
LIABILITIES.
The Borrower shall reimburse the Agent for all expenses and
fees paid or incurred in connection with the documentation,
negotiation and closing of the loans and other financial
accommodations described in this Agreement (including without
limitation, filing and recording fees, and the reasonable fees
and expenses of the Agent's attorneys, paralegals and legal
assistants, whether outside the Agent or in its legal department,
and whether such expenses and fees are incurred prior to or after
the Closing Date). The Borrower further agrees to reimburse the
Agent for all expenses and fees paid or incurred in connection
with the documentation of any renewal or extension of the Loans,
any additional financial accommodations, or any other amendments
to this Agreement. All costs and expenses incurred by the Agent
with respect to such negotiation and documentation together with
interest at the highest interest rate set forth in any promissory
note referred to herein, shall constitute additional Liabilities,
payable on demand.
13.5 CLAIMS AND TAXES.
The Borrower agrees to indemnify and hold the Agent, the
Lenders and the Issuer harmless from and against any and all
claims, demands, liabilities, losses, damages, penalties, costs,
and expenses (including without limitation, reasonable attorneys'
fees) relating to or in any way arising out of the possession,
use, operation or control of any of the Borrower's assets. The
Borrower 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 of the Borrower's real and personal property taxes,
assessments and charges and all of the Borrower's franchise,
income, unemployment, use, excise, old age benefit, withholding,
sales and other taxes and other governmental charges assessed
against the Borrower, or payable by the Borrower, at such times
and in such manner as to prevent any penalty from accruing or any
lien or charge from attaching to the Borrower's property,
provided however, that the Borrower 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, and upon such good faith contest to
delay or refuse payment thereof, if (a) the Borrower establishes
adequate reserves to cover such contested taxes; and (b) such
contest does not and will not have a material adverse effect on
the financial condition of the Borrower or the ability of the
Borrower to pay any of the Liabilities.
13.6 INSPECTION.
Upon reasonable prior notice (provided that such notice
shall not be required after the occurrence and during the
continuance of a Default or a Matured Default), the Agent (by and
through its officers and employees), or any Person designated by
the Agent in writing, shall have the right, from time to time
hereafter, to call at the Borrower's place or places of business
(or any other place where any information relating thereto is
kept or located) during reasonable business hours, and without
hindrance or delay, to: (a) inspect, audit, check and make copies
of and extracts from the Borrower's books, records, journals,
orders, receipts and any correspondence and other data relating
to the Borrower's business or to any transactions between the
parties to this Agreement; and (b) review operating procedures,
review maintenance of property and discuss the affairs, finances
and business of the Borrower with the Borrower's officers,
employees or directors. The Borrower agrees to pay to the Agent
an annual audit fee in accordance with the Agent's Letter, on the
date of this Agreement, and on each Anniversary Date as long as
Loans are outstanding, for all expenses incurred by or on behalf
of the Agent in making inspections under this Section 13.6,
including without limitation, travel and photocopying expenses.
The foregoing fees shall be fully earned on the dates they become
payable and, at the option of the Agent, shall be paid by Agent
initiated Loans. The Lenders shall have the right to accompany
the Agent on any inspections under this Section 13.6, at their
own expense.
13.7 EXAMINATION OF BANKING RECORDS.
The Borrower consents to the examination by the Agent, the
Agent's officers, employees and agents, or any of them, after the
occurrence and during the continuance of a Default or a Matured
Default, of any and all of the Borrower's banking records,
wherever they may be found, and directs any Person which may be
in control or possession of such records (including without
limitation, any bank, other financial institution, accountant or
lawyer) to provide such records to the Agent and the Agent's
officers, employees and agents, upon their request. Such
examination may be conducted by the Agent with prior notice to
the Borrower, which notice need not be written, any such written
notice being waived by the Borrower.
13.8 GOVERNMENTAL REPORTS.
The Borrower authorizes all duly constituted federal, state
and municipal authorities to furnish to the Agent copies of their
reports of examinations or inspections of the Borrower.
13.9 RELIANCE BY THE AGENT, THE LENDERS AND THE ISSUER.
All covenants, agreements, representations and warranties
made herein by the Borrower shall, notwithstanding any
investigation by the Agent or any of the Lenders, be deemed to be
material to and to have been relied upon by the Agent, the
Lenders and the Issuer.
13.10 PARTIES.
Whenever in this Agreement there is reference made to any of
the parties hereto, such reference shall be deemed to include,
wherever applicable, a reference to the respective successors and
assigns of the Borrower, the Agent, the Lenders and the Issuer.
13.11 APPLICABLE LAW; SEVERABILITY
This Agreement shall be construed in all respects in
accordance with, and governed by, the laws and decisions of the
State of Colorado. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
13.12 SUBMISSION TO JURISDICTION; WAIVER OF BOND AND
TRIAL BY JURY.
AT THE OPTION OF THE AGENT, THE BORROWER WAIVES, TO THE
EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS
WAIVER, BE REQUIRED OF THE AGENT. THE BORROWER CONSENTS TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN
THE CITY AND COUNTY OF DENVER, COLORADO AND WAIVES ANY OBJECTION
WHICH THE BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER,
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR
MESSENGER DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN
SECTION 13.18. THE BORROWER IRREVOCABLY APPOINTS CT CORPORATION
AS THE BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING THE SERVICE
OF ANY PROCESS WITHIN THE STATE OF COLORADO, WHICH SERVICE OF
PROCESS SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF
ACTUAL RECEIPT BY THE BORROWER OR THREE (3) DAYS AFTER SUCH AGENT
FOR SERVICE OF PROCESS HAS POSTED THE SAME TO THE BORROWER'S
ADDRESS SET FORTH IN SECTION 13.18. TO THE EXTENT PERMITTED BY
LAW, THE BORROWER ALSO CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING
IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER OR THE BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
13.13 APPLICATION OF PAYMENTS WAIVER.
Notwithstanding any contrary provision contained in this
Agreement or in any of the other Financing Agreements, after the
occurrence and during the continuance of a Default or a Matured
Default, the Borrower irrevocably waives the right to direct the
application of any and all payments at any time received by the
Agent from the Borrower, and the Borrower irrevocably agrees that
the Agent shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times
hereafter against the Liabilities, in such manner as the Agent
may deem advisable, notwithstanding any entry by the Agent upon
any of the Agent's books and records.
13.14 MARSHALLING; PAYMENTS SET ASIDE.
The Agent and the Lenders shall be under no obligation to
marshall any assets in favor of the Borrower or against or in
payment of any or all of the Liabilities. To the extent that the
Borrower makes a payment or payments to the Agent or any Lender
or the Agent or any Lender receives any payment for the
Borrower's benefit or exercises the Agent's or any Lender's
rights of set-off, and such payment or payments or the proceeds
of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had
not occurred.
13.15 SECTION TITLES.
The section titles contained in this Agreement shall be
without substantive meaning or content of any kind whatsoever and
are not a part of the agreement among the parties.
13.16 CONTINUING EFFECT.
This Agreement and all of the other Financing Agreements
shall continue in full force and effect so long as any
Liabilities shall be owed to the Agent and/or any of the Lenders
and (even if there shall be no Liabilities outstanding) so long
as the Agent and/or any of the Lenders remains committed to make
Loans under this Agreement.
13.17 NO WAIVER.
The Agent's or the Required Lenders' failure, at any time or
times hereafter, to require strict performance by the Borrower of
any provision of this Agreement shall not waive, affect or
diminish any right of the Agent or the Required Lenders
thereafter to demand strict compliance and performance therewith.
Any suspension or waiver by the Agent or the Required Lenders of
any Default or Matured Default under this Agreement or any of the
other Financing Agreements, shall not suspend, waive or affect
any other Default or Matured Default under this Agreement or any
of the other Financing Agreements, whether the same is prior or
subsequent thereto and whether of the same or of a different kind
or character. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this
Agreement or any of the other Financing Agreements and no Default
or Matured Default under this Agreement or any of the other
Financing Agreements, shall be deemed to have been suspended or
waived by the Agent or the Required Lenders unless such
suspension or waiver is in writing signed by an officer of the
Agent or each of the Required Lenders (as applicable) and is
directed to the Borrower specifying such suspension or waiver.
13.18 NOTICES.
(a) All notices and other communications provided for
herein shall be in writing (including telex, facsimile, or cable
communication) and shall be mailed, telexed, cabled or delivered
addressed as follows:
(ii) If to the Agent at:
U.S. Bancorp, Inc.
950 Seventeenth Street, Suite 350
Denver, Colorado 80202
Attn: James A. Bosco, President
Facsimile: (303) 585-4732
with a copy to:
Ellen Beverley McNamara
Dorsey & Whitney
370 Seventeenth Street, Suite 4400
Denver, Colorado 80202
(ii) If to the Borrower at:
John B. Sanfilippo & Son, Inc.
2299 Busse Road
Elk Grove Village, IL 60007
Attn: Gary P. Jensen
Facsimile: (847) 593-9608
with a copy to:
Jeffrey L. Elegant, Esq.
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Facsimile: (312) 840-7720
(iii) If to any of the Lenders other than the
Agent, at the address for such Lender set forth on
the applicable signature page of this Agreement;
and, as to each party hereto, at such other address as shall be
designated by such party in a written notice to the other parties
hereto. All such notices and communications shall, when mailed,
telecopied, telexed, transmitted or cabled, become effective when
deposited in the mail, confirmed by telex answerback, transmitted
by telecopier or delivered to the cable company respectively,
except that notices and communications to the Agent shall not be
effective until actually received by the Agent.
(b) Advance notices of terminations or reductions of the
Commitments, or borrowings, conversions and prepayments of Loans
and of the durations of Interest Periods, shall be delivered to
the Agent by 11:00 a.m. (Denver time) the number of Business Days
set forth below before the proposed date for the respective
termination, reduction, borrowing, conversion or prepayment.
EVENT DAYS PRIOR NOTICE
Borrowing of Loans
Which are Reference Rate Loans Same
Borrowing of Loans
Which are Eurodollar Rate Loans Two
Conversion of Loans (including changes in
Interest Periods for Eurodollar Rate Loans) Two
Prepayments of Loans
Which are Reference Rate Loans Same
Prepayments of Loans
Which are Eurodollar Rate Loans Two
Termination of Commitments Five
13.19 MAXIMUM INTEREST.
No agreements, conditions, provisions or stipulations
contained in this Agreement or in any of the other Financing
Agreements, or any Matured Default, or any exercise by the Agent
of the right to accelerate the payment of the maturity of
principal and interest, or to exercise any option whatsoever,
contained in this Agreement or any of the other Financing
Agreements, or the arising of any contingency whatsoever, shall
entitle the Agent to collect, in any event, interest exceeding
the Highest Lawful Rate, and in no event shall the Borrower be
obligated to pay interest exceeding the Highest Lawful Rate, and
all agreements, conditions or stipulations, if any, which may in
any event or contingency whatsoever operate to bind, obligate or
compel the Borrower to pay a rate of interest exceeding the
Highest Lawful Rate, shall be without binding force or effect, at
law or in equity, to the extent only of the excess of interest
over such Highest Lawful Rate. In the event any interest is
charged in excess of the Highest Lawful Rate ("Excess"), the
Borrower acknowledges and stipulates that any such charge shall
be the result of an accidental and bona fide error, and such
Excess shall be, first, applied to reduce the principal of any
Liabilities due, and, second, returned to the Borrower, it being
the intention of the parties hereto not to enter at any time into
a usurious or otherwise illegal relationship. The Borrower and
the Agent both recognize that, with fluctuations in the Reference
Rate, such an unintentional result could inadvertently occur. By
the execution of this Agreement, the Borrower covenants that (a)
the credit or return of any Excess shall constitute the
acceptance by the Borrower of such Excess and (b) the Borrower
shall not seek or pursue any other remedy, legal or equitable,
against the Agent based, in whole or in part, upon the charging
or receiving of any interest in excess of the Highest Lawful
Rate. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by the Agent, all
interest at any time contracted for, charged or received by the
Agent in connection with the Liabilities shall be amortized,
prorated, allocated and spread in equal parts during the entire
term of this Agreement.
13.20 ADDITIONAL ADVANCES.
All fees, charges, expenses, costs, expenditures,
obligations, liabilities, losses, penalties and damages incurred
or suffered by the Agent and/or the Lenders and for which the
Borrower is bound to indemnify or reimburse the Agent and/or the
Lenders under this Agreement (other than those which may be paid
without demand therefor, by the Agent initiated Loans) may, at
the option of the Agent, be paid by Agent initiated Loans if such
amounts remain unpaid for a period of ten (10) Business Days
after the Agent and/or the Lenders have made demand therefor.
13.21 REPRESENTATIONS BY THE LENDERS.
Each Lender represents that it is the present intention of
such Lender, as of the date of its acquisition of the Notes, to
acquire the Notes for its account or for the account of its
Affiliates, and not with a view to the distribution or sale
thereof, and, subject to any applicable laws, the disposition of
such Lender's property shall at all times be within its control.
The Notes have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be
transferred, sold or otherwise disposed of except (a) in a
registered offering under the Securities Act; (b) pursuant to an
exemption from the registration provisions of the Securities Act;
or (c) if the Securities Act shall not apply to the Notes or the
transactions contemplated by the Financing Agreements. Nothing
in this Section 13.21 shall affect the characterization of the
Loans and the transactions contemplated hereunder as commercial
lending transactions.
13.22 COUNTERPARTS.
This Agreement may be executed in several counterparts, and
by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an
original instrument, and all such separate counterparts shall
constitute but one and the same instrument.
13.23 SET-OFF.
The Borrower gives and confirms to each Lender a right of
set-off of all moneys, securities and other property of the
Borrower (whether special, general or limited) and the proceeds
thereof, now or hereafter delivered to remain with or in transit
in any manner to such Lender, its correspondent or its agents
from or for the Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise or coming into
possession of such Lender in any way, and also, any balance of
any deposit accounts and credits of the Borrower with, and any
and all claims of security for the payment of the Liabilities
owed by the Borrower to such Lender, contracted with or acquired
by the Lender, whether such liabilities and obligations be joint,
several, absolute, contingent, secured, unsecured, matured or
unmatured, and the Borrower authorizes such Lender at any time or
times, without prior notice after the occurrence of a Matured
Default, to apply such money, securities, other property,
proceeds, balances, credits or claims, or any part of the
foregoing, to such liabilities in such amounts as it may select,
whether such Liabilities be contingent, unmatured or otherwise,
and whether any collateral security therefor is deemed adequate
or not. The rights described herein shall be in addition to any
collateral security described in any separate agreement executed
by the Borrower.
13.24 ASSIGNMENTS AND PARTICIPATIONS.
(a) After the Closing Date and subject to the prior written
consent of the Agent and in the absence of a Default or a Matured
Default, the prior written consent of the Borrower, in both cases
such consents not to be unreasonably withheld, each Lender may
assign to any Person (the "Assignee") all or a portion of its
rights and obligations under this Agreement (including without
limitation, all or a portion of its Commitment and the Notes held
by it); provided however, that (i) each such assignment shall be
of a constant, and not a varying, percentage of all of the
assigning Lender's rights and obligations under this Agreement,
(ii) the total amount of the Commitments (based on the original
Commitments without giving effect to any repayments or
prepayments) so assigned to an Assignee or to an Assignee and its
affiliates taken as a whole shall equal or exceed $5,000,000,
(iii) the remaining Commitments, if any, (based on the original
Commitments without giving effect to any repayments or
prepayments) held by the assigning Lender after giving effect to
any such assignment shall equal or exceed $5,000,000, (iv) the
assignment will not cause the Borrower to incur any additional
liability and (v) the parties to each such assignment shall
execute and deliver to the Agent for its acceptance an Assignment
and Acceptance in substantially the form attached as Exhibit 13A
("Assignment and Acceptance"), together with any Note or Notes
subject to such assignment, a processing and recordation fee of
$5,000, and the unearned portion of any and all fees under
Section 6.1 or Section 6.2. Upon such execution, delivery,
acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date
shall be the date on which such Assignment and Acceptance is
accepted by the Agent, (vi) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender under
the Financing Agreements, and (vii) the assigning Lender
thereunder shall be deemed to have relinquished its rights and to
be released from its obligations under the Financing Agreements,
to the extent (and only to the extent) that its rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under the Financing Agreements,
such Lender shall cease to be a party thereto). The Agent may,
at its option, pay to any Assignee the unearned portion of fees
under Section 6.1 or Section 6.2 required to be delivered to the
Agent above, or the Agent may retain such fees for its own
account.
(b) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with the Financing Agreements or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Financing Agreements or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its
obligations under the Financing Agreements or any other
instrument or document furnished pursuant hereto; (iii) such
Assignee confirms that it has received a copy of the Financing
Agreements, together with copies of the financial statements
referred to in Section 7.15 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and
Acceptance; (iv) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement;
(v) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
the Financing Agreements as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably
incidental thereto; and (vi) such Assignee agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of the Financing Agreements are required to be
performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in
Section 13.18 a copy of each Assignment and Acceptance delivered
to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender, together with any Note subject
to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and if all required consents have
been obtained: (i) accept such Assignment and Acceptance, and
(ii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Agent in
exchange for the surrendered Note a new Note to the order of such
Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment, a new Note to the order of the
assigning Lender in an amount equal to the Commitment retained by
it. Such new Note shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note,
shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of
Exhibit 2A. Upon receipt by the Agent of such new Note
conforming to the requirements set forth in the preceding
sentences, the Agent shall return to the Borrower such
surrendered Note, marked to show that such surrendered Note has
(have) been replaced, renewed and extended by such new Note.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights
and obligations under this Agreement (including without
limitation, all or a portion of its Commitment and the Note held
by it); provided however, that (i) such Lender's obligations
under this Agreement (including without limitation, its
Commitment to the Borrower) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the sale of the participation will not cause the
Borrower to incur any additional liability, (v) the Borrower, the
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under this Agreement, provided however, that no
participant shall be entitled to recover under the above
provisions an amount in excess of the proportionate share which
such participant holds of the original aggregate principal amount
to which the assigning Lender would otherwise be entitled; and
(vi) no participant shall have any voting rights under this
Agreement.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to
this Section 13.24, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower furnished to such Lender by or on behalf of the
Borrower; provided however, that prior to any such disclosure,
the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential
information relating to the Borrower received by it from such
Lender.
(g) Any Lender may assign and pledge all or any of the
instruments held by it to any Federal Reserve Bank, the United
States Treasury or AgriBank, Farm Credit Bank, as collateral
security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any operating circular issued by
such Federal Reserve System and/or such Federal Reserve Bank or
any applicable regulation providing for such assignments and
pledges to AgriBank, Farm Credit Bank; provided however, that any
payment made by the Borrower for the benefit of such assigning
and/or pledging Lender in accordance with the terms of the
Financing Agreements shall satisfy the Borrower's obligations
under the Financing Agreements in respect thereof to the extent
of such payment. No such assignment and/or pledge shall release
the assigning and/or pledging Lender from its obligations
hereunder.
13.25 CREDIT AGREEMENT CONTROLS.
If there are any conflicts or inconsistencies among this
Agreement and any of the other Financing Agreements, the
provisions of this Agreement shall prevail and control.
13.26 OBLIGATIONS SEVERAL.
The obligations of each Lender under each Financing
Agreement to which it is a party are several, and no Lender shall
be responsible for any obligation or Commitment of any other
Lender under any Financing Agreement to which it is a party.
Nothing contained in any Financing Agreement to which it is a
party, and no action taken by any Lender pursuant thereto, shall
be deemed to constitute the Lenders to be a partnership, an
association, a joint venture, or any other kind of entity.
13.27 PRO RATA TREATMENT.
All Loans under, and all payments and other amounts received
in connection with this Agreement (including without limitation,
amounts received as a result of the exercise by any Lender of any
right of set-off) shall be effectively shared by the Lenders
ratably in accordance with their respective Pro Rata Percentages.
If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) on account of the principal of, or interest on, or
fees in respect of, any Note held by it (other than pursuant to
Section 5) in excess of its Pro Rata Percentage of payments on
account of similar Notes obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such
participations in the Notes or Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided however, that if all
or any portion of such excess payment is thereafter recovered
from such purchasing Lender, such purchase from each Lender shall
be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with
an amount equal to such Lender's ratable share (according to the
proportion of: (a) the amount of such Lender's required repayment
to (b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered.
Disproportionate payments of interest shall be shared by the
purchase of separate participations in unpaid interest
obligations, disproportionate payments of fees shall be shared by
the purchase of separate participations in unpaid fee
obligations, and disproportionate payments of principal shall be
shared by the purchase of separate participations in unpaid
principal obligations. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this
Section 13.27 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-
off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of
such participation. Notwithstanding the foregoing, a Lender may
receive and retain an amount in excess of its Pro Rata Percentage
to the extent, but only to the extent, that such excess results
from such Lender's Highest Lawful Rate exceeding another Lender's
Highest Lawful Rate.
13.28 CONFIDENTIALITY.
Each of the Agent and the Lenders agrees that it will use
its best efforts to keep confidential, in accordance with its
customary procedures for handling confidential information and in
accordance with safe and sound banking practices, any proprietary
information of the Borrower in writing by the Borrower, as being
proprietary and confidential; provided however, that the Agent or
any Lender may disclose any such information (a) to enable it to
comply with any Governmental Requirement applicable to it, (b) in
connection with the defense of any litigation or other proceeding
brought against it arising out of the transactions contemplated
by this Agreement and the other Financing Agreements, (c) in
connection with the supervision and enforcement of the rights and
remedies of the Agent and Lenders under any Financing Agreement
and (d) as set forth in Section 13.24 (f).
13.29 INDEPENDENCE OF COVENANTS.
All covenants under Section 10 shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence
of a Default or a Matured Default if such action is taken or
condition exists.
13.30 AMENDMENTS AND WAIVERS.
(a) Except as provided in clause (b) or clause (c) of this
Section 13.30, any term, covenant, agreement or condition of this
Agreement may be amended only by a written amendment executed by
the Borrower, the Required Lenders and, if the rights or duties
of the Agent are affected thereby, the Agent, or compliance
therewith only may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the
Borrower shall have obtained the consent in writing of the
Required Lenders and, if the rights or duties of the Agent are
affected thereby, the Agent.
(b) Notwithstanding clause (a) of this Section 13.30, no
amendment or waiver that does not have the consent in writing of
the holders of all outstanding Notes or of all Lenders if no
Loans are outstanding shall (a) reduce the amount or postpone the
date of payment of any scheduled payment or required payment of
principal of the Notes or reduce the rate or extend the time of
payment of interest on the Notes, or reduce the amount of
principal thereof, or modify any of the provisions of the Notes
with respect to the payment or prepayment thereof, (b) give to
any Note any preference over any other Note, (c) amend any of the
following definitions: Available Amount, Pro Rata Percentage or
Required Lenders, (d) alter, modify or amend the provisions of
this Section 13.30, (e) change the amount or increase the term of
any of the Commitments or change the fees required under Section
6, (f) alter, modify or amend the provisions of Section 8 of this
Agreement, or (g) alter, modify or amend any Lender's right to
consent to any action, make any request or give any notice. Any
such amendment or waiver shall apply equally to all Lenders and
all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Borrower, whether or
not such Note shall have been marked to indicate such amendment
or waiver. No such amendment or waiver shall extend to or affect
any obligation not expressly amended or waived.
(c) Notwithstanding clause (a) of this Section 13.30, the
Agent and the Borrower, without the consent of either the
Required Lenders or the holders of all outstanding Notes or of
all Lenders if no Loans are outstanding, may execute amendments
to this Agreement and the Financing Agreements which amendments
consist solely of the making of technical corrections and/or
other minor changes which do not materially adversely affect the
rights of the Lenders.
13.31. FINAL AGREEMENT.
THIS WRITTEN AGREEMENT, THE NOTES AND THE OTHER FINANCING
AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
[Balance of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation
By /s/ Gary P. Jensen
-------------------------
Its Executive Vice President,
Finance and Chief Financial
Officer
---------------------------
SUNSHINE NUT CO., INC., a
Texas corporation
By /s/ Michael J. Valentine
------------------------
Its Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC.,
a Delaware corporation
By /s/ Michael J. Valentine
-------------------------
Its Assistant Secretary
-------------------
JBS INTERNATIONAL, INC., a
Barbados corporation
By /s/ Michael J. Valentine
-------------------------
Its Assistant Secretary
-------------------
U.S. BANCORP AG CREDIT, INC.,
as Agent and as a Lender
950 17th Street, Suite 350
Denver, Colorado 80202
By /s/ Kenneth L. Warlick
-------------------------
Its Vice President
--------------
THE OTHER LENDERS:
KEYBANK NATIONAL ASSOCIATION,
as a Lender
By /s/ Brian Wise
---------------------------
Its Vice President
--------------
LASALLE NATIONAL BANK, as a
Lender
By /s/ James Minich
---------------------------
Its Vice President
--------------
REVOLVING CREDIT NOTE
$35,000,000 Denver, Colorado
March 31, 1998
FOR VALUE RECEIVED, the undersigned JOHN B. SANFILIPPO & SON, INC., a
Delaware corporation ("Sanfilippo"), SUNSHINE NUT CO., INC., a Texas
corporation ("Sunshine"), JBS INTERNATIONAL, INC., a Barbados corporation
("JBS") and QUANTZ ACQUISITION CO., INC., a Delaware corporation ("Quantz"
and collectively with Sanfilippo, JBS and Sunshine, the "Borrower", whether
one or more), promises to pay to the order of U.S. BANCORP AG CREDIT, INC.
f/k/a FBS Ag Credit, Inc., a Colorado corporation (hereinafter referred to
as "Lender"), at such place as U.S. Bancorp Ag Credit, Inc. f/k/a FBS Ag
Credit, Inc., as agent for the Lender, may designate, in lawful money of the
United States of America, the principal sum of Thirty Five Million Dollars
($35,000,000) or so much thereof as may be advanced and be outstanding,
together with interest on any and all principal amounts outstanding calculated
in accordance with the provisions set forth below. This Note is issued under
that certain Credit Agreement dated March 31, 1998 (as the same may be
amended, replaced, restated and/or supplemented from time to time, the "Credit
Agreement") between Borrower, U.S. Bancorp Ag Credit, Inc., a Colorado
corporation, as agent (the "Agent"), Lender and the other lenders identified
therein (collectively the "Lenders").
Capitalized terms used and not defined herein shall have the meanings given to
such terms in the Credit Agreement. In addition, as used herein, the following
terms shall have the following respective meanings (such terms to be equally
applicable to both the singular and plural forms of the terms defined):
"LOAN DOCUMENTS": the Credit Agreement, this Note, all Financing Agreements (as
defined in the Credit Agreement) and all documents, instruments, certificates
and agreements now or hereafter executed or delivered by the Borrower to the
Agent or the Lender pursuant to any of the foregoing, and any and all
amendments, modifications, supplements, renewals, extensions, increases
and rearrangements of, and substitutions for, any of the foregoing.
"MATURITY DATE": March 31, 2001 or the earlier date of termination in whole of
the Commitments (as defined in the Credit Agreement) pursuant to Section 4.4
or 11.1 of the Credit Agreement.
The outstanding Revolving Loans hereunder may be maintained as Reference Rate
Loans, Eurodollar Rate Loans or a combination thereof, at the election of the
Borrower and as more fully provided in the Credit Agreement. The Borrower
shall have the right to make prepayments of principal in accordance with the
Credit Agreement.
So long as no Matured Default (as defined in the Credit Agreement) has
occurred or is continuing, the Borrower shall pay interest on the unpaid
principal amount of each Revolving Loan made by the Lender from the date of
such Revolving Loan until such principal amount shall be paid in full, at the
times and at the rates per annum set forth below: (a) during such periods as
such Revolving Loan is a Reference Rate Loan, a rate per annum equal to the
lesser of (i) the sum of the Reference Rate in effect from time to time plus
the Applicable Margin and (ii) the Highest Lawful Rate; or (b) during such
periods as such Revolving Loan is a Eurodollar Rate Loan, a rate per annum
equal during each Interest Period for such Revolving Loan to the lesser of (i)
the sum of the Eurodollar Rate for such Interest Period for such Revolving
Loan plus the Applicable Margin and (ii) the Highest Lawful Rate. With
respect to each Reference Rate Loan, the rate of interest accruing hereunder
shall change concurrently with each change in the Reference Rate as announced
by U.S. Bank. All interest under this Note on Reference Rate Loans shall be
due and payable monthly in arrears on the first day of each month commencing
April 1, 1998, and on the Maturity Date. All interest under this Note on
Eurodollar Rate Loans for each Interest Period for each such Loan shall
be due and payable monthly in arrears on the first day of each month during
the applicable Interest Period and on the last day of such Interest Period.
The Agent shall make automatic advances of principal under the Credit
Agreement for any and all interest payments as the same become due and
payable.
After the occurrence of a Matured Default and for so long as such Matured
Default is continuing, the Agent may notify the Borrower that any and all
amounts due under this Note or under any other Loan Document, whether for
principal, interest (to the extent permitted by applicable law), fees,
expenses or otherwise, shall bear interest, from the date of such notice by
the Agent and for so long as such Matured Default continues, payable on
demand, at a rate per annum equal to the lesser of (i) the sum of three
percent (3.0%) per annum plus the Reference Rate in effect from time to time
and (ii) the Highest Lawful Rate.
All computations of interest pursuant to this Note shall be made on the basis
of a year of 360 days, unless the foregoing would result in a rate exceeding
the Highest Lawful Rate, in which case such computations shall be based on a
year of 365 or 366 days, as the case may be. Interest, whether based on a
year of 360, 365 or 366 days, shall be charged for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest is payable.
The unpaid balance of this obligation at any time shall be the total amounts
advanced hereunder by the Lender together with accrued and unpaid interest,
less the amount of payments made hereon by or for the Borrower, which balance
may be endorsed hereon from time to time by the Lender.
In addition to the repayment requirements imposed upon the Borrower under the
Credit Agreement, together with the agreements referred to therein, the
principal amount owing under this Note shall be due and payable in full on
the Maturity Date.
Interim payments made by Borrower pursuant to and in accordance with the
Credit Agreement shall be applied as provided therein.
Should any Matured Default occur, then all sums of principal and interest
outstanding hereunder may be declared or may otherwise become immediately
due and payable in accordance with the Credit Agreement, without presentment,
demand or notice of dishonor, all of which are expressly waived, and the
Lender shall have no obligation to make any further Revolving Loans pursuant
to the Credit Agreement.
Should more than one person or entity sign this Note, the obligations of each
signer shall be joint and several.
This Note shall be construed in accordance with the laws of the State of
Colorado.
JOHN B. SANFILIPPO & SON, INC., a
Delaware corporation
By /s/ Gary P. Jensen
-----------------------------
Its Executive Vice President,
Finance and Chief Financial
Officer
---------------------------
SUNSHINE NUT CO., INC., a Texas
corporation
By /s/ Michael J. Valentine
-------------------------
Its Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC., a
Delaware corporation
By /s/ Michael J. Valentine
-----------------------------
Its Assistant Secretary
-------------------
JBS INTERNATIONAL, INC., a
Barbados corporation
By /s/ Michael J. Valentine
-----------------------------
Its President
-------------------
REVOLVING CREDIT NOTE
$15,000,000 Denver, Colorado
March 31, 1998
FOR VALUE RECEIVED, the undersigned JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation ("Sanfilippo"), SUNSHINE NUT CO.,
INC., a Texas corporation ("Sunshine"), JBS INTERNATIONAL, INC., a
Barbados corporation ("JBS") and QUANTZ ACQUISITION CO., INC., a
Delaware corporation ("Quantz" and collectively with Sanfilippo,
JBS and Sunshine, the "Borrower", whether one or more), promises to
pay to the order of KEYBANK NATIONAL ASSOCIATION (hereinafter
referred to as "Lender"), at such place as U.S. Bancorp Ag Credit,
Inc. f/k/a FBS Ag Credit, Inc., as agent for the Lender, may
designate, in lawful money of the United States of America, the
principal sum of Fifteen Million Dollars ($15,000,000) or so much
thereof as may be advanced and be outstanding, together with
interest on any and all principal amounts outstanding calculated in
accordance with the provisions set forth below. This Note is
issued under that certain Credit Agreement dated March 31, 1998 (as
the same may be amended, replaced, restated and/or supplemented
from time to time, the "Credit Agreement") between Borrower, U.S.
Bancorp Ag Credit, Inc., a Colorado corporation, as agent (the
"Agent"), Lender and the other lenders identified therein
(collectively the "Lenders").
Capitalized terms used and not defined herein shall have the
meanings given to such terms in the Credit Agreement. In addition,
as used herein, the following terms shall have the following
respective meanings (such terms to be equally applicable to both
the singular and plural forms of the terms defined):
"Loan Documents": the Credit Agreement, this Note, all
Financing Agreements (as defined in the Credit Agreement) and all
documents, instruments, certificates and agreements now or
hereafter executed or delivered by the Borrower to the Agent or the
Lender pursuant to any of the foregoing, and any and all
amendments, modifications, supplements, renewals, extensions,
increases and rearrangements of, and substitutions for, any of the
foregoing.
"Maturity Date": March 31, 2001 or the earlier date of
termination in whole of the Commitments (as defined in the Credit
Agreement) pursuant to Section 4.4 or 11.1 of the Credit
Agreement.
The outstanding Revolving Loans hereunder may be maintained as
Reference Rate Loans, Eurodollar Rate Loans or a combination
thereof, at the election of the Borrower and as more fully provided
in the Credit Agreement. The Borrower shall have the right to make
prepayments of principal in accordance with the Credit Agreement.
So long as no Matured Default (as defined in the Credit
Agreement) has occurred or is continuing, the Borrower shall pay
interest on the unpaid principal amount of each Revolving Loan made
by the Lender from the date of such Revolving Loan until such
principal amount shall be paid in full, at the times and at the
rates per annum set forth below: (a) during such periods as such
Revolving Loan is a Reference Rate Loan, a rate per annum equal to
the lesser of (i) the sum of the Reference Rate in effect from time
to time plus the Applicable Margin and (ii) the Highest Lawful
Rate; or (b) during such periods as such Revolving Loan is a
Eurodollar Rate Loan, a rate per annum equal during each Interest
Period for such Revolving Loan to the lesser of (i) the sum of the
Eurodollar Rate for such Interest Period for such Revolving Loan
plus the Applicable Margin and (ii) the Highest Lawful Rate. With
respect to each Reference Rate Loan, the rate of interest accruing
hereunder shall change concurrently with each change in the
Reference Rate as announced by U.S. Bank. All interest under this
Note on Reference Rate Loans shall be due and payable monthly in
arrears on the first day of each month commencing April 1, 1998,
and on the Maturity Date. All interest under this Note on
Eurodollar Rate Loans for each Interest Period for each such Loan
shall be due and payable monthly in arrears on the first day of
each month during the applicable Interest Period and on the last
day of such Interest Period. The Agent shall make automatic
advances of principal under the Credit Agreement for any and all
interest payments as the same become due and payable.
After the occurrence of a Matured Default and for so long as
such Matured Default is continuing, the Agent may notify the
Borrower that any and all amounts due under this Note or under any
other Loan Document, whether for principal, interest (to the extent
permitted by applicable law), fees, expenses or otherwise, shall
bear interest, from the date of such notice by the Agent and for so
long as such Matured Default continues, payable on demand, at a
rate per annum equal to the lesser of (i) the sum of three percent
(3.0%) per annum plus the Reference Rate in effect from time to
time and (ii) the Highest Lawful Rate.
All computations of interest pursuant to this Note shall be
made on the basis of a year of 360 days, unless the foregoing would
result in a rate exceeding the Highest Lawful Rate, in which case
such computations shall be based on a year of 365 or 366 days, as
the case may be. Interest, whether based on a year of 360, 365 or
366 days, shall be charged for the actual number of days (including
the first day but excluding the last day) occurring in the period
for which such interest is payable.
The unpaid balance of this obligation at any time shall be the
total amounts advanced hereunder by the Lender together with
accrued and unpaid interest, less the amount of payments made
hereon by or for the Borrower, which balance may be endorsed hereon
from time to time by the Lender.
In addition to the repayment requirements imposed upon the
Borrower under the Credit Agreement, together with the agreements
referred to therein, the principal amount owing under this Note
shall be due and payable in full on the Maturity Date.
Interim payments made by Borrower pursuant to and in
accordance with the Credit Agreement shall be applied as provided
therein.
Should any Matured Default occur, then all sums of principal
and interest outstanding hereunder may be declared or may otherwise
become immediately due and payable in accordance with the Credit
Agreement, without presentment, demand or notice of dishonor, all
of which are expressly waived, and the Lender shall have no
obligation to make any further Revolving Loans pursuant to the
Credit Agreement.
Should more than one person or entity sign this Note, the
obligations of each signer shall be joint and several.
This Note shall be construed in accordance with the laws of
the State of Colorado.
JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation
By /s/ Gary P. Jensen
------------------------
Its Executive Vice President,
Finance and Chief Financial
Officer
---------------------------
SUNSHINE NUT CO., INC., a
Texas corporation
By /s/ Michael J. Valentine
------------------------
Its Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC.,
a Delaware corporation
By /s/ Michael J. Valentine
------------------------
Its Assistant Secretary
-------------------
JBS INTERNATIONAL, INC., a
Barbados corporation
By /s/ Michael J. Valentine
------------------------
Its President
---------
REVOLVING CREDIT NOTE
$20,000,000 Denver, Colorado
March 31, 1998
FOR VALUE RECEIVED, the undersigned JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation ("Sanfilippo"), SUNSHINE NUT CO.,
INC., a Texas corporation ("Sunshine"), JBS INTERNATIONAL, INC., a
Barbados corporation ("JBS") and QUANTZ ACQUISITION CO., INC., a
Delaware corporation ("Quantz" and collectively with Sanfilippo,
JBS and Sunshine, the "Borrower", whether one or more), promises to
pay to the order of LASALLE NATIONAL BANK (hereinafter referred to
as "Lender"), at such place as U.S. Bancorp Ag Credit, Inc. f/k/a
FBS Ag Credit, Inc., as agent for the Lender, may designate, in
lawful money of the United States of America, the principal sum of
Twenty Million Dollars ($20,000,000) or so much thereof as may be
advanced and be outstanding, together with interest on any and all
principal amounts outstanding calculated in accordance with the
provisions set forth below. This Note is issued under that certain
Credit Agreement dated March 31, 1998 (as the same may be amended,
replaced, restated and/or supplemented from time to time, the
"Credit Agreement") between Borrower, U.S. Bancorp Ag Credit, Inc.,
a Colorado corporation, as agent (the "Agent"), Lender and the
other lenders identified therein (collectively the "Lenders").
Capitalized terms used and not defined herein shall have the
meanings given to such terms in the Credit Agreement. In addition,
as used herein, the following terms shall have the following
respective meanings (such terms to be equally applicable to both
the singular and plural forms of the terms defined):
"Loan Documents": the Credit Agreement, this Note, all
Financing Agreements (as defined in the Credit Agreement) and all
documents, instruments, certificates and agreements now or
hereafter executed or delivered by the Borrower to the Agent or the
Lender pursuant to any of the foregoing, and any and all
amendments, modifications, supplements, renewals, extensions,
increases and rearrangements of, and substitutions for, any of the
foregoing.
"Maturity Date": March 31, 2001 or the earlier date of
termination in whole of the Commitments (as defined in the Credit
Agreement) pursuant to Section 4.4 or 11.1 of the Credit
Agreement.
The outstanding Revolving Loans hereunder may be maintained as
Reference Rate Loans, Eurodollar Rate Loans or a combination
thereof, at the election of the Borrower and as more fully provided
in the Credit Agreement. The Borrower shall have the right to make
prepayments of principal in accordance with the Credit Agreement.
So long as no Matured Default (as defined in the Credit
Agreement) has occurred or is continuing, the Borrower shall pay
interest on the unpaid principal amount of each Revolving Loan made
by the Lender from the date of such Revolving Loan until such
principal amount shall be paid in full, at the times and at the
rates per annum set forth below: (a) during such periods as such
Revolving Loan is a Reference Rate Loan, a rate per annum equal to
the lesser of (i) the sum of the Reference Rate in effect from time
to time plus the Applicable Margin and (ii) the Highest Lawful
Rate; or (b) during such periods as such Revolving Loan is a
Eurodollar Rate Loan, a rate per annum equal during each Interest
Period for such Revolving Loan to the lesser of (i) the sum of the
Eurodollar Rate for such Interest Period for such Revolving Loan
plus the Applicable Margin and (ii) the Highest Lawful Rate. With
respect to each Reference Rate Loan, the rate of interest accruing
hereunder shall change concurrently with each change in the
Reference Rate as announced by U.S. Bank. All interest under this
Note on Reference Rate Loans shall be due and payable monthly in
arrears on the first day of each month commencing April 1, 1998,
and on the Maturity Date. All interest under this Note on
Eurodollar Rate Loans for each Interest Period for each such Loan
shall be due and payable monthly in arrears on the first day of
each month during the applicable Interest Period and on the last
day of such Interest Period. The Agent shall make automatic
advances of principal under the Credit Agreement for any and all
interest payments as the same become due and payable.
After the occurrence of a Matured Default and for so long as
such Matured Default is continuing, the Agent may notify the
Borrower that any and all amounts due under this Note or under any
other Loan Document, whether for principal, interest (to the extent
permitted by applicable law), fees, expenses or otherwise, shall
bear interest, from the date of such notice by the Agent and for so
long as such Matured Default continues, payable on demand, at a
rate per annum equal to the lesser of (i) the sum of three percent
(3.0%) per annum plus the Reference Rate in effect from time to
time and (ii) the Highest Lawful Rate.
All computations of interest pursuant to this Note shall be
made on the basis of a year of 360 days, unless the foregoing would
result in a rate exceeding the Highest Lawful Rate, in which case
such computations shall be based on a year of 365 or 366 days, as
the case may be. Interest, whether based on a year of 360, 365 or
366 days, shall be charged for the actual number of days (including
the first day but excluding the last day) occurring in the period
for which such interest is payable.
The unpaid balance of this obligation at any time shall be the
total amounts advanced hereunder by the Lender together with
accrued and unpaid interest, less the amount of payments made
hereon by or for the Borrower, which balance may be endorsed hereon
from time to time by the Lender.
In addition to the repayment requirements imposed upon the
Borrower under the Credit Agreement, together with the agreements
referred to therein, the principal amount owing under this Note
shall be due and payable in full on the Maturity Date.
Interim payments made by Borrower pursuant to and in
accordance with the Credit Agreement shall be applied as provided
therein.
Should any Matured Default occur, then all sums of principal
and interest outstanding hereunder may be declared or may otherwise
become immediately due and payable in accordance with the Credit
Agreement, without presentment, demand or notice of dishonor, all
of which are expressly waived, and the Lender shall have no
obligation to make any further Revolving Loans pursuant to the
Credit Agreement.
Should more than one person or entity sign this Note, the
obligations of each signer shall be joint and several.
This Note shall be construed in accordance with the laws of
the State of Colorado.
JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation
By /s/ Gary P. Jensen
-------------------------
Its Executive Vice President,
Finance and Chief Financial
Officer
---------------------------
SUNSHINE NUT CO., INC., a
Texas corporation
By /s/ Michael J. Valentine
-------------------------
Its Assistant Secretary
-------------------
QUANTZ ACQUISITION CO., INC.,
a Delaware corporation
By /s/ Michael J. Valentine
-------------------------
Its Assistant Secretary
-------------------
JBS INTERNATIONAL, INC., a
Barbados corporation
By /s/ Michael J. Valentine
-------------------------
Its President
---------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the John B.
Sanfilippo & Son, Inc. Consolidated Statement of Operations for the thirty-nine
weeks ended March 26, 1998 and Consolidated Balance Sheet as of March 26, 1998
and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-25-1998
<PERIOD-END> MAR-26-1998
<CASH> 255
<SECURITIES> 0
<RECEIVABLES> 17,921
<ALLOWANCES> 0
<INVENTORY> 110,315
<CURRENT-ASSETS> 133,187
<PP&E> 135,649
<DEPRECIATION> 59,287
<TOTAL-ASSETS> 224,848
<CURRENT-LIABILITIES> 80,040
<BONDS> 65,450
0
0
<COMMON> 93
<OTHER-SE> 77,601
<TOTAL-LIABILITY-AND-EQUITY> 224,848
<SALES> 248,084
<TOTAL-REVENUES> 248,084
<CGS> 203,911
<TOTAL-COSTS> 203,911
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,254
<INCOME-PRETAX> 7,834
<INCOME-TAX> 3,212
<INCOME-CONTINUING> 4,622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,622
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.50
</TABLE>
