FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended SEPTEMBER 27, 1997 Commission File Number 0-1989
SENECA FOODS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 16-0733425
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
1162 PITTSFORD-VICTOR ROAD, PITTSFORD, NEW YORK 14534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 716/385-9500
NOT APPLICABLE
Former name, former address and former fiscal year,
if changed since last report
Check mark indicates whether registrant (1) has filed all reports required to be
filed by Section 13 of 15(d) of the Securities 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
The number of shares outstanding of each of the issuer's classes of common stock
at the latest practical date are:
CLASS SHARES OUTSTANDING AT OCTOBER 31, 1997
Common Stock Class A, $.25 Par 3,143,125
Common Stock Class B, $.25 Par 2,796,555
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 4 - (4a) Instrument defining the rights of any
holder of Long-Term Debt related to the Master
Reimbursement Agreement and between SENECA FOODS
CORPORATION and GENERAL ELECTRIC CAPITAL CORPORATION
dated September 15, 1997 incorporated by reference to
the Registrant's 10-Q filed November 10, 1997.
(b) Exhibit 4 - (4b) Instrument defining the rights of any
holder of Long-Term Debt related to the Credit Agreement
by and among SENECA FOODS CORPORATION, THE BANKS SIGNATORY
THERETO AND THE CHASE MANHATTAN BANK AS AGENT as amended
and restated as of September 24, 1997 and filed herewith.
(c) Exhibit 4 - (4c) Instrument defining the rights of any
holder of Long-Term Debt related to the Senior Promissory
Notes by and among SENECA FOODS CORPORATION, JOHN HANCOCK
MUTUAL LIFE INSURANCE COMPANY AND COBANK, ACB filed
herewith.
(d) Exhibit 11 - (11) Computation of earnings per share
incorporated by reference to the Registrant's 10-Q filed
November 10, 1997.
(e) Exhibit 27 - (27) Financial Data Schedules
incorporated by reference to the Registrant's 10-Q filed
November 10, 1997.
(f) Reports on Form 8-K - two 8-K's were filed during July
1997, which related to the two acquisitions during this
year.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SENECA FOODS CORPORATION
(Registrant)
/S/KRAIG H. KAYSER
November 14, 1997 Kraig H. Kayser
President and
Chief Executive Officer
/S/JEFFREY L. VAN RIPER
November 14, 1997 Jeffrey L. Van Riper
Controller and
Chief Accounting Officer
<PAGE>
Exhibit 4b
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 24, 1997
AMONG
SENECA FOODS CORPORATION
THE BANKS SIGNATORY HERETO
AND
THE CHASE MANHATTAN BANK
AS AGENT
<PAGE>
TABLE OF CONTENTS
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 24, 1997
among SENECA FOODS CORPORATION, a corporation organized under the laws of New
York (the "Borrower"), each of the banks which is a signatory hereto
(individually a "Bank" and collectively the "Banks") and THE CHASE MANHATTAN
BANK, a banking corporation organized under the laws of the State of New York,
as agent for the Banks (in such capacity, together with its successors in such
capacity, the "Agent").
The Borrower, Banks, and the Agent have entered into a Credit Agreement
dated as of February 23, 1995, Amendment No. 1 thereto, dated as of May 1, 1995,
Amendment No. 2 thereto, dated as of November 13, 1995, Amendment No. 3 thereto
dated as of December 28, 1995, Amendment No. 4 thereto dated as of March 20,
1996, Amendment No. 5 thereto dated as of September 20, 1996, and Amendment No.
6 thereto dated as of December 10, 1996. (As so amended, such Credit Agreement
is herein referred to as the "Credit Agreement".)
The Borrower desires that the Banks extend credit as provided herein and
the Banks are prepared to extend such credit. Accordingly, the Borrower, the
Banks and the Agent agree that the Credit Agreement is further amended and is
restated in its entirety, so that, upon this Amended and Restated Credit
Agreement becoming effective, it shall replace the Credit Agreement and the
promissory notes issued thereunder which shall thereupon cease to be of any
force or effect. All Loans and other amounts and obligations outstanding under
the Credit Agreement and the promissory notes issued thereunder shall
automatically become Loans, amounts and obligations under this Amended and
Restated Credit Agreement (and the Notes issued hereunder), upon its becoming
effective. In addition, all consents and/or waivers executed by the Required
Banks prior to the date hereof shall cease to have any force or effect with
respect to events occurring after the date on which this Amended and Restated
Credit Agreement becomes effective.
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. DEFINITIONS. As used in this Amended and Restated Credit
Agreement the following terms have the following meanings (terms defined in the
singular to have a correlative meaning when used in the plural and VICE VERSA):
"$15,000,000 Financing" has the meaning set forth in SECTION 5.10(B).
"$15,000,000 Loan Documents" has the meaning set forth in SECTION 5.10
(B).
"ABN LOC's" means the letters of credit issued pursuant to the ABN
Reimbursement Agreements by ABN Amro Bank, N.V. to the trustees for the holders
of the Secured Bonds to support payments of principal of, and interest on the
Secured Bonds and the purchase price of Secured Bonds tendered or required to be
tendered.
"ABN Reimbursement Agreements" shall mean the following Reimbursement
Agreements between Borrower and ABN AMRO Bank N. V. setting forth Borrower's
reimbursement obligations related to the ABN LOC's: Wayne County Industrial
Development Agency Industrial Development Refunding Revenue Bonds (Seneca Foods
Corporation Project) Series 1992; Ontario County Industrial Development Agency
Industrial Development Refunding Revenue Bonds (Seneca Foods Corporation
Project) Series 1992; City of Janesville, Wisconsin Industrial Development
Agency Industrial Development Refunding Revenue Bonds (Seneca Foods Corporation
Project) Series 1992; City of Rochester, Minnesota Industrial Development Agency
Industrial Development Refunding Revenue Bonds (Seneca Foods Corporation
Project) Series 1992; all as the same may be amended from time to time.
"Absolute Rate" shall mean an interest rate (rounded to the nearest
.0001) expressed as a decimal.
"Absolute Rate Loan" shall mean a Competitive Bid Loan with respect to
which the Borrower has requested that the Banks offer to make Competitive Bid
Loans at Absolute Rates.
"Affiliate" means any Person: (a) which directly or indirectly controls,
or is controlled by, or is under common control with, the Borrower or any of its
Subsidiaries; (b) which directly or indirectly beneficially owns or holds 10% or
more of any class of voting stock of the Borrower or any such Subsidiary; (c)
10% or more of the voting stock of which is directly or indirectly beneficially
owned or held by the Borrower or such Subsidiary; or (d) which is a partnership
in which the Borrower or any of its Subsidiaries is a general partner. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" shall mean The Chase Manhattan Bank, and any successor Agent
appointed pursuant to SECTION 10.09.
"Agreement" means this Amended and Restated Credit Agreement, as
amended, restated or supplemented from time to time. References to Articles,
Sections, Exhibits, Schedules and the like refer to the Articles, Sections,
Exhibits, Schedules and the like of this Agreement unless otherwise indicated.
"Alliance Inventory Sale" means, with respect to Green Giant finished
goods inventory packed for the purpose of sale to Pillsbury under the Pillsbury
Alliance Agreement, a sale by Borrower of such inventory to a buyer other than
Pillsbury (which buyer may include Parom, L.L.C. or another designee of RaboBank
Nederland, in a transaction pursuant to an inventory purchase commitment dated
April 14, 1997) that meets all of the following conditions:
(a) The purchase price of the inventory sold to such buyer shall consist
of the Transfer Price as defined in the Pillsbury Alliance Agreement (i.e.
Borrowers' fully allocated cost per unit plus a $.10 per case tolling fee)
multiplied by the number of Equivalent Cases (as defined in the Pillsbury
Alliance Agreement) of the inventory sold. Each sale must ultimately match the
amount of cash flow that would have been realized to the Borrower if the
inventory had been sold directly to Pillsbury pursuant to the Pillsbury Alliance
Agreement.
(b) Each sale must qualify as a sale of the inventory to the buyer and
thus must qualify for off balance sheet accounting treatment whereby the sale of
the inventory will be recognized and the inventory will be removed from the
Borrower's balance sheet. All risk of loss must pass to the buyer upon the
closing of such sale, and the buyer must adequately insure against any risk of
loss with respect to the inventory purchased. Each such sale must not require of
Borrower any greater warranty obligations with respect to the inventory than the
obligations to which the Borrower would be subject if the inventory had been
sold to Pillsbury pursuant to the Pillsbury Alliance Agreement, nor may any such
sale create or provide for any rights or recourse against the Borrower if
Pillsbury or another Person does not take or pay for the inventory from the
buyer.
(c) The buyer must agree with Pillsbury that the inventory to be sold by
the Borrower to the buyer will be sold to Pillsbury at prices based upon the
original purchase price from Borrower plus a provision for the cost of money
over the period in which the inventory is held by the buyer.
(d) In connection with each such sale, Borrower may agree to act as the
agent of the buyer such that the Borrower will, on behalf of and as agent for
the buyer, warehouse the purchased inventory and distribute it to and invoice
Pillsbury for the inventory, as agreed between Pillsbury and the buyer. Borrower
must not be required to repurchase any of the inventory purchased by the buyer,
guarantee sales prices or provide price supports for such inventory or agree to
cover any revenue shortfalls of the buyer with respect to such inventory.
(e) On and as of the date of the sale, and after giving effect
thereto, no event shall have occurred and be continuing that constitutes a
Default or Event of Default.
(f) All consents or waivers that are required, under the Pillsbury
Documents, the Insurance Company Loan Documents, the $15,000,000 Loan Documents,
the ABN Reimbursement Agreements, the GE Capital Reimbursement Agreement, any
other Facility Document, or any other law, rule, regulation agreement or
instrument, in order to permit such sale, shall have been obtained.
(g) Such sale will not result in the creation of either a Debt of
the Borrower or a Lien against Borrower or any of Borrower's assets.
(h) The Agent shall have received, in each case immediately upon their
becoming effective, a copy of the definitive documents between and among the
Borrower and the other parties involved in such sale, including but not limited
to: (i) all agreements to which the Borrower's a party or by which it is bound,
between the Borrower and Pillsbury and between Borrower and the buyer of the
inventory; and (ii) any amendments to or consents required under the Pillsbury
Documents, the Insurance Company Loan Documents, the $15,000,000 Loan Documents,
the ABN Reimbursement Agreements, the GE Capital Reimbursement Agreement, and
any other Facility document.
(i) Borrower must utilize the proceeds of any such sale, net of the
reasonable expenses incurred by Borrower in consummating such sale, for
repayment of the Loans. Such repayment shall be made not later than five days
after Borrower's receipt of any such net proceeds, provided, however, that if
Borrower desires to repay one or more Fixed Rate Loans with such net proceeds,
Borrower shall not be required to make a prepayment of Fixed Rate Loans under
such circumstances as would require the Borrower to pay compensation to the
Banks pursuant to SECTION 3.05(A), but shall use such net proceeds to prepay
such Loans as soon as it is able to do so without being required to pay such
compensation.
"Authorization Letter" means the letter agreement executed by the
Borrower pursuant to SECTION 4.01(B) in the form of EXHIBIT 4.01(B).
"Bank" and "Banks" shall include each of the Banks which is a party to
this Agreement and any successors and/or assignees pursuant to SECTION 11.05.
"Bank Cleandown" shall have the meaning given such term in SECTION 2.15.
"Banking Day" means any day on which commercial banks are not authorized
or required to close in New York City and Chicago, and whenever such day relates
to a Eurodollar Loan or notice with respect to any Eurodollar Loan, a day on
which dealings in Dollar deposits are also carried out in the London interbank
market.
"Borrower Cleandown" shall have the meaning given such term in SECTION
2.15.
"Borrowing" means the incurrence of one or more Loans of the same
type from one or more Banks on the same day and, in the case of Loans having an
Interest Period, having the same Interest Period.
"Borrowing Base" shall mean, as at any date, the sum of (a) 70% of the
aggregate amount of Eligible Receivables at said date plus (b) 40% of the
aggregate value of Eligible Inventory at said date, provided, that for purposes
of the Borrowing Base as of the last day of each April, May, June, July and
August, the Eligible Inventory percentage shall be 50%. The "value" of Eligible
Inventory shall be determined at the lower of cost or market in accordance with
GAAP, except that cost shall be determined on a first-in-first-out basis.
"Borrowing Base Certificate" shall mean a certificate of a Financial
Officer of the Borrower, substantially in the form of EXHIBIT 6.08(L) and
appropriately completed.
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"Cayman" means Signature 1A (Cayman), Ltd., by John Hancock Mutual Life
Insurance Company, Portfolio Advisor (together with any transferee, successor or
assigns).
"Closing Date" means the date this Agreement has been executed by the
Borrower, the Banks and the Agent.
"CoBank" means CoBank, ACB.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means, with respect to each Bank, the obligation of such
Bank to make its Eurodollar and Variable Rate Loans under this Agreement,
through and including November 30, 1997, in the aggregate principal amount
following, as such amount may be reduced or otherwise modified from time to
time:
The Chase Manhattan Bank: $ 32,500,000;
Fleet Bank: $ 30,000,000;
Manufacturers & Traders Trust Company: $ 25,000,000;
Harris Trust and Savings Bank: $ 25,000,000;
Rabobank Nederland: $ 10,000,000;
The Sumitomo Bank, Limited: $ 10,000,000;
National Bank of Canada: $ 10,000,000;
The Fuji Bank, Ltd.: $ 7,500,000;
-------------
Total: $150,000,000.
As of December 1, 1997, "Commitment" means, with respect to each Bank,
the obligation of such Bank to make its Eurodollar and Variable Rate Loans under
this Agreement in the aggregate principal amount following, as such amount may
be reduced or otherwise modified from time to time:
The Chase Manhattan Bank: $ 28,165,000;
Fleet Bank: $ 26,000,000;
Manufacturers & Traders Trust Company: $ 21,667,000;
Harris Trust and Savings Bank: $ 21,667,000;
Rabobank Nederland: $ 8,667,000;
The Sumitomo Bank, Limited: $ 8,667,000;
National Bank of Canada: $ 8,667,000;
The Fuji Bank, Ltd: $ 6,500,000;
------------
Total: $130,000,000.
Provided, however, that the Commitment of each Bank may be reduced temporarily
each calendar year, pro rata in accordance with SECTION 2.15.
"Competitive Bid Loan" shall have the meaning given such term in SECTION
2.13.
"Competitive Bid Note" means a promissory note of the Borrower in the
form of EXHIBIT 2.02B, executed pursuant to SECTION 2.02 and evidencing
Competitive Bid Loans made by a Bank hereunder.
"Consent and Agreement" has the meaning set forth in SECTION 5.10.
"Consolidated Current Assets" means Current Assets of the Borrower and
its Consolidated Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Current Liabilities" means Current Liabilities of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any fiscal period of the Borrower,
an amount equal to (A) the sum for such fiscal period of Consolidated Net Income
(Loss) and, to the extent subtracted in determining such Consolidated Net Income
(Loss), provisions for (i) taxes based on income, (ii) Interest Expense, and
(iii) depreciation and amortization expense minus (B) any items of gain (or plus
any items of loss) which were included in determining such Consolidated Net
Income (Loss) and were (x) not realized in the ordinary course of business
(whether or not classified as "ordinary" by GAAP), or (y) resulting from
minority investments plus (C) $15,078,000 for the non-recurring write-off that
occurred in the second Fiscal Quarter of 1996 plus (D) $4,279,000 capital gain
on the sale of the Peabody property located in Peabody, Massachusetts that
occurred in second Fiscal Quarter of 1996.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its
Consolidated Subsidiaries, as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal period of
the Borrower, the Consolidated net income (or loss) of the Borrower and its
Consolidated Subsidiaries for such period (taken as a single accounting period)
determined in conformity with GAAP, but excluding therefrom (to the extent
otherwise included therein) (i) any gains or losses, together with any related
provision for taxes, realized upon any sale of assets other than in the ordinary
course of business and (ii) any income or loss of any Person accrued prior to
the date such Person becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any Subsidiary or all or substantially all of
such Person's assets are acquired by the Borrower or any Subsidiary.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in
accordance with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Total Liabilities" means the total liabilities of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Current Assets" means all assets of the Borrower treated as current
assets in accordance with GAAP.
"Current Liabilities" means all liabilities of the Borrower treated as
current liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or within one year after the date in which the
determination is made and (b) installment and sinking fund payments required to
be made within one year after the date on which the determination is made, but
excluding all such liabilities or obligations which are renewable or extendable
at the option of the Borrower to a date more than one year from the date of
determination; provided, however, that Current Liabilities shall include the
outstanding principal balance of all Loans.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price of
property or services (except trade payables in the ordinary course of business);
(c) Unfunded Benefit Liabilities of such Person (if such Person is not the
Borrower, determined in a manner analogous to that of determining Unfunded
Benefit Liabilities of the Borrower); (d) the amount available for drawing under
any outstanding standby letters of credit issued for the account of such Person,
less the principal amount of any other Debt secured by such letters of credit;
(e) obligations arising under acceptance facilities; (f) guaranties,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss; (g) obligations secured by any Lien on property of such Person; and (h)
obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount payable by the Borrower under this
Agreement or any Note that is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period from and
including the due date, to, but excluding the date on which such amount is paid
in full equal to 1% above the Variable Rate as in effect from time to time plus
the Margin (if any) (provided that, if the amount so in default is principal of
a Fixed Rate Loan and the due date thereof is a day other than the last day of
the Interest Period therefor, the "Default Rate" for such principal shall be,
for the period from and including the due date and to but excluding the last day
of the Interest Period therefor, 2% above the interest rate for such Loan as
provided in SECTION 2.10 hereof and, thereafter, the rate provided for above in
this definition).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Eligible Inventory" shall mean, as at any date, all inventory owned by
the Borrower that is required to be reflected on a consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries prepared in accordance with GAAP.
"Eligible Receivables" shall mean, as at any date, the aggregate amount
of all receivables owned by the Borrower (net of bad debt reserves) that are
required to be reflected on a consolidated balance sheet of Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Eurodollar Loan" means any Loan, other than a Spread Loan, when and
to the extent the interest rate therefor is determined on the basis of the
Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan, and for any Spread
Loan whose Interest Rate Basis is a Eurodollar Rate, for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to the quotient of (i) the Fixed Base
Rate for such Loan for such Interest Period, divided by (ii) one minus the
Reserve Requirement for such Loan for such Interest Period.
"Event of Default" has the meaning given such term in SECTION 9.01.
"Facility Documents" means this Agreement, the Notes, the Security
Agreement, the Intercreditor Agreement, the Pillsbury Subordination Agreement,
the ss. 1111(b) Agreement, the Consent and Agreement, the Authorization Letter,
and any amendments to any of the foregoing that may hereafter be executed from
time to time.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions as
published by the Federal Reserve Bank of New York for such day (or for any day
that is not a Banking Day, for the immediately preceding Banking Day).
"Financial Officer" shall mean any of the chief executive officer, vice
president, finance or chief accounting officer.
"Fiscal Quarter" means the approximately 13-week period ending on a
Saturday near the end of June, September and December of each year, as
established by the Borrower, and the period beginning on the day following the
last day of each December Fiscal Quarter and ending on the next March 31.
"Fiscal Year" means the twelve month period beginning each April 1 and
ending the following March 31.
"Fixed Base Rate" means, with respect to any Interest Period for a
Borrowing of Eurodollar Loans or of Spread Loans whose Interest Rate Basis is a
Eurodollar Rate, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted at approximately 11:00 a.m. London time by the
principal London branch of the Reference Bank two Banking Days prior to the
first day of such Interest Period for the offering to leading banks in the
London interbank market of Dollar deposits in immediately available funds, (a)
in the case of a Borrowing of Eurodollar Loans, for a period, and in an amount,
comparable to the Interest Period and principal amount of the Eurodollar Loan
which shall be made by such Reference Bank and outstanding during such Interest
Period, and (b) in the case of a Borrowing of Spread Loans based on the
Eurodollar Rate, for a period comparable to the Interest Period of such Spread
Loans and in an amount obtained by dividing the Reference Bank's Commitment by
the total amount of all Commitments and multiplying the same by the maximum
aggregate amount of all of such Spread Loans having that Interest Period.
"Fixed Rate Loan" means any Eurodollar or Competitive Bid Loan.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property which could reasonably be expected to
have a Material Adverse Effect.
"Funded Debt" means, with respect to any Person, all Debt of such Person
for money borrowed which by its terms matures more than one year from the date
as of which such Funded Debt is incurred, and any Debt of such Person for money
borrowed maturing within one year from such date which is renewable or
extendable at the option of the obligor to a date beyond one year from such date
(whether or not theretofore renewed or extended), including any such
indebtedness renewable or extendable at the option of the obligor under, or
payable from the proceeds of other indebtedness which may be incurred pursuant
to, the provisions of any revolving credit agreement or other similar agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
SECTION 5.05 (except for changes concurred in by the Borrower's independent
public accountants).
"GE Capital" means General Electric Capital Corporation and its
successors and assigns as a party to the GE Capital Reimbursement Agreement.
"GE Capital Liens" means Liens against the Secured Bond Collateral
granted to GE Capital, pursuant to the GE Capital Reimbursement Agreement, to
secure Borrower's obligations to GE Capital under the GE Capital Reimbursement
Agreement.
"GE Capital LOC's" means letters of credit issued by BankBoston, N.A.,
at the request of GE Capital, to the trustees for the holders of the Secured
Bonds to support payments of principal of and interest on the Secured Bonds and
the purchase price of Secured Bonds tendered or required to be tendered.
"GE Capital Reimbursement Agreement" means the Master Reimbursement
Agreement and the related Letter of Credit Agreement, each dated as of September
15, 1997 among Borrower, GE Capital, and BankBoston, N.A. (copies of which are
attached as EXHIBIT 5.10(G)) pursuant to which (a) GE Capital agreed to cause
BankBoston, N.A. to issue the GE Capital LOC's in replacement of the ABN LOC's,
(b) the Borrower agreed to reimburse GE Capital for any reimbursement
obligations of GE Capital to BankBoston, N.A. related to the issuance of the GE
Capital LOC's and (c) the Borrower agreed to reimburse BankBoston, N.A. for
draws against GE Capital LOC's for which GE Capital fails to reimburse
BankBoston, N.A..
"Hazardous Materials" means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, harmful or toxic or a pollutant or contaminant under or pursuant to
any Environmental Law, including any mixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Insurance Company Financing" has the meaning set forth in SECTION 5.10(A).
"Insurance Company Loan Documents" has the meaning set forth in SECTION 5.10(A).
"Insurance Company Note Agreement" has the meaning set forth in SECTION 5.10(A).
"Intercreditor Agreement" has the meaning set forth in SECTION 5.10(D).
"Interest Expense" shall mean, for any period, the sum, for the Borrower
and its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) all interest in respect of Debt accrued or capitalized
during such period (whether or not actually paid during such period), minus
(b) all interest income during such period.
"Interest Period" means, with respect to any Fixed Rate Loan, the period
commencing on the date such Loan is made, converted from another type of Loan or
renewed, as the case may be, and ending, as the Borrower may select pursuant to
SECTION 2.06 or SECTION 2.13, as the case may be: (a) in the case of Eurodollar
Loans and Competitive Bid Loans having the Eurodollar Rate as the Interest Rate
Basis, on the numerically corresponding day in the first, second, third, or
sixth calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month; and
(b) in the case of other Competitive Bid Loans, on the date stipulated by
Borrower in its notice of Borrowing with respect thereto pursuant to SECTION
2.13.
"Interest Rate Basis" shall mean the Eurodollar Rate and/or such other
basis for determining an interest rate as the Borrower and the Agent shall agree
from time to time.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as such
for such type of Loan on its signature page hereof or such other office of such
Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Borrower as the office by which its Loans of such
type are to be made and maintained.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease (including any Capital Lease) or other
encumbrance or similar right of others, or any agreement to give any of the
foregoing.
"Loan" means any loan made by a Bank pursuant to SECTION 2.01, each
Competitive Bid Loan and each Swing Line Loan.
"LTI" means Mellon Bank, N.A., as Trustee for the Long-Term Investment
Trust (together with any transferee, successor or assigns).
"Margin" means for each Variable Rate and Eurodollar Loan, the
percentage for such type of Loan computed pursuant to EXHIBIT 1.01.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the
Borrower to perform its obligations under the Facility Documents, the Pillsbury
Documents, the $15,000,000 Loan Documents or the Insurance Company Loan
Documents, or (c) the validity or enforceability of any of the Facility
Documents or the rights or remedies of the Banks hereunder or thereunder.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Note" means each Revolving Note and Competitive Bid Note and the Swing
Line Note.
"NYNEX" means Mellon Bank, N.A., as Trustee for NYNEX Master Pension
Trust (together with any transferee, successor or assigns).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Percentage Interest" shall have the meaning set forth in the
Intercreditor Agreement.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Pillsbury" means The Pillsbury Company, a Delaware corporation.
"Pillsbury Alliance Agreement" means the First Amended and Restated
Alliance Agreement dated December 8, 1994, as amended February 10, 1995, among
Pillsbury, Grand Metropolitan Incorporated and Borrower, executed pursuant to
the Pillsbury Asset Purchase Agreement, and providing for the sale by Borrower
and the purchase by Pillsbury of certain products as provided therein, as the
same has been amended pursuant to Amendment No. 1 thereto dated as of February
25, 1997, providing for the substitution as a party of Grand Metropolitan Public
Limited Company for Grand Metropolitan Incorporated. (A copy of each such
agreement is attached as EXHIBIT 5.19(A)).
"Pillsbury Asset Purchase Agreement" (a copy of which is attached as
EXHIBIT 5.19) means that certain First Amended and Restated Asset Purchase
Agreement dated December 8, 1994, as amended February 10, 1995, between
Pillsbury and Borrower and providing for the purchase by Borrower from Pillsbury
of certain plants and related assets owned by Pillsbury.
"Pillsbury Documents" means, collectively, (i) the Pillsbury Alliance
Agreement, (ii) the Pillsbury Asset Purchase Agreement, (iii) the Pillsbury
Note, (iv) the Pillsbury Subordination Agreement, (v) the ss. 1111(b) Agreement,
(vi) the Security Agreement and each Mortgage, Security Agreement and Fixture
Financing Statement between Borrower and Pillsbury, each executed pursuant to
the Pillsbury Asset Purchase Agreement, and (vii) the Consent and Agreement.
"Pillsbury Note" (a copy of which is attached as EXHIBIT 5.19(B)) means
the 8% Secured Non-Recourse Subordinated Promissory Note, and any replacement
therefor, as amended by an Allonge dated September __, 1997, executed and
delivered by Borrower to Pillsbury in payment of part of the purchase price of
the assets sold to Borrower pursuant to the Pillsbury Asset Purchase Agreement,
in accordance with SECTION 2.02(A) of the Pillsbury Asset Purchase Agreement.
"Pillsbury Subordination Agreement" has the meaning set forth in SECTION
5.10(E).
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by
the Reference Bank at its principal office as its prime commercial lending rate.
"Principal Office" means the principal office of the Agent, presently
located at One Chase Plaza, Loan and Agency Service Group, 8th Floor, New York,
New York 10081.
"Reference Bank" means The Chase Manhattan Bank.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the Closing Date in United States federal, state or municipal laws or
regulations (including without limitation Regulation D) or the adoption or
making after such date of any interpretations, directives or requests applying
to a class of banks including such Bank of or under any United States, federal,
state or municipal laws or regulations (whether or not having the force of law)
by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Required Banks" means (i) Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, (ii) if all of the Commitments shall
have terminated, Banks holding at least 66 2/3% of the aggregate principal
amount of the Loans (including in the principal amount of Loans held by each
Bank, any participations in any Loans purchased by such Bank and held pursuant
to SECTION 2.14(F) or SECTION 10.17).
"Reserve Requirement" means, for any Interest Period for any Eurodollar
Loan and for any Spread Loan whose Interest Rate Basis is a Eurodollar Rate, the
average maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in New York
City with deposits exceeding $1,000,000,000 against "Eurocurrency liabilities"
(as such term is used in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks by reason of any Regulatory Change against
(i) any category of liabilities which includes deposits by reference to which
the Fixed Base Rate for such Eurodollar or Spread Loans is to be determined as
provided in the definition of "Fixed Base Rate" in this SECTION 1.01 or (ii) any
category of extensions of credit or other assets which include such Eurodollar
or Spread Loans.
"Revolving Loan" means a Eurodollar Loan or a Variable Rate Loan made
pursuant to SECTION 2.01(A).
"Revolving Note" means a promissory note of the Borrower executed
pursuant to SECTION 2.02 and evidencing the Revolving Loans of a Bank hereunder.
"ss. 1111(b) Agreement" has the meaning set forth in SECTION 5.10(F).
"Secured Bonds" means each of Ontario County (N.Y.) Industrial
Development Agency Refunding Revenue Bonds (Seneca Foods Corporation Project)
Series 1992; Wayne County Industrial Development Agency Refunding Revenue Bonds
(Seneca Foods Corporation Project) Series 1992, City of Janesville, Wisconsin
Industrial Development Refunding Revenue Bonds (Seneca Foods Corporation
Project) Series 1992; and City of Rochester, Minnesota Industrial Development
Agency Industrial Development Refunding Revenue Bonds (Seneca Foods Corporation
Project) Series 1992.
"Secured Bond Collateral" means the plants, and the real estate on which
such plants are located, described in the Secured Bonds and the fixtures,
furniture and equipment, including subsequently acquired items of fixtures,
furniture and equipment, located in such plants and on the sites on which the
plants are located.
"Security Agreement" has the meaning set forth in SECTION 5.10(C).
"Significant Subsidiary" means any Subsidiary (i) whose assets
constituted 10% or more of Consolidated Tangible Net Worth as of the end of the
most recent Fiscal Quarter or (ii) which contributed 10% or more of Borrower's
and its Consolidated Subsidiaries' net income, as determined on a consolidated
basis in accordance with GAAP, for any of the three Fiscal Years then most
recently ended.
"Spread" shall mean a percentage per annum in excess of, or less than,
an Interest Rate Basis.
"Spread Loans" shall mean Competitive Bid Loans with respect to which
the Borrower has requested that the Banks offer to make such Loans bearing
interest at a Spread over or under a specified Interest Rate Basis.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Swing Line Commitment" means the obligation of the Swing Line Lender to
make Swing Line Loans under this Agreement in an aggregate principal amount
which shall not exceed at any time the lesser of $5,000,000 or the amount of the
Swing Line Lender's Commitment.
"Swing Line Lender" means The Chase Manhattan Bank.
"Swing Line Loans" means any Loans made by the Swing Line Lender
pursuant to SECTION 2.14.
"Swing Line Note" means the promissory note of the Borrower payable to
the Swing Line Lender, executed pursuant to SECTION 2.02 and evidencing the
Swing Line Loans.
"Tangible Net Worth" means, at any date of determination thereof, the
excess of total assets of the Borrower over total liabilities of the Borrower,
excluding, however, from the determination of total assets, all intangible
assets required to be classified as such in accordance with GAAP, such as
organization costs, unamortized debt discount and expense, goodwill, patents,
trademarks, copyrights, contractual franchises and research and development
expenses.
"Termination Date" means June 30, 1999; provided that if such date is
not a Banking Day, the Termination Date shall be the next succeeding Banking Day
(or, if such next succeeding Banking Day falls in the next calendar month, the
next preceding Banking Day).
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Prime Rate for
such day and (b) the Federal Funds Rate for such day plus 1/2 of 1%.
"Variable Rate Loan" means any Loan, when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate.
Section 1.02. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
Section 1.03. TERMS GENERALLY. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". The word "will" shall be construed to have
the same meaning and effect as the word "shall". Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
ARTICLE 2. THE CREDIT.
Section 2.01. THE LOANS. (a) Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make Eurodollar Loans and
Variable Rate Loans (each of which shall be a "Loan" and all of which shall be
collectively referred to in this Agreement as "Revolving Loans" ) to the
Borrower from time to time from and including the date hereof up to but
excluding the Termination Date, up to but not exceeding in the aggregate
principal amount at any one time outstanding, the amount of its Commitment.
(b) Subject to the terms and conditions of this Agreement, each Bank may,
in its discretion, make Competitive Bid Loans and the Swing Line Lender agrees
to make Swing Line Loans.
(c) Variable Rate Loans, Eurodollar Loans, Competitive Bid Loans or
Swing Line Loan(s) shall each be deemed a separate "type" of Loans, and each
type of Loans of each Bank shall be made and maintained at such Bank's Lending
Office for such type of Loans.
(d) The Revolving Loans shall be due and payable on the Termination
Date, each Competitive Bid Loan shall be due and payable on the maturity date
therefor established pursuant to SECTION 2.13, and each Swing Line Loan shall be
due and payable on the date established pursuant to SECTION 2.14 .
(e) Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of all Loans outstanding shall at no time exceed the
amount of the Borrowing Base reflected on the most recent Borrowing Base
Certificate submitted pursuant to SECTION 6.08(L).
Section 2.02. THE NOTES. The Revolving Loans of each Bank shall be
evidenced by a single promissory note in favor of such Bank in the form of
EXHIBIT 2.02A (each a "Revolving Note"), the Competitive Bid Loans of each Bank
shall be evidenced by a single promissory note in favor of such Bank in the form
of EXHIBIT 2.02B (each a "Competitive Bid Note"), and the Swing Line Loans of
the Swing Line Lender shall be evidenced by a promissory note in its favor in
the form of EXHIBIT 2.02C (the "Swing Line Note"). The Notes shall each be dated
the date of this Agreement and shall be duly completed and executed by the
Borrower.
Section 2.03. PURPOSE. The Borrower shall use the proceeds of the Loans
for working capital and other proper corporate purposes, provided, that such
proceeds may not be used for any (a) voluntary, optional or otherwise
unscheduled (whether voluntary or involuntary) prepayment of any principal,
interest or other amount owed with respect to Funded Debt or (b) purchase, after
the Closing Date, of any Secured Bonds or of any other industrial development
bonds, or industrial development revenue bonds, issued for the benefit of
Borrower. Such proceeds shall not be used for the purpose, whether immediate,
incidental or ultimate, of buying or carrying "margin stock" within the meaning
of Regulation U.
Section 2.04. BORROWING PROCEDURES. The Borrower shall give the Agent
appropriate notice of each Borrowing to be made hereunder as provided in Section
2.08, SECTION 2.13 or SECTION 2.14. Not later than 1:00 p.m. New York City time
on the date of such Borrowing, each Bank shall, through its Lending Office and
subject to the conditions of this Agreement, make the amount of the Loan to be
made by it on such day available to the Agent at the Principal Office and in
immediately available funds for the account of the Borrower. The amount so
received by the Agent shall, subject to the conditions of this Agreement, be
made available to the Borrower, in immediately available funds, by the Agent
crediting an account of the Borrower designated by the Borrower and maintained
with the Agent at the Principal Office.
Section 2.05. PREPAYMENTS AND CONVERSIONS. (a) The Borrower shall have
the option to make prepayments of principal, or to convert one type of Loans
into another type of Loans, at any time or from time to time; provided that,
pursuant to this SECTION 2.05(A), (i) the Borrower shall give the Agent notice
of each such prepayment or conversion as provided in SECTION 2.08; (ii) Fixed
Rate Loans may be prepaid or converted only on the last day of an Interest
Period for such Loans; (iii) Competitive Bid Loans may not be converted into
another type of Loan, except as provided in SECTION 3.04; and (iv) Swing Line
Loans may not be converted into another type of Loans.
(b) If at any time the aggregate principal balance of all outstanding
Loans exceeds the Borrowing Base reflected on the latest Borrowing Base
Certificate delivered to the Agent pursuant to SECTION 6.08(L), Borrower shall
immediately give the Agent notice thereof. Such notice shall specify the amount
of such excess, shall constitute a notice of prepayment and shall specify the
Loan or Loans which Borrower intends to prepay, in whole or in part, in order to
eliminate such excess. Within four Banking Days after the date of such notice,
Borrower shall prepay the Loans designated in such notice.
(c) If a Termination Event (as defined in the Security Agreement) shall
occur, Borrower shall prepay to the Agent, for the account of the Banks, the
Loans in an amount equal to each Bank's Percentage Interest of the aggregate
amount of payments made by Pillsbury to the Borrower on the date of such
Termination Event in satisfaction of any account(s) receivable owed by Pillsbury
to the Borrower.
(d) Subject to the provisions of SECTION 2.12, Borrower shall have the
right to designate the Loan(s) to be prepaid pursuant to SECTIONS 2.05(B), OR
(C), provided that, (i) it shall be required to select the type(s) of Loans to
be prepaid in the following order of priority- Swing Line Loans, Competitive Bid
Loans and Revolving Loans; and (ii) Borrower shall be required to prepay pro
rata, in accordance with SECTION 10.16, in whole or in part to the extent
necessary to eliminate such excess, all Loans of a particular type that were
borrowed as part of the same Borrowing, if it prepays any Loans of such type and
Borrowing.
Section 2.06. INTEREST PERIODS; RENEWALS. (a) In the case of each Fixed
Rate Loan, the Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in SECTION 1.01, subject to
the following limitations: (i) no Interest Period may extend beyond the
Termination Date hereunder, (ii) no Interest Period shall have a duration less
than one month in the case of a Eurodollar Loan or a Spread Loan whose Interest
Rate Basis is the Eurodollar Rate, and if any such proposed Interest Period
would otherwise be for a shorter period, such Interest Period shall not be
available; (iii) if an Interest Period would end on a day which is not a Banking
Day, such Interest Period shall be extended to the next Banking Day, unless, in
the case of a Eurodollar Loan or a Spread Loan whose Interest Rate Basis is the
Eurodollar Rate, such Banking Day would fall in the next calendar month in which
event such Interest Period shall end on the immediately preceding Banking Day;
(iv) no more than eight Interest Periods of each Bank may be outstanding at any
one time.
(b) Upon notice to the Agent as provided in SECTION 2.08, the Borrower
may renew any Eurodollar Loans on the last day of the Interest Period therefor
as the same type of Loans with an Interest Period of the same or different
duration in accordance with the limitations provided above. If the Borrower
shall fail to give notice to the Agent of such a renewal, such Eurodollar Loan
shall automatically become a Variable Rate Loan on the last day of the current
Interest Period; provided that the foregoing shall not prevent the conversion of
any type of Eurodollar Loan into another type of Loans in accordance with
SECTION 2.05.
Section 2.07. CHANGES OF COMMITMENTS. The Borrower shall have the right
to reduce or terminate the amount of unused Commitments and/or the Swing Line
Commitment at any time or from time to time, provided that: (a) the Borrower
shall give notice of each such reduction or termination to the Agent as provided
in SECTION 2.08; and (b) each partial reduction shall be in an aggregate amount
at least equal to $10,000,000. The Commitments and the Swing Line Commitment
once reduced or terminated pursuant to this Section may not be reinstated.
Section 2.08. CERTAIN NOTICES. Notices by the Borrower to the Agent of
each Borrowing of Revolving Loans given pursuant to SECTION 2.04, and each
prepayment or conversion pursuant to SECTION 2.05 and each renewal pursuant to
SECTION 2.06(B), and each reduction or termination of the Commitments or the
Swing Line Commitments pursuant to SECTION 2.07 shall be irrevocable and shall
be effective on the Banking Day of receipt, if received by the Agent not later
than 12:00 noon New York City time, and otherwise, on the Banking Day following
the day of receipt, and (a) in the case of Borrowings and prepayments of,
conversions into and (in the case of Eurodollar Loans) renewals of (i) Variable
Rate Loans, given one Banking Day prior thereto; and (ii) Eurodollar Loans,
given three Banking Days prior thereto; and (b) in the case of reductions or
termination of the Commitments or the Swing Line Commitments, given three
Banking Days prior thereto. Each such notice shall specify the Loans to be
borrowed, prepaid, converted or renewed and the amount (subject to SECTION 2.09)
and type of the Loans to be borrowed, or converted, or prepaid or renewed (and,
in the case of a conversion, the type of Loans to result from such conversion
and, in the case of conversion into a Eurodollar Loan, the Interest Period
therefor) and the date of the Borrowing or prepayment, or conversion or renewal
(which shall be a Banking Day). Each such notice of reduction or termination
shall specify the amount of the Commitments or the Swing Line Commitments to be
reduced or terminated. Notices pursuant to SECTIONS 2.13 AND 2.14 shall be given
as provided in those Sections. The Agent shall promptly notify the Banks of the
contents of each such notice. Any notice given to the Agent hereunder shall be
confirmed promptly by telex, telecopy or other writing.
Section 2.09. MINIMUM AMOUNTS. Except for Borrowings which exhaust the
full remaining amount of the Commitments, prepayments or conversions which
result in the prepayment or conversion of all Loans of a particular type or
conversions made pursuant to SECTION 3.04, each Borrowing, prepayment,
conversion and renewal of principal of Loans of a particular type shall be in an
amount at least equal to $1,000,000 in the aggregate for all Banks (borrowings,
prepayments, conversions or renewals of or into Loans of different types or, in
the case of Fixed Rate Loans, having different Interest Periods at the same time
hereunder to be deemed separate borrowings, prepayments, conversions and
renewals for the purposes of the foregoing, one for each type of Interest
Period). Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of Fixed Rate Loans of each type having concurrent
Interest Periods shall be at least equal to $500,000 in the aggregate for each
Bank.
Section 2.10. INTEREST. (a) Interest shall accrue on the outstanding and
unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan is due at the following rates
per annum: (i) for a Variable Rate Loan, at a variable rate per annum equal to
the Variable Rate plus any applicable Margin, (ii) for a Eurodollar Loan, at a
fixed rate equal to the Eurodollar Rate plus the applicable Margin, (iii) for a
Competitive Bid Loan, at a fixed rate determined pursuant to SECTION 2.13, and
(iv) for a Swing Line Loan, at a rate determined pursuant to SECTION 2.14. If
the principal amount of any Loan and any other amount payable by the Borrower
hereunder or under the Note shall not be paid when due (at stated maturity, by
acceleration or otherwise), interest shall accrue on such amount to the fullest
extent permitted by law from and including such due date (which shall be two
Banking Days after receipt of a demand therefor, in the case of amounts owed
pursuant to SECTION 11.03) to but excluding the date such amount is paid in full
at the Default Rate.
(b) The interest rate on each Variable Rate Loan shall change when the
Variable Rate changes and interest on each such Loan shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. Interest on
each Fixed Rate Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall notify
the Borrower and the Banks.
(c) Accrued interest on each Loan shall be due and payable in arrears
upon any payment of principal or conversion of such Loan, and (i) for each
Variable Rate Loan, on the first day of each month, commencing the first such
date after such Loan; (ii) for each Fixed Rate Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest Period
greater than three months at three-month intervals after the first day of such
Interest Period; provided that interest accruing at the Default Rate shall be
due and payable from time to time on demand of the Agent.
Section 2.11. FEES. On the Closing Date, the Borrower shall pay to
the Agent for the account of each Bank an upfront fee of 6.25 basis points on
the amount of each Bank's Commitment up to the following amounts:
The Chase Manhattan Bank $37,500,000
Fleet Bank 32,500.000
Manufacturers and Traders Trust Company 20,000,000
Harris Trust and Savings Bank 12,500,000
RaboBank Nederland 12,500,000
The Fuji Bank, Ltd. 7,500,000
The Sumitomo Bank, Limited 7,500,000
National Bank of Canada 7,500,000
In the event that any Bank's Commitment on the Closing Date exceeds the
above amount, the Borrower shall pay an additional fee to the Agent for the
account of such Bank of 12.5 basis points on the amount by which such Bank's
Commitment exceeds the above amount.
In addition, the Borrower shall pay to the Agent for the account of each
Bank a Commitment fee on the daily average unused Commitment of such Bank,
without regard to any reduction in such Commitment as a result of any Bank
Cleandown, for the period from and including the date hereof to the earlier of
the date the Commitments are terminated or the Termination Date. Such Commitment
fee shall accrue at a rate per annum determined pursuant to EXHIBIT 1.01, and
shall be calculated on the basis of a year of 360 days for the actual number of
days elapsed. Neither any outstanding Competitive Bid Loan of a Bank nor any
outstanding Swing Line Loan of the Swing Line Lender shall reduce such Bank's
unused Commitment on which its Commitment fee is based. The accrued Commitment
fee shall be due and payable in arrears upon any reduction or termination of the
Commitments and on the last day of each Fiscal Quarter, commencing on the first
such date after the Closing Date.
Section 2.12. PAYMENTS GENERALLY. All payments under this Agreement or
the Notes shall be made in Dollars in immediately available funds not later than
1:00 p.m. New York City time on the relevant dates specified above (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Banking Day) to the Agent's account number 900-9-000002
maintained at the Principal Office for the account of the applicable Lending
Office of each Bank. The Agent, or any Bank for whose account any such payment
is to be made, may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account of the
Borrower with the Agent or such Bank, as the case may be, and any Bank so doing
shall promptly notify the Agent. The Borrower shall, at the time of making each
payment under this Agreement or the Notes, specify to the Agent the principal or
other amount payable by the Borrower under this Agreement or the Notes to which
such payment is to be applied (and in the event that it fails to so specify, or
if a Default or Event of Default has occurred and is continuing, the Agent may
apply such payment as it may elect in its sole discretion (subject to SECTION
10.16)). If the due date of any payment under this Agreement or the Notes would
otherwise fall on a day which is not a Banking Day, such date shall be extended
to the next succeeding Banking Day and interest shall be payable for any
principal so extended for the period of such extension. Each payment received by
the Agent hereunder or under any Note for the account of a Bank shall be paid
promptly to such Bank, in immediately available funds, for the account of such
Bank's Lending Office.
Section 2.13. COMPETITIVE BID LOANS. (a) On the terms and conditions set
forth in this SECTION 2.13, and in reliance upon the representations and
warranties of the Borrower set forth in this Agreement, each Bank, severally and
not jointly, agrees that Borrower may borrow a Loan or Loans (each a
"Competitive Bid Loan"), from time to time from and including the date hereof to
but excluding the Termination Date; provided that no Competitive Bid Loan shall
be made hereunder if, after giving effect thereto, the aggregate principal
amount of all Loans outstanding would exceed the lesser of the aggregate amount
of all Commitments or the Borrowing Base reflected on the most recent Borrowing
Base Certificate submitted pursuant to SECTION 6.08(L). Each Competitive Bid
Loan will be payable on the last day of the Interest Period therefor and no
Competitive Bid Loan shall be converted into another type of Loan, except
pursuant to SECTION 3.04.
(b) Whenever the Borrower decides to make a Borrowing of Competitive Bid
Loans hereunder, it shall give the Agent, not later than 12:00 noon New York
City time, on the fifth Banking Day prior to the date of such proposed
Borrowing, a written notice of Borrowing, which shall specify (i) the date of
the proposed Borrowing (which shall be a Banking Day) and the aggregate amount
thereof (which shall not be less than $1,000,000), (ii) the Interest Period and
maturity date for each Competitive Bid Loan comprising such Borrowing (which
maturity date shall be the last day of the Interest Period therefor), (iii)
whether the proposed Borrowing is to be a Borrowing of Absolute Rate Loans or
Spread Loans, and if it is to be Spread Loans, the Interest Rate Basis, and (iv)
any other terms to be applicable to such Competitive Bid Loans. Promptly after
receipt of such notice, the Agent shall provide each Bank with a copy thereof
and the Borrower shall pay the Agent a fee of $2,500 each time the Agent
provides the Banks with such a notice.
(c) Each Bank shall, if in its sole discretion it elects to do so,
irrevocably offer to make one or more Competitive Bid Loans to the Borrower as
part of such proposed Borrowing at a rate or rates of interest specified by such
Bank in its sole discretion and determined by such Bank independently of each
other Bank. Such offer shall be made by each offering Bank notifying the Agent
(which shall give prompt notice thereof to the Borrower) before 10:00 a.m. (New
York City time) on the date (the "Reply Date"), which is (i) in the case of the
Borrowing of Absolute Rate Loans, the Banking Day before and (ii) in the case of
a Borrowing of Spread Loans, four Banking Days before, the date of the proposed
Borrowing of Competitive Bid Loans, which notice shall state the minimum amount
and maximum amount of each proposed Competitive Bid Loan which such Bank thereby
offers to make, the rate or rates of interest therefor and such Bank's Lending
Office with respect to each such Competitive Bid Loan; provided that, if the
Agent in its capacity as a Bank shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer before 9:30 a.m. (New
York City time) on the Reply Date. The outstanding Competitive Bid Loans of a
Bank shall not reduce the amount of such Bank's unused Commitment. Consequently,
the aggregate amount of a Bank's outstanding Competitive Bid Loans plus its
other outstanding Loans may exceed its Commitment. If any Bank shall elect not
to make such an offer to make Competitive Bid Loans, such Bank shall so notify
the Agent, before 10:00 a.m. (New York City time) on the Reply Date, and such
Bank shall not be obligated to, and shall not, make any Competitive Bid Loan as
part of the proposed Borrowing of Competitive Bid Loans; provided, that the
failure by any Bank to give such notice shall not cause such Bank to be
obligated to make any Competitive Bid Loan as part of such proposed Borrowing.
(d) The Borrower shall, in turn, before (i) in the case of Absolute
Rate Loans, 12:00 noon (New York City time) or (ii) in the case of Spread
Loans, 1:00 p.m. (New York City time) on the Reply Date, either
(1) Cancel the proposed Borrowing of Competitive Bid Loans by
giving the Agent notice to that effect, which shall be irrevocable, or
(2) Accept one or more of the offers made by any Bank or Banks
pursuant to CLAUSE (C) above by giving notice (in writing or by telephone
promptly confirmed in writing) to the Agent, which shall be irrevocable, of the
amount of each Competitive Bid Loan (which amount shall be equal to or greater
than the minimum amount, and equal to or less than the maximum amount, notified
to the Borrower by the Agent on behalf of such Bank for such Competitive Bid
Loans pursuant to CLAUSE (C) above) to be made by each Bank as part of the
Borrowing of such Competitive Bid Loans, and reject any remaining offers made by
Banks pursuant to CLAUSE (C) above by giving the Agent notice to that effect;
provided, that acceptance of offers may only be made on the basis of ascending
Absolute Rates (in the case of Absolute Rate Loans) or Spreads (in the case of
Spread Loans), in each case commencing with the lowest rate so offered;
provided, however, that if offers are made by two or more Banks at the same rate
and acceptance of all such equal offers would result in a greater principal
amount of Competitive Bid Loans being accepted than the aggregate principal
amount request by the Borrower, the Borrower shall have the right in its sole
discretion to accept one or more such equal offers in their entirety and reject
the other equal offer or offers or to allocate acceptance among all such equal
offers (but giving effect to the minimum and maximum amounts specified for each
such offer pursuant to CLAUSE (C) above).
(e) If the Borrower notifies the Agent that the proposed Borrowing of
Competitive Bid Loans is canceled pursuant to CLAUSE (D)(1) above, the Agent
shall give prompt notice thereof to the Banks and such Borrowing shall not be
made.
(f) If the Borrower accepts one or more of the offers made by any Bank
or Banks, pursuant to CLAUSE (D)(2) above, the Agent shall in turn promptly
notify (i) each Bank that has made an offer as described in CLAUSE (C) above, of
the date and aggregate amount of the Borrowing of Competitive Bid Loans and
whether or not any offer or offers made by such Bank pursuant to CLAUSE (C)
above have been accepted by the Borrower and (ii) each Bank that is to make a
Competitive Bid Loan as part of such Borrowing, of the amount of such
Competitive Bid Loan to be made by such Bank as part of such Borrowing.
(g) The Borrower and the Banks agree that, during the existence of any
Default or Event of Default by reason of any failure by Borrower to comply with
ARTICLE 8, the Borrower will not request, and no Bank will extend, any Borrowing
of a Competitive Bid Loan.
Section 2.14. SWING LINE LOANS. (a) On the terms and conditions set
forth in this Agreement, and in reliance upon the representations and warranties
of the Borrower set forth herein, the Swing Line Lender agrees to make, from
time to time loans to Borrower, which may be borrowed, repaid and reborrowed in
accordance with the terms hereof, from and including the date hereof to but
excluding the earlier of the Termination Date or the date on which all
Commitments are either terminated or reduced to zero pursuant to SECTION 2.07,
up to but not exceeding in the aggregate principal amount at any one time
outstanding, the amount of its Swing Line Commitment (the "Swing Line Loans");
provided, that no Swing Line Loan shall be made hereunder if, after giving
effect thereto, the aggregate outstanding principal amount of all Loans would
exceed the lesser of the total of all Commitments or the Borrowing Base
reflected on the most recent Borrowing Base Certificate submitted pursuant to
SECTION 6.08(L); and provided further that no Swing Line Loan shall be made
hereunder if, after giving effect thereto, the aggregate outstanding principal
amount of Swing Line Loans, plus the aggregate outstanding principal amount of
the Swing Line Lender's Revolving Loans, would exceed the Commitment of the
Swing Line Lender. Outstanding Swing Line Loans shall not reduce the unused
portion of the Commitment of the Swing Line Lender, for the purposes of SECTION
2.11.
(b) All Swing Line Loans shall bear interest at the rate agreed to from
time to time between the Borrower and the Swing Line Lender. Borrower shall not
be entitled to convert any Swing Line Loans into any other type of Loans. Swing
Line Loans made on any date shall be in aggregate minimum amount of $500,000.
(c) Whenever the Borrower desires to borrow a Swing Line Loan, it shall
give the Agent and the Swing Line Lender, no later than 1:00 p.m. (New York City
time) on the proposed date for such Borrowing, telephonic (confirmed promptly in
writing) or written notice of such Borrowing, which shall be irrevocable and
shall specify (i) the principal amount of the Swing Line Loans to be made, (ii)
the date of such Borrowing (which shall be a Banking Day), (iii) the maturity
date for such Swing Line Loan (which shall be payable on demand and in any event
no later than seven (7) days after the making thereof or, if earlier, the
Termination Date), and (iv) the agreed upon interest rate for such Swing Line
Loan.
(d) Promptly after receiving a notice of Borrowing pursuant to CLAUSE
(C) above, the Agent shall provide each Bank with a copy thereof (or telephonic
notice of the contents thereof confirmed promptly by providing a copy thereof).
(e) The Swing Line Lender shall in its sole and absolute discretion be
entitled to require a Borrowing of Variable Rate Loans hereunder, the proceeds
of which shall be applied to the pre-payment of all Swing Line Loans then
outstanding, by giving notice (by telephone promptly confirmed in writing) to
the Agent, the Borrower and the Banks to such effect, which notice shall set
forth the aggregate outstanding principal amount of such Swing Line Loans. Upon
the giving of such notice, the Borrower shall be deemed to have timely given a
notice of Borrowing to the Agent requesting Revolving Loans which are Variable
Rate Loans on the Banking Day following such notice, and the Banks shall, on
such date, make Revolving Loans which are Variable Rate Loans in the aggregate
amount of such Swing Line Loans, the proceeds of which shall be applied by the
Agent to the pre-payment of such Swing Line Loans; provided, that for the
purposes solely of such Borrowing, the conditions precedent set forth in ARTICLE
4, and the minimum Borrowing requirements of SECTION 2.09, shall not be
applicable. Unless the Borrower shall have notified the Agent and the Swing Line
Lender prior to 11:00 a.m. (New York City time) on the date which is six (6)
days following the date on which any Swing Line Loan has been made by the Swing
Line Lender that the Borrower intends to reimburse the Swing Line Lender with
funds other than the proceeds of Revolving Loans, the Agent shall give such
notice on behalf of the Swing Line Lender.
(f) Upon the giving of notice to the following effect to the Agent and
to each Bank by the Swing Line Lender, in its sole and absolute discretion, any
deemed notice of Borrowing given under CLAUSE (E) above pursuant to which no
Borrowing has yet been made shall be deemed canceled and each Bank shall be
deemed to, and hereby agrees to, irrevocably purchase from the Swing Line Lender
a participation in its Swing Line Loans in the aggregate outstanding principal
amount equal to such Bank's pro rata share of the aggregate principal amount of
such Swing Line Loans, and shall make available to the Swing Line Lender an
amount equal to its respective participation in the Swing Line Lender's Swing
Line Loans in Dollars and immediately available funds, at the office of the
Swing Line Lender specified by notice to the Agent and each Bank in such notice,
not later than 1:00 p.m. (New York City time) on the second Banking Day after
the giving of such notice. In the event that any Bank fails to make available to
the Swing Line Lender the amount of such Bank's participation as provided in
this CLAUSE (F), the Swing Line Lender shall be entitled to recover such amount
on demand from such Bank together with interest at the Federal Funds Rate set by
the Agent for three (3) Banking Days and thereafter at the Prime Rate, and the
Swing Line Lender shall, until such time as all such amounts have been paid, be
deemed to have outstanding a Swing Line Loan in the amount of such unpaid
participation for all purposes of this Agreement other than those provisions
requiring Banks to purchase an interest therein. The Swing Line Lender shall
distribute to each other Bank which has paid all amounts payable by it under
this CLAUSE (F) with respect to the Swing Line Loans made by the Swing Line
Lender, such other Banks' share of all payments received by the Swing Line
Lender in respect of such Swing Line Loans when such payments are received. The
obligations of the Banks under this CLAUSE (F) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the fact that a
Default or an Event of Default shall have occurred and be continuing or any
other circumstances whatsoever.
Section 2.15. CLEANDOWN. (a) The Borrower shall reduce the aggregate
principal amount of all Loans outstanding to $30,000,000 or less for a period of
thirty consecutive days between November 1 of each year and April 30 of the
following year (the "Borrower Cleandown") and shall provide a notice of such
reduction as required by SECTION 2.15(B). If, as of April 1 of any year, a
Borrower Cleandown has not been completed in the five months immediately
preceding such date, the Commitments of the Banks shall be reduced pro rata so
that the aggregate amount of all Commitments is reduced to $30,000,000 as of
such date, and such reduction shall continue through April 30 of such year (the
"Bank Cleandown"). However, in the event that as of any April 1 a Borrower
Cleandown has begun and is continuing, but has not continued for a consecutive
thirty day period, then the Bank Cleandown shall terminate once the Borrower
Cleandown has continued for thirty consecutive days. On completion of each Bank
Cleandown, the Commitments shall be restored to the levels that existed as of
the March 31 immediately preceding such Bank Cleandown.
(b) Within five Banking Days after the completion of each Borrower
Cleandown, the Borrower shall notify the Agent as to the date on which such
Borrower Cleandown was completed. The Agent shall review each such notice and if
it concludes that the Borrower Cleandown was completed as indicated in the
latter such notice, it shall so notify the Borrower and each Bank within five
Banking Days of such notice. If the Agent concludes that the Borrower Cleandown
was not properly completed, it shall so notify the Borrower, within such five
day period, specifying the date(s) during the period of the asserted Borrower
Cleandown on which the aggregate principal balance of all Loans exceeded
$30,000,000.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. ADDITIONAL COSTS. (a) The Borrower shall pay directly to
each Bank from time to time on demand such amounts as such Bank may determine to
be necessary to compensate it for any costs which such Bank reasonably
determines are attributable to its making or maintaining any Fixed Rate Loans
under this Agreement or any of its Notes with respect to Fixed Rate Loans or its
obligation to make any such Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Bank under this
Agreement or any of such Notes in respect of any of such Loans (other than taxes
imposed on the overall net income of such Bank or of its Lending Office for any
of such Loans by the jurisdiction in which such Bank has its principal office or
such Lending Office); or (ii) imposes or modifies any reserve, special deposit,
deposit insurance or assessment, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Bank (including any of such Loans or
any deposits referred to in the definition of "Fixed Base Rate" in SECTION
1.01); or (iii) imposes any other condition affecting this Agreement or any of
such Notes (or any of such extensions of credit or liabilities). Each Bank will
notify the Borrower of any event occurring after the date of this Agreement
which will entitle such Bank to compensation pursuant to this SECTION 3.01(A) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. If any Bank requests compensation from the Borrower
under this SECTION 3.01(A), or under SECTION 3.01(C), the Borrower may, by
notice to such Bank (with a copy to the Agent), require that such Bank's Loans
of the type with respect to which such compensation is requested be converted in
accordance with SECTION 3.04.
(b) Without limiting the effect of the foregoing provisions of this
SECTION 3.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Bank
to make or renew, and to convert Loans of any other type into, Loans of such
type hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect (and all Loans of such type held by such Bank then outstanding
shall be converted in accordance with SECTION 3.04).
(c) Without limiting the effect of the foregoing provisions of this
SECTION 3.01 (but without duplication), the Borrower shall pay directly to each
Bank from time to time on request such amounts as such Bank may reasonably
determine to be necessary to compensate such Bank for any costs which it
determines are attributable to the maintenance by it or any of its affiliates
pursuant to any law or regulation of any jurisdiction or any interpretation,
directive or request (whether or not having the force of law and whether in
effect on the date of this Agreement or thereafter) of any court or governmental
or monetary authority of capital in respect of its Loans hereunder or its
obligation to make Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
such Bank to a level below that which it could have achieved but for such law,
regulation, interpretation, directive or request). Each Bank will notify the
Borrower if it is entitled to compensation pursuant to this SECTION 3.01(C) as
promptly as practicable after it determines to request such compensation.
(d) Determinations and allocations by a Bank for purposes of this
SECTION 3.01 of the effect of any Regulatory Change pursuant to subsections (a)
or (b), or of the effect of capital maintained pursuant to subsection (c), on
its costs of making or maintaining Loans or its obligation to make Loans, or on
amounts receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate such Bank under
this SECTION 3.01, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
Section 3.02. LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if:
(a) the Agent determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "Fixed Base Rate" in SECTION 1.01 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for any type of Fixed Rate Loans as provided in this Agreement;
or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Fixed Base Rate" in SECTION 1.01 upon the basis of which
the rate of interest for any type of Fixed Rate Loans is to be determined do not
adequately cover the cost to the Banks of making or maintaining such Loans;
then the Agent shall give the Borrower and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks shall be under no
obligation to make or renew Loans of such type or to convert Loans of any other
type into Loans of such type and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Loans of the affected type,
either prepay such Loans or convert such Loans into another type of Loans in
accordance with SECTION 2.05.
Section 3.03. ILLEGALITY. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to (a) honor its obligation to make or renew Eurodollar Loans hereunder
or convert Loans of any type into Loans of such type, or (b) maintain Eurodollar
Loans hereunder, then such Bank shall promptly notify the Borrower thereof (with
a copy to the Agent) and such Bank's obligation to make or renew Eurodollar
Loans, as the case may be, and to convert other types of Loans into Loans of
such type hereunder shall be suspended until such time as such Bank may again
make, renew, or convert and maintain such affected Loans and such Bank's
outstanding Eurodollar Loans, as the case may be, shall be converted in
accordance with SECTION 3.04.
Section 3.04. CERTAIN CONVERSIONS PURSUANT TO SECTIONS 3.01 AND 3.03. If
the Loans of any Bank of a particular type (Loans of such type being herein
called "Affected Loans" and such type being herein called the "Affected Type")
are to be converted pursuant to SECTION 3.01 OR 3.03, such Bank's Affected Loans
shall be automatically converted into Variable Rate Loans on the last day(s) of
the then current Interest Period(s) for the Affected Loans (or, in the case of a
conversion required by SECTION 3.01(B) OR 3.03, on such earlier date as such
Bank may specify to the Borrower with a copy to the Agent) and, unless and until
such Bank gives notice as provided below that the circumstances specified in
SECTION 3.01 OR 3.03 which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Variable
Rate Loans;
(b) all Loans which would otherwise be made or renewed by such Bank as
Loans of the Affected Type shall be made instead as Variable Rate Loans and all
Loans of such Bank which would otherwise be converted into Loans of the Affected
Type shall be converted instead into (or shall remain as) Variable Rate Loans;
and
(c) if Loans of other Banks of the Affected Type are subsequently
converted into Loans of another type (other than Variable Rate Loans), such
Bank's Variable Rate Loans shall be automatically converted on the conversion
date into Loans of such other type to the extent necessary so that, after giving
effect thereto, all Loans held by such Bank and the Banks whose Loans are so
converted are held pro rata (as to principal amounts, types and Interest
Periods) in accordance with their respective Commitments.
If such Bank gives notice to the Borrower (with a copy to the Agent)
that the circumstances specified in SECTION 3.01 OR 3.03 which gave rise to the
conversion of such Bank's Affected Loans pursuant to this SECTION 3.04 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type are outstanding, such Bank's
Variable Rate Loans shall be automatically converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Loans of the Affected
Type to the extent necessary so that, after giving effect thereto, all Loans
held by the Banks holding Loans of the Affected Type and by such Bank are held
pro rata (as to principal amounts, types and Interest Periods) in accordance
with their respective Commitments.
Section 3.05. CERTAIN COMPENSATION. The Borrower shall pay to the Agent
for the account of each Bank, upon the request of such Bank through the Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense which such Bank determines
is attributable to:
(a) any payment, prepayment, conversion or renewal of a Fixed Rate Loan
made by such Bank on a date other than the last day of an Interest Period for
such Loan (whether by reason of required prepayment, required conversion or
acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or renew a Fixed
Rate Loan to be made, converted into or renewed by such Bank on the date
specified therefor in the relevant notice under SECTION 2.04, 2.05, 2.06 OR
2.13, as the case may be.
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid, prepaid, converted
or renewed or not borrowed, converted or renewed for the period from and
including the date of such payment, prepayment or conversion or failure to
borrow, convert or renew to but excluding the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or renew, to but excluding the last day of the Interest Period for such Loan
which would have commenced on the date specified therefor in the relevant
notice) at the applicable rate of interest for such Loan provided for herein;
over (ii) the amount of interest (as reasonably determined by such Bank) such
Bank would have bid on the first day of such Interest Period in the London
interbank market (if such Loan is a Eurodollar Loan) or other relevant market
(if interest on such Loan is not based on the Eurodollar Rate) for Dollar
deposits for amounts comparable to such principal amount and maturities
comparable to such Interest Period.
ARTICLE 4. CONDITIONS PRECEDENT.
Section 4.01. DOCUMENTARY CONDITIONS PRECEDENT. The effectiveness of
this Agreement and the obligations of the Banks to make the Loans constituting
the initial Borrowing hereunder are subject to the condition precedent that the
Agent shall have received on or before the date of such effectiveness and of
such Loans each of the following, in form and substance satisfactory to the
Agent and its counsel:
(a) the Notes duly executed by the Borrower;
(b) the Authorization Letter, in the form of EXHIBIT 4.01(B) duly
executed by the Borrower;
(c) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Closing Date, attesting to all corporate action taken by the
Borrower, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Facility Documents and each other
document to be delivered pursuant to this Agreement;
(d) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Closing Date, certifying the names and true signatures of
the officers of the Borrower authorized to sign the Facility Documents and the
other documents to be delivered by the Borrower under this Agreement;
(e) a certificate of a duly authorized officer of the Borrower, dated
the Closing Date, stating that the representations and warranties in ARTICLE 5
are true and correct on such date as though made on and as of such date and that
no event has occurred and is continuing which constitutes a Default or Event of
Default;
(f) a favorable opinion of counsel for the Borrower, dated the Closing
Date, in substantially the form of EXHIBIT 4.01(F) and as to such other matters
as the Agent or any Bank may reasonably request; and
(g) the upfront fee, payable to the Agent for the account of each Bank,
calculated pursuant to the terms of SECTION 2.11.
Section 4.02. ADDITIONAL CONDITIONS PRECEDENT. The obligations of the
Banks to make any Loans pursuant to a Borrowing (including the initial Borrowing
under this Agreement) shall be subject to the further conditions precedent that
on the date of such Loans:
(a) the following statements shall be true:
(i) the representations and warranties contained in ARTICLE 5
are true and correct on and as of the date of such Loans as though made on and
as of such date; and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Loans; and
(b) the Agent shall have received such approvals, opinions or documents
as the Agent or any Bank may reasonably request.
Section 4.03. DEEMED REPRESENTATIONS. Each notice of Borrowing hereunder
and acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty that the statements contained in
SECTION 4.02(A) are true and correct both on the date of such notice and, unless
the Borrower otherwise notifies the Agent prior to such Borrowing, as of the
date of such Borrowing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 5.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. Each
of the Borrower and its Subsidiaries is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its assets and to transact the business
in which it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, except where the failure
to so qualify would not reasonably be expected to have a Material Adverse
Effect.
Section 5.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by the Borrower of the Facility Documents
have been duly authorized by all necessary corporate action and do not and will
not: (a) require any consent or approval of its stockholders; (b) contravene its
charter or by-laws; (c) violate any provision of, or require any filing,
registration, consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
or any of its Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower, except for the Lien granted pursuant to the Security Agreement; or (f)
cause the Borrower (or any Significant Subsidiary or Affiliate, as the case may
be) to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
Section 5.03. LEGALLY ENFORCEABLE AGREEMENTS. Each Facility Document is,
or when delivered under this Agreement will be, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally.
Section 5.04. LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in any one case or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 5.05. FINANCIAL STATEMENTS. The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at March 31, 1997, and the
related consolidated income statement and statements of cash flows and changes
in stockholders' equity of the Borrower and its Consolidated Subsidiaries for
the Fiscal Year then ended, and the accompanying footnotes, together with the
opinion thereon, of Deloitte & Touche, independent certified public accountants,
and the interim consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at June 28, 1997, and the related consolidated income statement
and statements of cash flows and changes in stockholders' equity for the three
month period then ended, copies of which have been furnished to each of the
Banks, are complete and correct and fairly present the financial condition of
the Borrower and its Consolidated Subsidiaries as at such dates and the results
of the operations of the Borrower and its Consolidated Subsidiaries for the
periods covered by such statements, all in accordance with GAAP consistently
applied (subject to year end adjustments in the case of the interim financial
statements). There are no liabilities of the Borrower or any of its Consolidated
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements or in the notes thereto, other than liabilities arising
in the ordinary course of business since March 31, 1997. No information, exhibit
or report furnished by the Borrower to the Banks in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not materially misleading. Since March 31, 1997, there has
been no material adverse change in the condition (financial or otherwise),
business, operations or prospects of the Borrower and its Subsidiaries taken as
a whole.
Section 5.06. OWNERSHIP AND LIENS. Each of the Borrower and its
Consolidated Subsidiaries has title to, or valid leasehold interests in, all of
its properties and assets, real and personal, including the properties and
assets, and leasehold interests reflected in the financial statements referred
to in SECTION 5.05 (other than any properties or assets disposed of in the
ordinary course of business), and none of the properties and assets owned by the
Borrower or any of its Subsidiaries and none of its leasehold interests is
subject to any Lien, except as disclosed in such financial statements or as may
be permitted hereunder.
Section 5.07. TAXES. Each of the Borrower and its Significant
Subsidiaries has filed all tax returns (federal, state and local) required to be
filed and has paid all taxes, assessments and governmental charges and levies
shown thereon to be due, including interest and penalties, except for those
being contested in good faith and by appropriate proceedings, and for which
adequate financial reserves have been established by Borrower. The federal
income tax liability of the Borrower and its Subsidiaries has been audited by
the Internal Revenue Service and has been finally determined and satisfied for
all taxable years up to and including the year ended 1993.
Section 5.08. ERISA. Each Plan, and, to the best knowledge of the
Borrower, without making a specific inquiry, each Multiemployer Plan, is in
compliance in all material respects with, and has been administered in all
material respects in compliance with, the applicable provisions of ERISA, the
Code and any other applicable Federal or state law, and no event or condition is
occurring or exists concerning which the Borrower would be under an obligation
to furnish a report to the Bank in accordance with SECTION 6.08(H) hereof. As of
the most recent valuation date for each Plan except as set forth in EXHIBIT
5.08, each Plan was "fully funded", which for purposes of this SECTION 5.08
shall mean that the fair market value of the assets of the Plan is not less than
the present value of the accrued benefits of all participants in the Plan,
computed on a Plan termination basis. To the best knowledge of the Borrower, no
Plan has ceased being fully funded as of the date these representations are made
with respect to any Loan under this Agreement.
Section 5.09. SUBSIDIARIES AND OWNERSHIP OF STOCK. EXHIBIT 5.09 is a
complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of the Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been validly issued, is fully paid and
nonassessable and is owned by the Borrower free and clear of all Liens.
Section 5.10. CREDIT ARRANGEMENTS. EXHIBIT 5.10 is a complete and
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Exhibit. (A transaction that constitutes an Alliance Inventory
Sale is not an extension of credit within the meaning of this Section.) A true
and complete copy of:
(a) the Note Agreement dated February 23, 1995, and Amendments No. 1 and
2 thereto, (collectively, the "Insurance Company Note Agreement") between
Borrower and The Prudential Insurance Company of America and John Hancock Mutual
Life Insurance Company and of the promissory notes, each of which notes was
executed pursuant thereto (collectively, the "Insurance Company Loan
Documents"), are attached as EXHIBIT 5.10(A), and each of such documents is in
full force and effect, (the loan transactions described therein being referred
to in this Agreement as the "Insurance Company Financing");
(b) the $15,000,000 Note Agreement dated September __, 1997 between
Borrower and Cayman and LTI and NYNEX and CoBank and the promissory notes, each
of which was executed pursuant thereto (collectively, the "$15,000,000 Loan
Documents"), are attached as EXHIBIT 5.10(B), each of such documents is in full
force and effect, and the loan transactions described therein (the "15,000,000
Financing") have been consummated in accordance therewith;
(c) the Pledge, Security and Assignment Agreement, including Amendments
No. 1 and 2 thereto (collectively, the "Security Agreement"), duly executed by
Borrower and the Agent, as the Collateral Agent named therein, along with the
Consent and Agreement, in the form attached to Amendment No. 1 to the Security
Agreement (the "Consent and Agreement") and the financing statements duly
executed by all parties as required therein, are attached as EXHIBIT 5.10(C);
(d) the Intercreditor Agreement (the "Intercreditor Agreement"), duly
executed by each Bank, and by each Purchaser under the Insurance Company Note
Agreement, and by the Agent, as the Collateral Agent thereunder, and
acknowledged by Borrower, are attached as EXHIBIT 5.10(D);
(e) an Agreement Regarding Subordination, (the "Pillsbury Subordination
Agreement"), duly executed by Pillsbury, by the Agent, on behalf of the Banks,
by each Purchaser under the Insurance Company Note Agreement and by Cayman, LTI,
NYNEX and CoBank is attached as EXHIBIT 5.10(E);
(f) an Agreement Relating to 11 U.S.C. ss. 1111(b), (the "ss. 1111(b)
Agreement"), duly executed by Pillsbury, by the Agent, as Collateral Agent, by
each Bank, by each Purchaser under the Insurance Company Note Agreement, and by
Cayman, LTI, NYNEX and CoBank, and agreed and acknowledged by Borrower is
attached as EXHIBIT 5.10(F);
(g) the GE Capital Reimbursement Agreement is attached as EXHIBIT
5.10(G); and
(h) Security Agreement dated September 15, 1997 providing for a security
interest in the fixtures, furniture and equipment covered by the GE Capital
Liens and included in the Secured Bond Collateral; and all financing statements
filed in any secretary of state's office with respect to the GE Capital Liens,
are attached as EXHIBIT 5.10(H); and the description of such Secured Bond
Collateral contained in such financing statements is in all respects identical
to the description of the Secured Bond Collateral contained in all other
financing statements filed with respect to the GE Capital Liens.
Section 5.11. OPERATION OF BUSINESS. Each of the Borrower and its
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, necessary to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
neither the Borrower nor any of its Subsidiaries is in violation of any valid
rights of others with respect to any of the foregoing, which violation may
reasonably be expected to have a Material Adverse Effect.
Section 5.12. HAZARDOUS MATERIALS. The Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not reasonably be expected to
have a Material Adverse Effect. The Borrower and each of its Subsidiaries are in
compliance with the terms and conditions of all such permits, licenses and
authorizations, and are also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations
schedules and timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
failure to comply would not reasonably be expected to have a Material Adverse
Effect.
In addition, (i) except as set forth in EXHIBIT 5.12 hereto, or (ii)
except to the extent that the same has not had and may not reasonably be
expected to have a Material Adverse Effect:
(a) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by the Borrower
or any of its Subsidiaries to have any permit, license or authorization required
in connection with the conduct of the business of the Borrower or any of its
Subsidiaries or with respect to any generation, treatment, storage, recycling,
transportation, release or disposal, or any release as defined in 42 U.S.C. ss.
9601(22) ("Release"), of any HAZARDOUS MATERIALS generated by the Borrower or
any of its Subsidiaries and Borrower has no knowledge of any condition which
could reasonably be expected to trigger any of the above events, writings or
penalties;
(b) Neither the Borrower nor any of its Subsidiaries has handled any
Hazardous Material, other than as a generator, on any property now or previously
owned or leased by the Borrower or any of its Subsidiaries; and
(c) Neither the Borrower nor any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location which
is listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), listed
for possible inclusion on the National Priorities List by the Environmental
Protection Agency in the Comprehensive Environmental Response and Liability
Information System as provided by 40 C.F.R. ss. 300.5 ("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 claims against the
Borrower or any of its Subsidiaries for clean-up costs, remedial work, damages
to natural resources or for personal injury claims, including, but not limited
to, claims under CERCLA.
(d) No Hazardous Material generated by the Borrower or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released by the
Borrower or any of its Subsidiaries.
(e) No oral or written notification of a Release of a Hazardous material
has been filed by or on behalf of the Borrower or any of its Subsidiaries and no
property now or previously owned or leased by the Borrower or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS or on any similar state list of sites
requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any Environmental
laws on any of the real property or properties owned or leased by the Borrower
or any of its Subsidiaries, and no government actions have been taken or are in
process which could subject any of such properties to such Liens and neither the
Borrower nor any of its Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(g) There have been no environmental investigations, studies, audits,
test, reviews or other analyses conducted by or which are in the possession of
the Borrower or any of its Subsidiaries in relation to any property or facility
now or previously owned or leased by the Borrower or any of its Subsidiaries
which have not been made available to the Banks.
Section 5.13. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Each of the
Borrower and its Significant Subsidiaries has satisfied all judgments and
neither the Borrower nor any of its Subsidiaries is in default with respect to
any judgment, writ, injunction, decree, law, rule or regulation of any court,
arbitrator or federal, state, municipal or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
default has or may reasonably be expected to have a Material Adverse Effect.
Section 5.14. NO DEFAULTS ON OTHER AGREEMENTS. To Borrower's knowledge,
neither the Borrower nor any of its Subsidiaries is a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction which Borrower reasonably
anticipates will have a Material Adverse Effect. Neither the Borrower nor any of
its Subsidiaries is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument material to its business to which it is a party, which
default has or may reasonably be expected to have a Material Adverse Effect.
Section 5.15. LABOR DISPUTES AND ACTS OF GOD. Neither the business nor
the properties of the Borrower or of any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which has or may reasonably be
expected to have a Material Adverse Effect.
Section 5.16. GOVERNMENTAL REGULATION. Neither the Borrower nor any of
its Significant Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Investment Company Act of 1940, the Federal
Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
Section 5.17. PARTNERSHIPS. Neither the Borrower nor any of its
Significant Subsidiaries is a partner in any partnership.
Section 5.18. NO FORFEITURE. Neither the Borrower nor any of its
Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which could result in a Forfeiture
Proceeding and no Forfeiture Proceeding against any of them is pending or
threatened.
Section 5.19. PILLSBURY TRANSACTIONS. The Pillsbury Asset Purchase
Agreement, the Pillsbury Alliance Agreement and the Pillsbury Note, a true and
complete copy of each of which is attached to this Agreement as EXHIBITS 5.19,
5.19(A) and 5.19(B), respectively, the Pillsbury Subordination Agreement, the
ss. 1111(b) Agreement and the Consent and Agreement have been duly and validly
authorized, executed and delivered by each of the parties thereto (except the
Agent and the Banks), are in full force and effect and are enforceable by the
Agent and the Banks, as the case may be, in accordance with their respective
terms, except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity. Neither Borrower nor, to
Borrower's knowledge, Pillsbury or Grand Metropolitan plc has in any material
respect failed to perform or otherwise breached or defaulted under any provision
of any of the Pillsbury Documents, which breach or default has not been cured or
waived with the written consent of the Banks; no event of default, or condition
or event which with notice or lapse of time or both would constitute an event of
default, under any of the Pillsbury Documents, has occurred and is continuing;
no amount of principal or interest has been paid, credited or otherwise
satisfied (whether by payment, offset or any other method) prior to the due date
thereof, or in violation of the Pillsbury Note or of this Agreement; and no
notice of termination has been given, and no event has occurred which would
entitle either party to terminate, under Article XIX of the Pillsbury Alliance
Agreement.
ARTICLE 6. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Borrower shall:
Section 6.01. MAINTENANCE OF EXISTENCE. Except as otherwise permitted
pursuant to this Agreement, preserve and maintain, and cause each of its
Significant Subsidiaries to preserve and maintain, its corporate existence and
good standing in the jurisdiction of its incorporation, and qualify and remain
qualified; and cause each of its Subsidiaries to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to so qualify will not reasonably be expected
to have a Material Adverse Effect.
Section 6.02. CONDUCT OF BUSINESS. Continue, and cause each of its
Significant Subsidiaries to continue, to engage in a business of the same
general type as conducted by it on the date of this Agreement, except as set
forth in EXHIBIT 7.06.
Section 6.03. MAINTENANCE OF PROPERTIES. Maintain and cause each of its
Significant Subsidiaries to maintain all of its properties, (tangible and
intangible) necessary in the proper conduct of its business in good working
order and condition, ordinary wear and tear excepted.
Section 6.04. MAINTENANCE OF RECORDS. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all financial transactions of the Borrower and its Significant
Subsidiaries.
Section 6.05. MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Significant Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
Section 6.06. COMPLIANCE WITH LAWS. Comply, and cause each of its
Significant Subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property, except for those
being contested in good faith and by appropriate proceedings and for which
adequate financial reserves have been established by Borrower.
Section 6.07. RIGHT OF INSPECTION. On reasonable notice, at any
reasonable time during normal business hours and from time to time, permit the
Agent or any Bank or any agent or representative thereof, to examine and make
copies and abstracts from the records and books of account of, and visit the
properties of, the Borrower and any of its Subsidiaries, and to discuss the
affairs, finances and accounts of the Borrower and any such Subsidiary with any
of their respective officers and directors and the Borrower's independent
accountants.
Section 6.08. REPORTING REQUIREMENTS. Furnish directly to each of the
Banks:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and
a consolidated income statement and statements of cash flows and changes in
stockholders' equity of the Borrower and its Consolidated Subsidiaries for such
Fiscal Year, all in reasonable detail and stating in comparative form the
respective consolidated figures for the corresponding date and period in the
prior Fiscal Year and all prepared in accordance with GAAP and accompanied by an
opinion thereon acceptable to the Agent and each of the Banks by Deloitte &
Touche or other independent accountants of national standing selected by the
Borrower; provided, however, that delivery (within the time period specified
above) of the Annual Report of the Borrower on Form 10-K for such Fiscal Year
filed with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this SECTION 6.08(A).
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such Fiscal Quarter and a consolidated income statement and
statements of cash flows and changes in stockholders' equity, of the Borrower
and its Consolidated Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter, all in
reasonable detail and stating in comparative form the respective consolidated
figures for the corresponding date and period in the previous Fiscal Year and
all prepared in accordance with GAAP and certified by a Financial Officer of the
Borrower (subject to year-end adjustments); provided, however, that (i) delivery
(within the time period specified above) of the Quarterly Report of the Borrower
on Form 10-Q for such Fiscal Quarter filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this SECTION 6.08(B).
(c) promptly upon receipt thereof, notice of receipt of any report
submitted to the Borrower or any of its Subsidiaries by independent certified
public accountants in connection with any examination of the financial
statements of the Borrower or any such Subsidiary made by such accountants,
which report is addressed to the Board of Directors of the Borrower or any
committee thereof; and, on the request of any Bank, the opportunity for such
Bank to review such report at the offices of the Borrower;
(d) simultaneously with the delivery of the financial statements
referred to above, a certificate of a Financial Officer of the Borrower (i)
certifying that to the best of his knowledge no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, (ii) and with computations
demonstrating compliance with the covenants contained in ARTICLE 8;
(e) simultaneously with the delivery of the annual financial statements
referred to in SECTION 6.08(A), a certificate of the independent public
accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(f) promptly after the commencement thereof, notice of all actions,
suits, and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (i) affecting the
Borrower or any of its Subsidiaries which, if determined adversely to the
Borrower or such Subsidiary, could reasonably be expected to have a Material
Adverse Effect, or (ii) relating to the enforceability, validity or enforcement
of any provision of any of the Pillsbury Documents;
(g) as soon as possible and in any event within 10 days after obtaining
actual knowledge of the occurrence of each Default or Event of Default a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days after the
Borrower has actual knowledge that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan have occurred or exist and
that such events have had or may reasonably be expected to have a Material
Adverse Effect, a statement signed by a senior financial officer of the Borrower
setting forth details respecting such event or condition and the action, if any,
which the Borrower or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given to PBGC
by the Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event (provided that a failure
to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA including, without limitation, the failure to make
on or before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section
412(d) of the Code) and any request for a waiver under Section 412(d) of
the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
of the Borrower or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days;
(vi) the adoption of an amendment to any Plan that pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Borrower or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Borrower or any ERISA Affiliate
to incur liability under Title IV of ERISA or under Sections 412(c)(11)
or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement.
(i) promptly after the furnishing thereof, copies of any statement or
report furnished to any other party pursuant to the terms of any indenture, loan
or credit or similar agreement and not otherwise required to be furnished to the
Banks pursuant to any other clause of this SECTION 6.08, provided that, the
Borrower shall not be required, pursuant to this SECTION 6.08(I), to furnish
copies of statements or reports delivered pursuant to paragraphs 5A(1)(iv), (v),
and (vi) of the Insurance Company Note Agreement;
(j) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower or any of its
Subsidiaries sends to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements which the Borrower or any such
Subsidiary files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national securities
exchange;
(k) promptly after the commencement thereof or promptly after the
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
(l) as soon as available and in any event within twenty (20) days after
the end of each calendar month, a Borrowing Base Certificate, in the form of
EXHIBIT 6.08(L) as at the last day of such month, and from time to time as
requested by the Agent or the Required Banks (but not more frequently than twice
in any Fiscal Year), a report of an independent collateral auditor (which may
be, or be affiliated with, one of the Banks) with respect to the Eligible
Receivables and Eligible Inventory Components included in the Borrowing Base as
at the end of any month, which report shall indicate that, based upon a review
by such auditors of the Eligible Receivables (including, without limitation,
verification with respect to the amount, aging, identity and credit of the
respective account debtors and the billing practices of the Borrower and its
Subsidiaries) and Eligible Inventory (including, without limitation,
verification as to the value, location and respective types), the information
set forth in the Borrowing Base Certificate delivered by the Borrower as at the
end of such month is accurate and complete in all material respects.
(m) within 10 days after the date as of which financial information is
required to be delivered pursuant to SECTION 6.08 (A) AND (B), a report as of
the end of the Fiscal Quarter covered by such financial information setting
forth Borrower's sales, for such Fiscal Quarter and for the current year to
date, and inventory, as of the end of such Fiscal Quarter, separately for all of
its Green Giant brand products and for all other products.
(n) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Agent
or any Bank may from time to time reasonably request.
Section 6.09. PILLSBURY DOCUMENTS/INSURANCE COMPANY LOAN DOCUMENTS.
Comply in all material respects with all of its material obligations under each
of the Pillsbury Documents and the Insurance Company Loan Documents, and notify
the Agent as soon as possible, and in any event within twenty days, with respect
to Pillsbury Documents, and within ten days with respect to Insurance Company
Loan Documents, after the Borrower knows or has reason to know (i) of any
material failure to perform, breach or default by Pillsbury or Borrower, or any
other event of default, under any of the Pillsbury Documents, or (ii) of any
event of default, or any event or condition which with notice or lapse of time
or both would constitute an event of default, under the Insurance Company Loan
Documents.
Section 6.10. $15,000,000 LOAN DOCUMENTS. Comply in all material
respects with all of its material obligations under each of the $15,000,000 Loan
Documents, and notify the Agent as soon as possible, and in any event within ten
days, after the Borrower has reason to know of any event of default, or any
event or condition which with notice or lapse of time or both would constitute
an event of default, under the $15,000,000 Loan Documents.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Borrower shall not:
Section 7.01. DEBT. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist
any Debt, except:
(a) Debt of the Borrower under this Agreement or the Notes;
(b) Debt described in EXHIBIT 5.10, including renewals, extensions or
refinancings thereof, provided that the principal amount thereof does not
increase;
(c) Debt of the Borrower subordinated on terms satisfactory to the Banks
to the Borrower's obligations under this Agreement and the Notes;
(d) Debt of the Borrower to any such Subsidiary; or Debt of any
Subsidiary to the Borrower or another such Subsidiary, to the extent permitted
by SECTION 7.04;
(e) Debt in respect of letters of credit issued for the account of the
Borrower or any such Subsidiary in an aggregate face amount outstanding at any
time of up to $50,000,000; and
(f) Additional Debt for borrowed money, provided (i) that the aggregate
amount of "priority" Debt does not exceed 10% of Consolidated Tangible Net
Worth; and (ii) that Borrower shall not be permitted to incur or suffer to exist
Debt under the GE Capital Reimbursement Agreement related to any GE Capital LOC
issued with respect to any issue of Secured Bonds unless any outstanding ABN LOC
related to such issue of Secured Bonds is simultaneously canceled, with the
effect that all obligations of Borrower under the ABN Reimbursement Agreement
related to any such ABN LOC, and any Lien securing such obligations, are also
released and of no further force or effect. For the purposes of this SECTION
7.01(F), "priority" Debt shall mean all unsecured Funded Debt, and all secured
Debt, of Borrower and its Consolidated Subsidiaries, other than (x) Debt secured
by Liens permitted under clauses (a) through (i) and clause (k) of SECTION 7.03
and (xx) Debt listed on EXHIBIT 5.10, without giving effect to any amendment,
modification, supplement, increase, extension, renewal or refunding after the
Closing Date.
Section 7.02. GUARANTIES, ETC. Assume, guarantee, endorse or otherwise
be or become directly or contingently responsible or liable, or permit any of
its Subsidiaries to assume, guarantee, endorse or otherwise be or become
directly or indirectly responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except (i) for guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, and (ii) for Debt of the kind described above that
is permitted under either SECTION 7.01 or SECTION 7.04.
Section 7.03. LIENS. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(a) Liens pursuant to the Security Agreement securing the Loans
hereunder; the Insurance Company Financing and the $15,000,000 Financing;
(b) Liens for taxes or assessments or other government charges or levies
if not yet due and payable or if due and payable if they are being contested in
good faith by appropriate proceedings and for which appropriate reserves are
maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than 30 days, or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;
(d) Liens under workers' compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens for amounts aggregating less than
$5,000,000 arising in connection with court proceedings; provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(h) Liens securing obligations of such a Subsidiary to the Borrower or
another such Subsidiary;
(i) Liens pursuant to the security agreement and mortgages described in
clause (vi) of the definition of Pillsbury Documents, securing Borrower's
obligations under the Pillsbury Documents, but not the extension of such Liens
to other property, or the granting of such Liens to secure the extension of the
maturity, refunding or modification of such obligations, in whole or in part; or
(j) purchase money Liens on any property hereafter acquired or any Lien
on property existing at the time of such acquisition, whether or not assumed, or
a Lien hereafter incurred in connection with any conditional sale or other title
retention agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is acquired by
the Borrower or any such Subsidiary in the ordinary course of its
business and the Lien on any such property is created contemporaneously
with or prior to such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 100% of the lesser of cost or fair market
value as of the time of acquisition of the property covered thereby to
the Borrower or such Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the property so
acquired and fixed improvements thereon; and
(iv) the obligations secured by such Lien are permitted by the
provisions of SECTION 7.01; and
(k) Existing Liens described in EXHIBIT 7.03(K), but not the extension
of such Liens to other property, or the granting of such Liens to secure the
refunding of the obligations secured thereby;
provided, however, that the Borrower shall not be permitted to create, incur,
assume or suffer to exist any GE Capital Liens related to any issue of Secured
Bond unless any Lien in favor of ABN Amro Bank securing Borrower's obligations
under the ABN Reimbursement Agreement related to such issue of Secured Bonds has
been released and is of no further force or effect.
Section 7.04. INVESTMENTS. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person, (including any Subsidiary) or purchase
or otherwise acquire, or permit any such Subsidiary to purchase or otherwise
acquire, any capital stock, assets, obligations or other securities of, make any
capital contribution to, or otherwise invest in, or acquire any interest in, any
Person, except: (a) direct obligations of the United States of America or any
agency thereof with maturities of one year or less from the date of acquisition;
(b) commercial paper of a domestic issuer rated at least "A-1" by Standard &
Poor's Corporation or "P-1" by Moody's Investors Service, Inc.; (c) certificates
of deposit denominated in Dollars, with maturities of one year or less from the
date of acquisition and issued (i) by any Bank or (ii) by any commercial bank
organized under the laws of the United States, or any foreign Bank operating
within the United States of America, or any Canadian bank (in any case having
capital and surplus in excess of $500,000,000 or the Canadian dollar equivalent,
and a short term debt rating of A-1 or P-1 and a long term debt rating of A or
higher, or with respect to any Canadian bank, the rating equivalent thereof);
(d) stock, obligations or securities received in settlement of debts (created in
the ordinary course of business) owing to the Borrower or any such Subsidiary;
(e) any Acceptable Acquisition permitted by SECTION 7.10;(f) capital stock of
Moog, Inc. with a cost basis of $716,225; and (g) investments in the
obligations, stock or securities of any other Person, provided that (i) no
amount so invested after the date hereof may exceed the amount then available
for such purposes pursuant to CLAUSE (D) of SECTION 7.05 and (ii) Borrower shall
not purchase after the Closing Date any Secured Bonds or any other industrial
development bonds, or industrial development revenue bonds, issued for the
benefit of Borrower.
Section 7.05. DIVIDENDS. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Borrower or another
such Subsidiary, except that: (a) the Borrower may declare and deliver dividends
and make distributions payable solely in common stock of the Borrower; (b) the
Borrower may purchase or otherwise acquire shares of its capital stock by
exchange for, or out of the proceeds received from a substantially concurrent
issue of new shares of, its capital stock; (c) Borrower may pay in cash
semi-annual dividends on its 6% Cumulative Preferred Stock, par value $.25 per
share (200,000 shares outstanding) and on its 10% cumulative Preferred Stock,
par value $.25 per share (807,240 shares outstanding) that are accrued but
unpaid as of the Closing Date, in the amount of $34,771.50 ($11,590.50 accrued
as of each January 1, 1996, July 1, 1996, and January 1, 1997), and on and after
July 1, 1997 Borrower may pay in cash future semi-annual dividends on the same
shares at the same rate; and (d) Borrower may declare and pay cash dividends
with respect to, and purchase or redeem, the shares of its outstanding capital
stock, provided that no Default or Event of Default then exists or would be
created thereby and provided further that, after giving effect to any proposed
cash dividend, investment under CLAUSE (G) of SECTION 7.04, or purchase or
redemption of shares, the total of (i) the aggregate amount of all cash
dividends and other cash distributions declared or paid after July 31,1994,
including all dividends on the shares described in CLAUSE (C) of this Section,
payment of which is permitted by such clause (regardless of whether actually
paid), plus (ii) the aggregate amount of investments made after July 31,1994 of
the kind described in CLAUSE (G) of SECTION 7.04, plus (iii) the excess of the
aggregate amount expended, directly or indirectly, after July 31, 1994, for the
redemption, purchase or other acquisition of any shares of its stock over the
aggregate amount received after July 31, 1994 as the net cash proceeds of the
sale of any shares of its stock, shall not exceed the sum of $1,000,000 plus 50%
(or minus 100% in the case of a deficit) of the net income of the Borrower and
its Consolidated Subsidiaries, as determined on a consolidated basis in
accordance with GAAP, for the period commencing on August 1, 1994 and
terminating at the end of the last Fiscal Quarter preceding the date of any
proposed dividend declaration or payment, investment, or purchase or redemption,
as the case may be. There shall not be included in the computations under CLAUSE
(D) of this Section, (x) dividends paid, or distributions made, in stock of the
Borrower; or (xx) exchanges of stock of one or more classes of the Borrower for
other stock of the Borrower, except to the extent that cash or other value is
involved in such exchange.
Section 7.06. SALE OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, assign, transfer
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests), except: (a) for inventory
disposed of in the ordinary course of business; (b) for sales of inventory that
qualify as Alliance Inventory Sales; (c) for the sale or other disposition of
assets no longer used or useful in the conduct of its business; (d) that any
such Subsidiary may sell, lease, assign, or otherwise transfer its assets to the
Borrower; (e) that Borrower may sell or otherwise dispose of for fair
consideration, in the judgment of Borrower's Board of Directors, all or any of
the shares of Moog, Inc. described in CLAUSE (F) of SECTION 7.04, the Secured
Bonds presently owned by Borrower and described in EXHIBIT 7.06, and the other
properties described in EXHIBIT 7.06; and (f) for other assets, provided that as
of any date, the aggregate net value of all other assets so disposed of
subsequent to the date hereof constitutes less than 10% of Consolidated Tangible
Net Worth as of the end of the Fiscal Year then most recently ended, and that as
of the date of any disposition, the other assets so disposed of contributed less
than 10% of the net income of the Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP, for any of the three
Fiscal Years then most recently ended.
Section 7.07. STOCK OF SUBSIDIARIES, ETC. Sell or otherwise dispose of
any shares of capital stock of any of its Significant Subsidiaries, except in
connection with a transaction permitted under SECTION 7.10, or permit any such
Subsidiary to issue any additional shares of its capital stock, except
directors' qualifying shares.
Section 7.08. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any of its Subsidiaries
to enter into any transaction, including, without limitation, the purchase, sale
or exchange of property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
Section 7.09. MERGERS, ETC. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of its Significant Subsidiaries to do so except
that: (a) any such Subsidiary may merge into or transfer assets to the Borrower;
(b) any Subsidiary may merge into or consolidate with or transfer all or
substantially all of its assets to any other Subsidiary; (c) the Borrower may
effect any Acceptable Acquisition permitted by SECTION 7.10; and (d) Borrower
may dispose of assets as permitted pursuant to SECTION 7.06.
Section 7.10. ACQUISITIONS. Without the prior written consent of the
Required Banks, which consent may not be unreasonably withheld, make any
Acquisition other than an Acceptable Acquisition.
"Acceptable Acquisition" means any separate individual Acquisition which
has been either (a) approved by the Board of Directors of the corporation which
is the subject of such Acquisition or (b) recommended by such Board to the
shareholders of such corporation, and in each case (i) does not involve the
acquisition of fixed and intangible assets whose purchase price aggregates more
than $10,000,000, and (ii) is made under circumstances in which no Default or
Event of Default will either exist or result therefrom, and (iii) does not cause
the aggregate purchase price of all Acquisitions made in any one Fiscal Year to
exceed $25,000,000.
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries (a) acquires equity securities (or warrants, options or
other rights to acquire such securities) of any corporation other than the
Borrower or any corporation which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing, or (b) makes any corporation a Subsidiary
of the Borrower, or causes any such corporation to be merged into the Borrower
or any of its Subsidiaries, in any case pursuant to a merger, purchase of assets
or any reorganization providing for the delivery or issuance to the holders of
such corporation's then outstanding securities, in exchange for such securities,
of cash or securities of the Borrower or any of its Subsidiaries, or a
combination thereof, or (c) purchases all or substantially all of the business
or assets of any corporation.
Section 7.11. NO ACTIVITIES LEADING TO FORFEITURE. Neither the Borrower
nor any of its Significant Subsidiaries or Affiliates shall engage in the
conduct of any business or activity which could result in a Forfeiture
Proceeding.
Section 7.12. NO PREPAYMENT OF INSURANCE COMPANY FINANCING. Pay any
amount of principal or interest owed pursuant to any of the Insurance Company
Loan Documents, or permit it to be paid, credited or otherwise satisfied
(whether by payment, offset or any other method and whether by voluntary or
mandatory prepayment or otherwise) prior to the regularly scheduled payment date
therefor set forth in the Insurance Company Loan Documents, as the same may be
amended as permitted under SECTION 7.13, provided that (i) Borrower may make
such prepayments with the proceeds of refinancings or of replacement loans
borrowed from the same lenders, as long as the maturity date thereof occurs
after the Termination Date, and (ii) in addition, Borrower may make unscheduled
prepayments which, when added to any prepayments made pursuant to CLAUSE (II) of
SECTION 7.14, total not more than $12,500,000 in any Fiscal Year, as long as
Borrower complies with SECTION 2.03 and no Default or Event of Default then
exists or would result therefrom.
Section 7.13. AMENDMENT OF PILLSBURY DOCUMENTS/ INSURANCE COMPANY LOAN
DOCUMENTS. Without the express prior written consent of the Required Banks, (i)
agree to any alteration or amendment of any of the Insurance Company Loan
Documents, or any replacement therefor resulting from a prepayment permitted
pursuant to SECTION 7.12, that changes the maturity dates of the loans made
thereunder to any new maturity date that occurs on or prior to the Termination
Date; or (ii) amend, modify, supplement or waive any term, condition or other
provision of the Pillsbury Note, the security agreement and mortgages referred
to in CLAUSE (VI) of the definition of Pillsbury Documents (except for mortgage
modifications contemplated by SECTION 10.06 of the Pillsbury Asset Purchase
Agreement or any amendment which reduces indebtedness under the Pillsbury Note
as a result of forgiveness by Pillsbury or provision for conversion of some or
all of that indebtedness into equity securities of Borrower), or Article XIX or
any other material provision, of the Pillsbury Alliance Agreement except a
modification or waiver for the purpose of permitting an Alliance Inventory Sale;
or (iii) consent, pursuant to the third sentence of the first paragraph of
SECTION 22.1 of the Pillsbury Alliance Agreement, to an assignment by Pillsbury
of the Pillsbury Alliance Agreement to an assignee that does not have long term
debt that is rated BBB or better by Standard and Poors Corporation or Baa or
better by Moody's Investor Services, Inc.
Section 7.14. NO PREPAYMENT OF $15,000,000 FINANCING. Pay any amount of
principal or interest owed pursuant to any of the $15,000,000 Financing Loan
Documents, or permit to be paid, credited or otherwise satisfied (whether by
payment, offset or any other method and whether by voluntary or mandatory
prepayment or otherwise) prior to the regularly scheduled payment date therefor
set forth in the $15,000,000 Loan Documents, as the same may be amended as
permitted under SECTION 7.15, provided that (i) Borrower may make such
prepayments with the proceeds of refinancings or of replacement loans borrowed
from the same lenders, as long as the maturity date thereof occurs after the
Termination Date, and (ii) in addition, Borrower may make unscheduled
prepayments which, when added to any prepayments made pursuant to CLAUSE (II) of
SECTION 7.12, total not more than $12,500,000 in any Fiscal Year, as long as
Borrower complies with SECTION 2.03 and no Default or Event of Default then
exists or would result therefrom.
Section 7.15. AMENDMENT OF $15,000,000 LOAN DOCUMENTS. Without the
express prior written consent of the Required Banks, agree to any alteration or
amendment of any of the $15,000,000 Loan Documents, or any replacement therefor
resulting from a prepayment permitted pursuant to SECTION 7.14, that changes the
maturity dates of the loans made thereunder to any new maturity date that occurs
on or prior to the Termination Date.
ARTICLE 8. FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement:
Section 8.01. MINIMUM WORKING CAPITAL. The Borrower shall maintain at
the end of each Fiscal Quarter an excess of Consolidated Current Assets over
Consolidated Current Liabilities of not less than the amount set forth in the
following table:
FISCAL QUARTER ENDED AMOUNT
06/28/97 $ 90,000,000
09/27/97 $ 90,000,000
12/27/97 $ 90,000,000
03/31/98 $ 90,000,000
06/27/98 $ 100,000,000
09/26/98 $ 100,000,000
12/26/98 $ 100,000,000
03/31/99 $ 100,000,000
06/28/99 $ 110,000,000
Section 8.02. MINIMUM TANGIBLE NET WORTH. The Borrower shall maintain
at the end of each Fiscal Quarter a Consolidated Tangible Net Worth of not less
than the amount set forth in the following table:
FISCAL QUARTER ENDED AMOUNT
06/28/97 $82,000,000
09/27/97 $86,000,000
12/27/97 $86,000,000
03/31/98 $90,000,000
06/27/98 $90,000,000
09/26/98 $90,000,000
12/26/98 $90,000,000
03/31/99 $90,000,000
06/28/99 $90,000,000
Section 8.03. CURRENT RATIO. The Borrower shall maintain at the end of
each Fiscal Quarter a ratio of Consolidated Current Assets to Consolidated
Current Liabilities of not less than that set forth in the following table:
FISCAL QUARTER ENDED RATIO
06/28/97 1.50:1
09/27/97 1.25:1
12/27/97 1.25:1
03/31/98 1.50:1
06/27/98 1.50:1
09/26/98 1.25:1
12/26/98 1.25:1
03/31/99 1.25:1
06/28/99 1.25:1
Section 8.04. LEVERAGE RATIO. The Borrower shall maintain at the end of
each Fiscal Quarter a ratio of Consolidated Total Liabilities to Consolidated
Tangible Net Worth of not greater than that set forth in the following table:
FISCAL QUARTER ENDED RATIO
06/28/97 5.00:1
09/27/97 6.00:1
12/27/97 4.75:1
03/31/98 4.00:1
06/27/98 4.75:1
09/26/98 6.00:1
12/26/98 4.75:1
03/31/99 4.00:1
06/28/99 4.75:1
Section 8.05. INTEREST COVERAGE RATIO. The Borrower shall maintain as
of the end of each Fiscal Quarter, for the four Fiscal Quarter period then
ended, a ratio of Consolidated EBITDA to Interest Expense of not less than that
set forth in the following table:
FISCAL QUARTER ENDED RATIO
06/28/97 1.75:1
09/27/97 1.75:1
12/27/97 1.75:1
03/31/98 2.00:1
06/27/98 2.00:1
09/26/98 2.00:1
12/26/98 2.00:1
03/31/99 2.00:1
06/28/99 2.20:1
Section 8.06. CONSOLIDATED FUNDED DEBT COVERAGE. The Borrower shall
maintain at the end of each Fiscal Quarter, for the four Fiscal Quarter period
then ended, a ratio of "Average Consolidated Funded Debt" to Consolidated EBITDA
of not more than that set forth in the following table. For the purposes of this
paragraph, Average Consolidated Funded Debt shall mean the average amount of
Consolidated Funded Debt outstanding at the end of each of the four Fiscal
Quarters comprising such period.
FISCAL QUARTER ENDED RATIO
06/28/97 5.50:1
09/27/97 5.50:1
12/27/97 5.50:1
03/31/98 5.00:1
06/27/98 5.00:1
09/26/98 5.00:1
12/26/98 5.00:1
03/31/99 5.00:1
06/28/99 5.00:1
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. EVENTS OF DEFAULT. Any of the following events shall be
an "Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any Note as
and when due and payable; or (ii) fail to pay interest on any Note, or any fee
or other amount due hereunder, for more than 3 Banking Days after the due date;
(b) any representation or warranty made or deemed made by the Borrower
in this Agreement or by Borrower or Pillsbury in any other Facility Document or
which is contained in any certificate, document, opinion, financial or other
statement furnished or deemed furnished at any time under or in connection with
any Facility Document shall prove to have been incorrect in any material respect
on or as of the date made or deemed made;
(c) the Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in SECTION 2.03 or ARTICLES 7 OR 8; or (ii) fail
to perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this SECTION 9.01) in any Facility Document and such failure shall
continue for 30 consecutive days after any Financial Officer obtains actual
knowledge thereof; or (iii) fail to deliver a Borrowing Base Certificate for
more than five Banking Days after the date on which it is due pursuant to
SECTION 6.08(I);
(d) the Borrower or any of its Subsidiaries shall: (i) fail to pay any
indebtedness, including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of the Borrower or
such Subsidiary, as the case may be, or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise); or (ii) fail to perform or observe any term, covenant or condition
on its part to be performed or observed under any agreement or instrument
relating to any such indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or to permit
the acceleration of, after the giving of notice or passage of time, or both, the
maturity of such indebtedness, whether or not such failure to perform or observe
shall be waived by the holder of such indebtedness; or any such indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
(e) the Borrower or any of its Subsidiaries: (i) shall generally not,
or be unable to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (iii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or shall be the subject of any
proceeding under which its assets may be subject to seizure, forfeiture or
divestiture (other than a proceeding in respect of a Lien permitted under
SECTION 7.03 (B)); or (v) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 60 days or more;
(f) one or more judgments, decrees or orders for the payment of money
in excess of $5,000,000 in the aggregate shall be rendered against the Borrower
or any of its Subsidiaries and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which the Borrower is under an obligation
to furnish a report to the Banks in accordance with SECTION 6.08(H) hereof and
as a result of such event or condition, together with all other such events or
conditions, the Borrower or any ERISA Affiliate has incurred or in the opinion
of the Bank is reasonably likely to incur a liability to a Plan, a Multiemployer
Plan, the PBGC, or a Section 4042 Trustee (or any combination of the foregoing)
which is material in relation to the financial position of the Borrower and its
Subsidiaries, on a consolidated basis;
(h) The Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in SECTION 9.01(G) hereof);
(i) Any Person or two or more Persons acting in concert (other than the
Wolcott or Kayser families) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of capital stock possessing either (x) 30% or
more of the total number of votes which Borrower's shareholders shall be
entitled to cast on matters submitted to such shareholders or (xx) the right to
elect 30% or more of Borrower's board of directors; or (ii) during any period of
twelve (12) consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 12 month period were
directors of the Borrower cease for any reason to constitute a majority of the
Board of Directors of the Borrower; or
(j) (A) any Forfeiture Proceeding shall have been commenced or the
Borrower shall have given any Bank written notice of the commencement of any
Forfeiture Proceeding as provided in SECTION 6.08(K) or (B) any Bank has a good
faith basis to believe that a Forfeiture Proceeding has been threatened or
commenced.
(k) Pillsbury shall in any material respect fail to perform or
otherwise breach or default under any provision of either the Pillsbury
Subordination Agreement, the ss. 1111(b) Agreement or the Consent and Agreement
or any provision of the Pillsbury Note applicable to or binding on Pillsbury;
any amount of principal or interest is paid, credited or otherwise satisfied
(whether by payment, offset or any other method, and whether by voluntary or
mandatory prepayment) other than by Permitted Payments (as defined in the
Pillsbury Note), either prior to the regularly scheduled payment date therefor
under the Pillsbury Note, or in violation of the Pillsbury Note, of the
Pillsbury Subordination Agreement or of this Agreement; Pillsbury, Borrower or
any other Person denies or contests, including the bringing of any action or
proceeding to contest, the effectiveness or validity of the subordination or
non-recourse provisions of the Pillsbury Note, or any of such provisions is
declared invalid or unenforceable; or any notice of termination is given under
the Pillsbury Alliance Agreement or the Pillsbury Alliance Agreement is in fact
terminated.
Section 9.02. REMEDIES. If any Event of Default shall occur and be
continuing, the Agent shall, upon request of the Required Banks, by notice to
the Borrower, (a) declare the Commitments to be terminated, whereupon the same
shall forthwith terminate, and (b) declare the outstanding principal of the
Notes, all interest thereon and all other amounts payable under this Agreement
and the Notes to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided that, in the case of an
Event of Default referred to in SECTION 9.01(E) or SECTION 9.01(J)(A) above, the
Commitments shall be immediately terminated, and the Notes, all interest thereon
and all other amounts payable under this Agreement shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.01. APPOINTMENT, POWERS AND IMMUNITIES OF AGENT. Each Bank
hereby irrevocably (but subject to removal by the Required Banks pursuant to
SECTION 10.09) appoints and authorizes the Agent to act as its agent hereunder
and under any other Facility Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Facility
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Facility Document, and shall not by reason
of this Agreement be a trustee for any Bank. The Agent shall not be responsible
to the Banks for any recitals, statements, representations or warranties made by
the Borrower or any officer or official of the Borrower or any other Person
contained in this Agreement or any other Facility Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Facility Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility Document or any other
document or instrument referred to or provided for herein or therein, for the
perfection or priority of any collateral security for the Loans or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder. The Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any other Facility
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed to
by the Borrower and the Agent with respect to the Agent's services hereunder.
Section 10.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent may deem and treat each Bank as
the holder of the Loans made by it for all purposes hereof unless and until a
notice of the assignment or transfer thereof satisfactory to the Agent signed by
such Bank shall have been furnished to the Agent but the Agent shall not be
required to deal with any Person who has acquired a participation in any Loan
from a Bank. As to any matters not expressly provided for by this Agreement or
any other Facility Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Banks, and such instructions of the Required Banks and
any action taken or failure to act pursuant thereto shall be binding on all of
the Banks and any other holder of all or any portion of any Loan.
Section 10.03. DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on the Loans to the extent the same is
required to be paid to the Agent for the account of the Banks) unless the Agent
has received notice from a Bank or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Banks (and shall give
each Bank prompt notice of each such non-payment). The Agent shall (subject to
SECTION 10.08) take such action with respect to such Default or Event of Default
which is continuing as shall be directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that the Agent shall not be required to take any
such action which it determines to be contrary to law.
Section 10.04. RIGHTS OF AGENT AS A BANK. With respect to its
Commitment, its Swing Line Commitment and the Loans made by it, the Agent in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its capacity as a Bank. The Agent and its
affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to (on a secured or unsecured basis), and generally engage in
any kind of banking, trust or other business with, the Borrower (and any of its
affiliates) as if it were not acting as the Agent, and the Agent may accept fees
and other consideration from the Borrower for services in connection with this
Agreement or otherwise without having to account for the same to the Banks.
Although the Agent and its affiliates may in the course of such relationships
not involving its activities as Agent, and in the course of relationships with
other Persons, acquire information about the Borrower, its Affiliates and such
other Persons, the Agent shall have no duty to disclose to the Banks information
so acquired.
Section 10.05. INDEMNIFICATION OF AGENT. The Banks agree to indemnify
the Agent (to the extent not reimbursed under SECTION 11.03 or under the
applicable provisions of any other Facility Document, but without limiting the
obligations of the Borrower under SECTION 11.03 or such provisions), ratably in
accordance with the aggregate unpaid principal amount of the Loans made by the
Banks (without giving effect to any participations, in all or any portion of
such Loans, sold by them to any other Person) (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, any other Facility
Document or any other documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Borrower is obligated to pay under SECTION 11.03 or
under the applicable provisions of any other Facility Document but excluding,
unless a Default or Event of Default has occurred, normal administrative costs
and expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other documents
or instruments; provided that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
Section 10.06. DOCUMENTS. The Agent will forward to each Bank, promptly
after the Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
Section 10.07. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other
Facility Document. The Agent shall not be required to keep itself informed as to
the performance or observance by the Borrower of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any Subsidiary (or any of their Affiliates) which may come into the
possession of the Agent or any of its affiliates. The Agent shall not be
required to file this Agreement, any other Facility Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Facility Document or any document or instrument referred to
herein or therein, to anyone.
Section 10.08. FAILURE OF AGENT TO ACT. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under SECTION 10.05 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 10.09. RESIGNATION OR REMOVAL OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof to the Banks and the
Borrower, and the Agent may be removed at any time with or without cause by the
Required Banks; provided that the Borrower and the other Banks shall be promptly
notified thereof. Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a bank which has
an office in New York State. The Required Banks or the retiring Agent, as the
case may be, shall upon the appointment of a successor Agent promptly so notify
the Borrower and the other Banks. 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 be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this ARTICLE 10 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.
Section 10.10. AMENDMENTS CONCERNING AGENCY FUNCTION. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 10.11. LIABILITY OF AGENT. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Facility Document.
Section 10.12. TRANSFER OF AGENCY FUNCTION. Without the consent of the
Borrower or any Bank, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrower and the Banks
thereof.
Section 10.13. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent
shall have been notified by a Bank or the Borrower (either one as appropriate
being the "Payor") prior to the date on which such Bank is to make payment
hereunder to the Agent of the proceeds of a Loan or the Borrower is to make
payment to the Agent, as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment (and, if such recipient is
the Borrower and the Payor Bank fails to pay the amount thereof to the Agent
forthwith upon demand, the Borrower) shall, on demand, repay to the Agent the
amount made available to it together with interest thereon for the period from
the date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the average daily Federal
Funds Rate for such period.
Section 10.14. WITHHOLDING TAXES. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements and other documents as the Agent may request from time to time to
evidence such Bank's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Agent to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Bank is not created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of interest by the
Borrower is treated for U.S. income tax purposes as derived in whole or in part
from sources from within the U.S., such Bank will furnish to the Agent, when and
as appropriate, Form 4224 or Form 1001 of the Internal Revenue Service, or such
other forms, certifications, statements or documents, duly executed and
completed by such Bank as evidence of such Bank's exemption from the withholding
of U.S. tax with respect thereto. The Agent shall not be obligated to make any
payments hereunder to such Bank in respect of any Loan or such Bank's Commitment
until such Bank shall have furnished to the Agent the requested form,
certification, statement or document.
Section 10.15. SEVERAL OBLIGATIONS AND RIGHTS OF BANKS. The failure of
any Bank to make any Loan to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Loan on such date, but
no Bank shall be responsible for the failure of any other Bank to make a Loan to
be made by such other Bank. The amounts payable at any time hereunder to each
Bank shall be a separate and independent debt, and each Bank shall be entitled
to protect and enforce its rights arising out of this Agreement, and it shall
not be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
Section 10.16. PRO RATA TREATMENT OF LOANS, ETC. Except to the extent
otherwise provided: (a) each Borrowing under SECTION 2.04 shall be made from the
Banks, each reduction or termination of the amount of the Commitments under
SECTION 2.07 or SECTION 2.15 shall be applied to the Commitments of the Banks,
and each payment of commitment fee accruing under SECTION 2.11 shall be made for
the account of the Banks, pro rata according to the amounts of their respective
Commitments; (b) each conversion under SECTION 2.05 of Loans of a particular
type (but not conversions provided for by SECTION 3.04), shall be made pro rata
among the Banks holding Loans of such type according to the respective principal
amounts of such Loans by such Banks; (c) each prepayment and payment of
principal of or interest on Loans of a particular type and a particular Interest
Period shall be made to the Agent for the account of the Banks holding Loans of
such type and Interest Period pro rata in accordance with the respective unpaid
principal amounts of such Loans of such Interest Period held by such Banks; and
(d) any "Proceeds" (as defined in the Intercreditor Agreement), available for
distribution to the Banks pursuant to the Intercreditor Agreement shall be
distributed to each Bank according to the Percentage Interest of such Bank, as
described in the Intercreditor Agreement.
Section 10.17. SHARING OF PAYMENTS AMONG BANKS. Subject to any
conflicting provisions of the Intercreditor Agreement, which shall supersede
this SECTION 10.17 for as long as they are binding on the Banks, if a Bank shall
obtain directly from the Borrower payment of any principal of or interest on any
Loan made by it through the exercise of any right of setoff, banker's lien,
counterclaim, or by any other means, it shall promptly purchase from the other
Banks participations in (or, if and to the extent specified by such Bank, direct
interests in) the Loans made by the other Banks in such amounts, and make such
other adjustments from time to time as shall be equitable to the end that all
the Banks shall share the benefit of such payment (net of any expenses which may
be incurred by such Bank in obtaining or preserving such benefit) pro rata in
accordance with the unpaid principal and interest on the Loans held by each of
them. To such end the Banks shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if such payment is rescinded
or must otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other Banks may exercise
all rights of setoff, banker's lien, counterclaim or similar rights with respect
to such participation (or direct interest). Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness of the Borrower.
Section 10.18. INTERCREDITOR AGREEMENT AND SECURITY AGREEMENT. The
Banks acknowledge that the Agent, on execution of the Security Agreement and the
Intercreditor Agreement, has assumed the duties as Collateral Agent thereunder,
and that such duties will require the Agent to act on behalf of the lenders
under the Insurance Company Loan Documents, and the $15,000,000 Loan Documents,
as well as on behalf of the Banks. The Banks hereby authorize the Agent to
execute such documents and to assume such duties, and they acknowledge that, in
so acting, the Agent may be required to take action which may be contrary to the
interests of the Banks. Notwithstanding that possibility, the Banks hereby
affirm that the Agent shall not thereby suffer any impairment or reduction of
any of the rights, protections or indemnification rights afforded the Agent
pursuant to this Agreement, the Intercreditor Agreement or the Security
Agreement.
ARTICLE 11. MISCELLANEOUS.
Section 11.01. AMENDMENTS AND WAIVERS. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent and
the Required Banks, or by the Borrower and the Agent acting with the prior
written consent of the Required Banks and any provision of this Agreement may be
waived by the Required Banks or by the Agent acting with the prior written
consent of the Required Banks; PROVIDED that no amendment, modification or
waiver shall, unless by an instrument signed by all of the Banks or by the Agent
acting with the prior written consent of all of the Banks: (a) increase or
extend the term, or extend the time or waive any requirement for the reduction
or termination, of the Commitments or of the Swing Line Commitments, (b) extend
the date fixed for the payment of principal of or interest on any Loan or any
fee payable hereunder, (c) reduce the amount of any payment of principal thereof
or the rate at which interest is payable thereon or any fee payable hereunder,
(d) alter the terms of this SECTION 11.01, (e) amend the definition of the term
"Required Banks" or (f) waive any of the documentary conditions precedent set
forth in SECTION 4.01 hereof and PROVIDED, FURTHER, that (i) any amendment of
ARTICLE 10 hereof or any amendment which increases the obligations of the Agent
hereunder shall require the consent of the Agent, and (ii) any amendment which
could have the effect of altering any terms or provisions of any then
outstanding Competitive Bid Loan(s), or that changes any provisions of this
Agreement that relate to Swing Line Loans, shall require the consent of the
Banks then holding such Competitive Bid Loans, or of the Swing Line Lender, as
the case may be. No failure on the part of the Agent or any Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof or preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 11.02. USURY. Anything herein to the contrary notwithstanding,
the obligations of the Borrower under this Agreement and the Notes shall be
subject to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable to
a Bank limiting rates of interest which may be charged or collected by such
Bank.
Section 11.03. EXPENSES. The Borrower shall pay the Agent and the
Banks, as the case may be, on demand for all costs, expenses, and charges
(including, without limitation, fees and charges of external legal counsel for
the Agent and each Bank and costs allocated by their respective internal legal
departments) (i) incurred by the Agent in connection with the negotiation and
preparation of this Agreement, the Notes and the other documents executed in
connection herewith, and (ii) incurred by the Agent or the Banks in connection
with the performance or enforcement of this Agreement or the Notes. The Borrower
agrees to indemnify the Agent and each Bank and their respective directors,
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages or expenses (each an "Indemnified
Liability") incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to or arising out of
this Agreement or any actual or proposed use by the Borrower or any Subsidiary
of the proceeds of the Loans, including without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such investigation
or litigation or other proceedings, but (i) excluding any Indemnified Liability
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified, and (ii) in the case of any Indemnified Liability incurred by
the directors, officers, employees or agents of a Bank by reason of the gross
negligence or willful misconduct of or attributable to such Bank, excluding also
the Indemnified Liability so incurred. The Borrower agrees that any Indemnified
Liability will be promptly paid to the Person to be indemnified upon the written
demand of such Person.
Section 11.04. SURVIVAL. The obligations of the Borrower under
SECTIONS 3.01, 3.05 AND 11.03 shall survive the repayment of the Loans and the
termination of the Commitments.
Section 11.05. ASSIGNMENT; PARTICIPATIONS. (a) This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the Agent, the
Banks and their respective successors and assigns, except that the Borrower may
not assign or transfer its rights or obligations hereunder. Each Bank may
assign, or sell participations in, all or any part of its Commitment or any Loan
to another bank or other entity, in which event (i) in the case of an
assignment, upon notice thereof by the Bank to the Borrower with a copy to the
Agent, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and obligations as it
would have if it were a Bank hereunder; and (ii) in the case of a participation,
the participant shall have no rights under the Facility Documents and all
amounts payable by the Borrower under ARTICLE 3 shall be determined as if such
Bank had not sold such participation. The agreement executed by such Bank in
favor of the participant shall not give the participant the right to require
such Bank to take or omit to take any action hereunder except action directly
relating to (i) the extension of the Termination Date, (ii) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder, or with respect to any Commitment fees, allocated
to such participant, (iii) the reduction of the principal amount outstanding
hereunder or (iv) the reduction of the rate of interest payable on such amount
or any amount of fees payable hereunder to a rate or amount, as the case may be,
below that which the participant is entitled to receive under its agreement with
such Bank. Such Bank may furnish any information concerning the Borrower in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants); provided that such Bank
shall require any such prospective assignee or such participant (prospective or
otherwise) to agree to maintain the confidentiality of such information.
(b) In addition to the assignments and participations permitted under
paragraph (a) above, any Bank may assign and pledge all or any portion of its
Loans and Notes to (i) any affiliate of such Bank or (ii) any Federal Reserve
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 Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
Section 11.06. NOTICES. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Agent by
telephone, confirmed promptly by telex, telecopy or other writing, and to the
Banks and to the Borrower by ordinary mail or telex or telecopy addressed to
such party at its address on the signature page of this Agreement. Notices shall
be effective: (a) if given by mail, 96 hours after deposit in the United States
mails with first class postage prepaid, addressed as aforesaid; and (b) if given
by telex or telecopy, when the notice is transmitted to the telex or telecopy
number as aforesaid; provided that notices to the Agent and the Banks shall be
effective upon receipt.
Section 11.07. SETOFF. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option, during the
existence of a Default or an Event of Default, to offset balances (general or
special, time or demand, provisional or final) held by it for the account of the
Borrower at any of such Bank's offices, in Dollars or in any other currency,
against any amount payable by the Borrower to such Bank under this Agreement or
such Bank's Notes which is not paid when due (regardless of whether such
balances are then due to the Borrower), in which case it shall promptly notify
the Borrower and the Agent thereof; provided that such Bank's failure to give
such notice shall not affect the validity thereof. Payments by the Borrower
hereunder shall be made without setoff or counterclaim.
SECTION 11.08. JURISDICTION; IMMUNITIES. (A) THE BORROWER, THE AGENT
AND EACH BANK HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN MONROE COUNTY, NEW YORK OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES,
AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE
BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 11.06. EACH PARTY AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. EACH PARTY FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE
AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM
NON CONVENIENS. EACH PARTY FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT
AGAINST THE AGENT SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES
FEDERAL COURT SITTING IN MONROE COUNTY, NEW YORK. EACH PARTY WAIVES ANY RIGHT IT
MAY HAVE TO JURY TRIAL.
(b) Nothing in this SECTION 11.08 shall affect the right of the Agent
or any Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Bank to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Notes.
Section 11.09. TABLE OF CONTENTS; HEADINGS. Any table of contents
and the headings and captions hereunder are for convenience only and shall
not affect the interpretation or construction of this Agreement.
Section 11.10. SEVERABILITY. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 11.12. INTEGRATION. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 11.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
Section 11.14. CONFIDENTIALITY. Each Bank and the Agent agrees (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement which is identified by
the Borrower as being confidential at the time the same is delivered to the
Banks or the Agent, provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Banks or the Agent, (iii) to
bank examiners, auditors or accountants, (iv) in connection with any litigation
to which any one or more of the Banks is a party or (v) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) agrees to maintain the
confidentiality of such information.
Section 11.15. TREATMENT OF CERTAIN INFORMATION. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by each Bank or by one or more of their respective
subsidiaries or affiliates and (b) acknowledges that any information delivered
to each Bank or its subsidiaries or affiliates regarding the Borrower may be
shared among such Bank and such subsidiaries and affiliates. This SECTION 11.15
shall survive the repayment of the Loans and the termination of the Commitments.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SENECA FOODS CORPORATION
By /S/PHILIP G. PARAS
Name: Philip G. Paras
Title: Vice President, Finance
Address for Notices:
1162 Pittsford-Victor Road
Pittsford, New York 14534
Attn: Philip G. Paras,
Vice President - Finance
Telephone: (716) 383-4643
Telecopy: (716) 385-4249
<PAGE>
- -
AGENT:
THE CHASE MANHATTAN BANK
By /s/Diana Laura
Name: Diana Laura
Title: Vice-President
Address for Notices:
One Chase Plaza
Loan and Agency Service Group
- 8th Fl.
New York, New York 10081
Attn:
Telephone:
Telecopy:
<PAGE>
BANKS:
THE CHASE MANHATTAN BANK
By: /s/Diana Lauria
Name: Diana Lauria
Title: Vice-President
Lending Office and Address
for Notices:
One Chase Square
Rochester New York 14643
Attn: Diana M. Lauria, V.P.
Telephone: (716) 258-5458
Telecopy: (716) 258-4258
<PAGE>
BANKS:
FLEET BANK
By: /s/Martin K. Birmingham
Name: Martin K. Birmingham
Title:Vice President
Lending Offices and Address
for Notices:
1 East Avenue
Rochester, New York 14638
Attn: Martin K. Birmingham, V.P.
Telephone: (716) 546-9126
Telecopy: (716) 546-9278
<PAGE>
BANKS:
MANUFACTURERS & TRADERS TRUST
COMPANY
By:/s/William E. Holston
Name:William E. Holston
Title: Vice President
Lending Offices and Address
for Notices:
44 Exchange Street
Rochester, New York 14614
Attn: William E. Holston, V.P.
Telephone: (716) 258-8479
Telecopy: (716) 325-5105
<PAGE>
BANKS:
HARRIS TRUST AND SAVINGS BANK
By: /s/Erica T. Kuhlmann
Name: Erica T. Kuhlmann
Title: Vice President
Lending Offices and Address
for Notices:
111 West Monroe
Chicago, Illinois 60603
Attn: Mary L. Burke, V. P.
Telephone: (312) 461-2744
Telecopy: (312) 765-8095
<PAGE>
BANKS:
RABOBANK NEDERLAND, New York
Branch
By: /s/Ot Quast
Name: Ot Quast
Title: Vice President
By: /s/Ian Reece
Name: Ian Reece
Title:Senior Credit Office
Lending Offices and Address
for Notices:
245 Park Avenue
New York, New York 10167
Attn: Angelo J. Balestrieri,
V.P.
Telephone: (212) 916-7851
Telecopy: (212) 916-3731
<PAGE>
BANKS:
THE SUMITOMO BANK, LIMITED
By: /s/William N. Paty
Name: William N. Paty
Title:Vice President & Mgr
By:/s/J. H. Broadley
Name: J. H. Broadley
Title: Vice President
Address for Notices:
450 Lexington Avenue
Suite 1700
New York, New York 10017
Attn: James M. Drum, AVP
Telephone: (212) 808-2340
Telecopy: (212) 818-0865
Lending Office:
233 South Wacker Drive
Chicago, Illinois 60606
<PAGE>
BANKS:
THE FUJI BANK, LTD.
By:/s/Peter L. Chinnici
Name: Peter L. Chinnici
Title:Joint General Manager
Lending Offices and Address
for Notices:
225 W. Wacker Dr.
Suite 2000
Chicago, Illinois 60606
Attn: James S. Bell, V.P.
Telephone: (312) 621-0526
Telecopy: (312) 621-0539
<PAGE>
BANKS:
NATIONAL BANK OF CANADA
By:/s/Mark J. Nigro
Name:Mark J. Nigro
Title:Vice President
By:/s/Michael S. Woodard
Name:Michael S. Woodard
Title:Vice President
Lending Offices and Address
for Notices:
350 Main Street, Suite 2540
Main Place Tower
Buffalo, New York 14202
Attn: Mark J. Nigro, V.P.
Telephone: (716) 852-6836
Telecopy: (716) 852-6832
<PAGE>
Exhibit 4c
SENECA FOODS CORPORATION
1162 Pittsford-Victor Road
Pittsford, New York 14534
As of September 26, 1997
To Each Purchaser Listed
on Annex I Attached Hereto
Ladies and Gentlemen:
The undersigned, Seneca Foods Corporation, a New York corporation
(herein called the "COMPANY"), hereby agrees with each of the Purchasers as
follows:
1. THE NOTES.
1A. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes in the aggregate principal amount of
$15,000,000, to be dated the date of issue thereof, to mature September 26,
2004, to bear interest on the unpaid balance thereof from the date thereof until
the principal thereof shall have become due and payable at the rate of 9.17% per
annum and on overdue payments at the rate specified therein, and, in each case,
to be substantially in the form of Exhibit A attached hereto. The term "NOTE" or
"NOTES" as used herein shall include each such senior promissory note delivered
pursuant to any provision of this Agreement and each such senior promissory note
delivered in substitution or exchange for any other Note pursuant to any such
provision.
1B. SECURITY FOR THE NOTES. The Notes are to be secured by, and to have
the benefit of, a pledge of and grant of a first priority security interest in
the Collateral under and pursuant to the Pledge Agreement.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
each Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser agrees to purchase from the Company one or more Notes in the aggregate
principal amount specified in the Purchaser Schedule hereto at 100% of such
aggregate principal amount. The Company will deliver to each Purchaser, at the
offices of King & Spalding, New York, New York, one or more Notes registered in
such Purchaser's name, evidencing the principal amount of Notes to
<PAGE>
be purchased by such Purchaser and in the denomination or denominations
specified in the Purchaser Schedule attached hereto, against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account #000-029-134-4 at The Chase Manhattan Bank, Rochester, New
York, ABA #021-000-021 on the date of closing, which shall be September 26, 1997
or any other date on or before September 26, 1997 upon which the Company and the
Purchasers may mutually agree (herein called the "CLOSING" or the "DATE OF
CLOSING").
3. CONDITIONS PRECEDENT. The obligation of the Purchasers to enter
into, execute and deliver this Agreement and purchase the Notes as described in
paragraph 2 is subject to the satisfaction, on or before the Date of Closing, of
the following conditions, as determined in sole judgment of the Purchasers:
3A. RELATED DOCUMENTS. Each Purchaser shall have received each of
the following documents duly executed and delivered by the parties thereto:
(i) Amendment No. 2 to Pledge Agreement;
(ii) Pillsbury Acknowledgment;
(iii) the Subordination Letter; and
(iv) Intercreditor Agreement.
Each of the foregoing agreements shall be in full force and effect on the Date
of Closing and each party thereto shall be in full compliance with its
obligations thereunder.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Each Purchaser shall have
received from King & Spalding, who are acting as special counsel for the
Purchasers in connection with this transaction, a favorable opinion satisfactory
to the Purchasers as to such matters incident to the matters herein contemplated
as the Purchasers may reasonably request.
3C. OPINIONS OF COUNSEL. Each Purchaser shall have received from (i)
Jaeckle Fleischmann & Mugel, LLP, counsel to the Company, a favorable opinion in
form and content satisfactory to the Purchasers and in substantially the form of
Exhibit B hereto, (ii) a reliance letter in connection with the opinions of (x)
Dorsey & Whitney, delivered in connection with the 1995 Note Agreement and (y)
the General Counsel of Pillsbury and the Senior Entity, delivered in connection
with the 1995 Note Agreement.
<PAGE>
3D. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 shall be true on and as of the Date of
Closing, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on the Date of Closing no Event of Default or
Default; and the Company shall have delivered to each Purchaser a certificate of
a Principal Officer, dated the Date of Closing, regarding the foregoing.
3E. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased on the Date of Closing on the terms and conditions
herein provided (including the use of the proceeds of such Notes) shall not
violate any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation G, T or X of the Board
of Governors of the Federal Reserve System) and shall not subject such Purchaser
to any tax (other than any tax on income earned), penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation. The Notes shall on the Date of Closing qualify as a legal investment
for such Purchaser under applicable insurance law (without regard to any
"basket" or "leeway provisions"), and such acquisition shall not subject such
Purchaser to any penalty or other onerous condition contained in or pursuant to
any such law or regulation. Such Purchaser shall have received such certificates
or other evidence as such Purchaser may request to establish compliance with
this condition.
3F. PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to the Purchasers,
and each Purchaser shall have received all such counterpart originals or
certified or other copies of such documents as a Purchaser may reasonably
request. In this connection, the Company shall deliver to each Purchaser:
(i) copies of the certificate or articles of incorporation
(certified as of a recent date by the Secretary of the State of its
incorporation) and its by-laws (certified by its Secretary) as in
effect on the Date of Closing;
(ii) certified copies (certified by its Secretary) of all
corporate action taken by it to authorize the execution, delivery and
performance of any Related Document to which it is a party; and
(iii) certificates of incumbency and specimen signatures with
respect to each of its officers who are authorized to execute and
deliver any Related Document to which it is a party.
3G. CERTIFICATES OF GOOD STANDING/QUALIFICATION TO DO BUSINESS.
Each Purchaser shall have received a good standing certificate issued by the
Secretary
<PAGE>
of State of the State of incorporation of the Company and its Subsidiaries
(other than Seneca Foods International, Ltd.), as the case may be, and
certificates of qualification to do business as a foreign corporation in
jurisdictions specified in Schedule 3G, each dated as of a date not more than
thirty days prior to Closing.
3H. NO MATERIAL ADVERSE CHANGE. Each Purchaser shall have received a
certificate from a Principal Officer of the Company dated the Date of Closing to
the effect that no material adverse change in the financial condition, business,
operations or prospects of the Company or its Subsidiaries has occurred since
March 31, 1996.
3I. PRIVATE PLACEMENT NUMBERS. The Company shall have obtained or
caused to be obtained private placement numbers for the Notes from the CUSIP
Service Bureau of Standard & Poor's and each Purchaser shall have been informed
of such private placement numbers.
3J. PERFECTION OF LIENS. All actions necessary to perfect the Liens of
the Collateral Agent in the Collateral (including, without limitation, the
filing of appropriate financing statements and the recording of all appropriate
documents with public officials) shall have been taken in accordance with the
terms and provisions of the Pledge Agreement and confirmation thereof received
by each Purchaser. The Liens of the Collateral Agent in the Collateral shall be
valid, enforceable and perfected and the Collateral shall be subject to no other
Liens not otherwise acceptable to each Purchaser.
3K. PILLSBURY AGREEMENTS. Each Purchaser shall have received a true,
correct and duly authorized and executed copy of each of the Pillsbury
Agreements and each other principal document between Pillsbury and the Company,
including all schedules and exhibits thereto and side letters, if any, affecting
the terms thereof or delivered in connection therewith, together with all
amendments and waivers thereto, accompanied by a certificate of a Principal
Officer dated the Date of Closing of the Company to such effect. No material
provision of any of the foregoing agreements shall have been amended,
supplemented or otherwise modified or waived without the prior written consent
of each Purchaser.
3L. MATERIAL AGREEMENTS. Each Purchaser shall have received a true,
correct and duly executed copy of each of the Material Agreements specified on
Schedule 3L, including all schedules and exhibits thereto and side letters, if
any, affecting the terms thereof or delivered in connection therewith, together
with all amendments and waivers thereto and any documents, instruments or
certificates executed and delivered in connection therewith accompanied by a
certificate of a Principal Officer dated the Date of Closing of the Company to
such effect.
<PAGE>
3M. EXPENSES. All of the reasonable fees and disbursements of each
Purchaser (including without limitation special counsel to the Purchasers) shall
have been paid in full.
3N. OTHER DOCUMENTS. Each Purchaser shall have received such other
certificates, legal opinions and documents as such Purchaser or special counsel
to the Purchasers may reasonably request, all in form and substance reasonably
satisfactory to each Purchaser.
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect to the required prepayments specified in paragraph 4A, as applicable,
and the optional prepayments permitted by paragraph 4B.
4A. REQUIRED PREPAYMENTS. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without premium, the sum
opposite the dates set forth below on such dates:
$3,000,000 September 26, 2000
$3,000,000 September 26, 2001
$3,000,000 September 26, 2002
$3,000,000 September 26, 2003
and such principal amounts of the Notes, together with interest thereon to the
prepayment dates, shall become due on such prepayment dates. The remaining
$3,000,000 principal amount of the Notes, together with interest accrued
thereon, shall become due on the maturity date of the Notes on September 26,
2004.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
multiples of $250,000), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note. Any partial
prepayment of the Notes pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates. Any prepayment made by the Company pursuant to any other
provision of this paragraph 4, shall not reduce or otherwise effect its
obligations to make any prepayment required by paragraph 4A.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to paragraph 4B
not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the
<PAGE>
Notes held by such holder, to be prepaid on such date and stating that such
prepayment is to be made pursuant to paragraph 4B. Notice of prepayment having
been given as aforesaid, the principal amount of the Notes specified in such
notice, together with interest thereon to the prepayment date and together with
the Yield-Maintenance Amount, if any, with respect thereto, shall become due and
payable on such prepayment date.
4D. PARTIAL PAYMENTS PRO RATA. Upon any partial prepayment of the
Notes, the principal amount so prepaid shall be allocated to all Notes having
the same maturity date, interest rate and payment terms (all Notes in any such
issue being referred to as the "SERIES NOTES") at the time outstanding
(including, for the purpose of this paragraph 4D only, all such Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph
4A) in proportion to the respective outstanding principal amounts of such Series
Notes. All prepayments of the Notes and any other payments on account of the
Notes or hereunder or any other Related Document shall be made not later than
12:00 noon, Eastern time, on the date when due.
4E. RETIREMENT OF NOTES. The Company shall not and shall not permit any
of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than by prepayment in
accordance with paragraphs 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire directly or
indirectly, any Series Note held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Series Notes held by each other holder of such
Notes at the time outstanding upon the same terms and conditions. Any Notes so
prepaid or otherwise retired or purchased or otherwise acquired by the Company
or any of its Subsidiaries or Affiliates shall not be deemed to be outstanding
for any purpose under this Agreement, except as provided in paragraph 4D.
4F. CHANGE IN CONTROL. If within 30 Business Days of the date on which
a Significant Holder has knowledge that a Change of Control Event has occurred a
Purchaser shall request that the Company prepay in full the Notes held by such
Purchaser, the Company shall pay within 10 Business Days of such request to such
Purchaser an amount equal to the aggregate outstanding principal amount of such
Notes, together with interest thereon to the prepayment date and
Yield-Maintenance Amount, if any, with respect thereto. Each Purchaser may at
any time by notice in writing to the Company (subject to the following proviso)
irrevocably relinquish its right (but not the right of any subsequent holder) to
request the repurchase of its Notes under this paragraph 4F, provided that such
<PAGE>
relinquishment shall automatically become ineffective upon receipt by the
Company of a request from any other holder of any Notes for the repurchase of
such Notes in accordance with this paragraph 4F. Upon receipt by the Company of
such a request for repurchase, the Company shall provide, within 5 Business
Days, notice of such request to the Purchasers, including any Purchaser that has
irrevocably relinquished the right to request repurchase under this Paragraph
4F.
4G. PILLSBURY PAYMENTS. If a Termination Event (as defined in the
Pledge Agreement) shall occur, the Company shall prepay the Notes in an amount
equal to each Purchaser's Percentage Interest (as defined in the Intercreditor
Agreement) of the aggregate amount of payments made by Pillsbury to the Company
on the date of such Termination Event in satisfaction of any account receivable
owed by Pillsbury to the Company.
5. AFFIRMATIVE COVENANTS.
5A. REPORTING REQUIREMENTS.
5A(1) FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company covenants
that it will deliver to each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year,
(1) Consolidated statements of income and cash flows
of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of each such
quarterly period, and
(2) a Consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in form to the Significant Holders and
certified by an authorized financial officer of the Company, subject to
changes resulting from normal year-end adjustments; provided, however,
that delivery (within the time period specified above) of the Quarterly
Report on Form 10-Q of the Company for such quarterly period filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (i);
<PAGE>
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year,
(1) consolidating and Consolidated statements of
income and cash flows and stockholders' equity of the Company
and its Subsidiaries for such year, and
(2) a consolidating and Consolidated balance sheet of
the Company and its Subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding
Consolidated figures from the preceding annual audit, all in reasonable
detail and satisfactory in form to the Required Holder(s) and, as to
the Consolidated statements, reported on by independent public
accountants of recognized standing selected by the Company whose report
shall be without limitation as to the scope of the audit and
satisfactory in substance to the Required Holder(s); provided, however,
that delivery (within the time period specified above) of the Annual
Report of the Company on Form 10-K for such fiscal year filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission)
and copies of all press releases reporting financial results of the
Company or any of its Subsidiaries or any material development with
respect to the Company or any of its Subsidiaries;
(iv) promptly upon receipt thereof, the Annual Pack Plan to be
delivered pursuant to Section 4.1 of the Alliance Agreement and all
adjustments thereto and a reconciliation report dated as of the
Company's fiscal year-end setting forth, among other things, any
adjustments to Transfer Prices (as defined in the Alliance Agreement)
and the Management Fee (as defined in the Alliance Agreement) and such
other information with respect to or delivered in connection with the
Alliance Agreement as such Significant Holder may reasonably request;
(v) promptly upon completion, the Seneca Projection prepared
in accordance with Section 4.2 of the Alliance Agreement;
<PAGE>
(vi) as soon as practicable and in any event within 45 days
after the end of each of the first three quarterly periods of the
current fiscal year and within 90 days after the end of the last
quarterly period of the current fiscal year, with respect to the
Central Division (as defined in the Alliance Agreement), a balance
sheet, a profit and loss statement and a statement of cash flows, in
each case, in reasonable detail and specifying separately the financial
information attributable to the Alliance Agreement and any amounts
Pillsbury would be required to pay pursuant to Section 19.2(a) of the
Alliance Agreement if a termination was effective as of the last day of
the applicable quarterly period assuming a termination by Pillsbury
pursuant to Section 19.1(a)(i) of the Alliance Agreement;
(vii) promptly upon receipt thereof, notice of receipt of each
other report submitted to the Company or any Subsidiary after the Date
of Closing by independent accountants in connection with any annual,
interim or special audit made by such accountants of the books of the
Company or any such Subsidiary addressed to the Board of Directors of
the Company or any committee thereof and, upon request of a Significant
Holder, an opportunity to review the same at the offices of the
Company;
(viii) promptly and in any event, within twenty days, with
respect to the Pillsbury Agreements, and within ten days with respect
to the Bank Facility, after the Company knows or has reason to know (A)
of any material failure to perform, breach or default by any party to
the Pillsbury Agreements, or any other event of default, under any of
the Pillsbury Agreements, or (B) of any event of default, or any event
or condition which with notice or lapse of time or both would
constitute an event of default under the Bank Facility; and
(ix) Within 10 days after the date as of which financial
information is required to be delivered pursuant to clause (i) of this
paragraph 5A(1), a report as of the end of the Fiscal Quarter covered
by such financial information setting forth the Company's sales, for
such Fiscal Quarter and for the current year to date, and inventory, as
of the end of such Fiscal Quarter, separately for all of its Green
Giant brand products and for all other products; and
(x) with reasonable promptness, such other financial data as
such Significant Holder may reasonably request.
5A(2) OFFICER'S CERTIFICATE. Together with each delivery of the
financial statements required by clauses (i) and (ii) of paragraph 5A(1) above,
the Company shall deliver a certificate of a Principal Officer (with
computations in reasonable
<PAGE>
detail) demonstrating compliance with paragraphs 6A, 6B and 6C(1) through 6C(3)
and setting forth (except to the extent specifically set forth in such financial
statements) the aggregate amount of interest accrued on each of Funded Debt and
Current Debt (without duplication) of the Company and Subsidiaries (if any)
during the fiscal period covered by such financial statements and the aggregate
amounts of depreciation on physical property charged on the books of the Company
and Subsidiaries (if any) during such fiscal period, and identifying the 45 days
selected by the Company for purposes of the defined term "FUNDED DEBT" and
stating that there exists no Event of Default or Default, or, if any Event of
Default or Default exists, specifying the nature and period of existence thereof
and what action the Company proposes to take with respect thereto.
5A(3) ANNUAL ACCOUNTANT'S LETTER. Together with each delivery of
financial statements required by clause (ii) of paragraph 5A(1) above, the
Company will deliver to each Significant Holder a certificate of such
accountants stating that, in making the audit necessary for their report on such
financial statements, they are familiar with the respective terms of this
Agreement and the Alliance Agreement and have obtained no knowledge of any Event
of Default or Default, or, if they have obtained knowledge of any Event of
Default or Default, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards.
5A(4) SPECIAL INFORMATION. The Company also covenants that forthwith
upon a Principal Officer of the Company obtaining knowledge of:
(i) an Event of Default or Default;
(ii) the commencement of any Strategic Review Board (as
defined in the Alliance Agreement) review related to any dispute under
the Alliance Agreement and material development with respect to such
dispute;
(iii) a notice of termination delivered by Pillsbury pursuant
to the Alliance Agreement;
(iv) a material adverse change in the financial condition,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(v) the institution of legal proceedings against the Company
and/or any Subsidiary, which has a reasonable possibility of materially
adversely affecting the financial condition, business or operations of
such Company and its Subsidiaries, taken as a whole, or which in any
manner
<PAGE>
draws into question the validity of or has a reasonable possibility of
impairing the ability of the Company to perform its obligations under
this Agreement or any other Related Document to which it is a party; or
(vi) any (A) Environmental Liabilities which individually or
in the aggregate could have a material adverse effect on the business,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries, taken as a whole, (B) pending, threatened or anticipated
Environmental Proceedings which if decided adversely could have a
material adverse effect on the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries, taken as
a whole, (C) Environmental Notices, (D) Environmental Judgments and
Orders, or (E) Environmental Releases at, on, in, under or in any way
materially affecting the Properties;
the Company will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "QUALIFIED
INSTITUTIONAL BUYER" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense, to visit and inspect any of the properties of the Company and
its Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of any of such corporations with
the Principal Officers of the Company and its independent public accountants,
all at such reasonable times and as often as such Significant Holder may
reasonably request.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
<PAGE>
the provisions of paragraph 6C(1) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured.
5E. GUARANTEED OBLIGATIONS. The Company covenants that if, at any time,
after the date hereof, it or any of its Subsidiaries incurs or permits to exist
any Debt or other obligation (other than a performance bond or trade letter of
credit or letter of credit issued with respect to insurance coverages or like
financial accommodation and, in any case, issued in the ordinary course of
business) Guaranteed or collateralized in any other manner by any other Person,
it will simultaneously cause such other Person to execute and deliver to each
holder of any Note a guaranty agreement in form and substance reasonably
satisfactory to such holder guaranteeing payment of the principal amount of the
Notes and any premium and interest thereon, which bears the same ratio to the
total unpaid principal amount of the Notes as the amount of such other
obligation which is guaranteed bears to the total unpaid principal amount of
such other obligation, or if such other obligation is collateralized, to
collateralize the Notes equally and ratably with such other obligation;
provided, however, that the provisions of this paragraph 5E shall not apply to
guaranties or collateral provided by an industrial development agency or other
governmental agency or entity in connection with any financing or
sale-and-leaseback transaction involving that agency or entity which is not
prohibited by other provisions of this Agreement.
5F. CORPORATE EXISTENCE, ETC. Subject to the provisions of paragraph
6C(5), the Company covenants that it will at all times preserve and keep in full
force and effect its corporate existence, and rights and franchises material to
its business, and those of each of its Subsidiaries and will qualify, and cause
each of its Subsidiaries to qualify, to do business in any jurisdiction where
the failure to do so would have a material adverse effect on the financial
condition or operations of the Company and its Subsidiaries taken as a whole,
provided that the corporate existence of any such Subsidiary may be terminated,
if, in the good faith judgment of the Board of Directors of the Company, such
termination is in the best interests of the Company and is not disadvantageous
to the holders of any of the Notes.
5G. PAYMENT OF TAXES AND CLAIMS. The Company covenants that it will,
and will cause each of its Subsidiaries to, pay before they become delinquent:
(i) all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any
of its
<PAGE>
franchises, business, income or property before any penalty or
significant interest accrues thereon, and
(ii) all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums which have become due
and payable and which by law have or may become a Lien upon any of its
properties or assets;
provided, that items of the foregoing need not be paid which are being contested
in good faith by appropriate proceedings and if such accrual, reserve or other
appropriate provision, if any, as shall be required by generally accepted
accounting principles shall have been made therefor.
5H. COMPLIANCE WITH LAWS, ETC. The Company covenants that it will
comply and cause its Subsidiaries to comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
except where the necessity of compliance is being contested in good faith by
appropriate proceedings and adequate reserves or other provisions therefor shall
have been established on the books of the Company in accordance with generally
accepted accounting principles or where the failure to comply would not
materially adversely affect the financial condition or operations of the Company
and its Subsidiaries taken as a whole.
5I. NO INTEGRATION. The Company covenants that it has taken and will
continue to take all necessary steps so that the issuance of the Notes has not
and will not require registration under the Securities Act. The Company
covenants that no future offer and sale of debt securities of the Company of any
class will be made if, as a result of the doctrine of "integration", there is a
reasonable possibility that such offer and sale would result in the loss of the
entitlement of the Notes to the exemption from the registration requirements of
the Securities Act.
5J. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, product liability and public liability) and in
such amounts as is customary in the case of similarly situated corporations
engaged in the same or similar businesses and in any event reasonably acceptable
to the Required Holder(s).
5K. REDUCTION IN BANK FACILITY DEBT. The Company covenants that its
outstanding principal indebtedness under the Bank Facility will not exceed
$30,000,000 for a continuous period of not less than 30 days within each of the
following periods:
<PAGE>
November 1, 1997, through April 30, 1998; and
November 1, 1998, through April 30, 1999.
5L. OTHER COVENANTS. If (in the reasonable opinion of the Required
Holders) at any time and from time to time, after the date hereof, any of the
covenants, representations and warranties or events of default, or any other
material term or provision (other than any term or provision relating to payment
terms, interest rates or penalties), contained in the Bank Facility, or in any
document, agreement or instrument from time to time entered into by the Company
in respect thereof, is more favorable to the banks under the Bank Facility than
are the terms of this Agreement to the holders of the Notes, this Agreement
shall be amended to contain each such more favorable covenant, representation
and warranty, event of default, term or provision, and the Company hereby agrees
to so amend this Agreement and to execute and deliver all such documents
requested by the Required Holder(s) to reflect such Amendment. Prior to the
execution and delivery of such documents by the Company, this Agreement shall be
deemed to contain each such more favorable covenant, representation and
warranty, event of default, term or provision for purposes of determining the
rights and obligations hereunder.
6. NEGATIVE COVENANTS.
6A. CURRENT RATIO AND INTEREST COVERAGE. The Company covenants
that it will not permit at any time:
(i) the ratio of Current Assets to Current Liabilities to be
less than 1.25 to 1.0 for each Fiscal Quarter ending September and
December and 1.50 to 1.0 for all other Fiscal Quarters;
(ii) the Interest Coverage Ratio for its four consecutive
Fiscal Quarters most recently ended during any period specified below
to be less than the ratio set forth opposite such period:
June 28, 1997 through December 31, 1997 1.75 to 1
January 1, 1998 through March 31, 1999 2.00 to 1
April 1, 1999 through March 31, 2001 2.20 to 1
April 1, 2001 and thereafter 2.40 to 1
(iii) at any time, the excess of Current Assets over Current
Liabilities during any period specified below to be less than the
amount set forth opposite such period:
March 31, 1997 through March 31, 1998 $90,000,000
<PAGE>
April 1, 1998 through March 31, 1999 $100,000,000
April 1, 1999 and thereafter $110,000,000
6B. DIVIDEND LIMITATION. The Company covenants that it will not (a) pay
or declare any dividend on any class of its stock or make any other distribution
on account of any class of its stock, or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock (all of the foregoing being
herein called "RESTRICTED PAYMENTS"), or (b) make any Restricted Investment,
except out of Consolidated Net Earnings Available For Restricted Payments.
"CONSOLIDATED NET EARNINGS" shall mean consolidated gross revenues of the
Company and its Subsidiaries, less all operating and non-operating expenses of
the Company and its Subsidiaries, including all charges of a proper character
(including current and deferred taxes on income, provision for taxes on
unremitted foreign earnings which are included in gross revenues, and current
additions to reserves), but not including in gross revenues any gains (net of
expenses and taxes applicable thereto) in excess of losses resulting from the
sale, conversion or other disposition of capital assets (i.e., assets other than
Current Assets), any gains resulting from the write-up of assets, any equity of
the Company or any Subsidiary in the unremitted earnings of any corporation
which is not a Subsidiary, any earnings of any Person acquired by the Company or
any Subsidiary through purchase, merger or consolidation or otherwise for any
year prior to the year of acquisition, or any deferred credit representing the
excess of equity in any Subsidiary at the date of acquisition over the cost of
the investment in such Subsidiary, all determined in accordance with generally
accepted accounting principles. "CONSOLIDATED NET EARNINGS AVAILABLE FOR
RESTRICTED PAYMENTS" shall mean an amount equal to (i) the sum of $1,000,000
plus 50% (or minus 100% in case of a deficit) of Consolidated Net Earnings for
the period (taken as one accounting period) commencing on August 1, 1994, and
terminating at the end of the last fiscal quarter preceding the date of any
proposed Restricted Payment, less (ii) the sum of (A) the aggregate amount of
all dividends and other distributions paid or declared by the Company on any
class of its stock after July 31, 1994, (B) the excess of the aggregate amount
expended, directly or indirectly, after July 31, 1994, for the redemption,
purchase or other acquisition of any shares of its stock over the aggregate
amount received after July 31, 1994 as the net cash proceeds of the sale of any
shares of its stock and (C) the aggregate amount of Restricted Investments made
after July 31, 1994. There shall not be included in Restricted Payments or in
any computation of Consolidated Net Earnings Available For Restricted Payments:
(x) dividends paid, or distributions made, in stock of the Company; or (y)
exchanges of stock of one or more classes of the Company for other stock of the
Company, except to the extent that cash or other value is involved in such
exchange. There shall not be included in Restricted Payments the following
dividends payable in cash upon preferred stocks of the Company: (u) accumulated
dividends for [insert description of preferred stock] in the total
<PAGE>
amount of $34,771.50 for three semi-annual periods ending June 30, 1997; and (v)
dividends [insert description of preferred stock] not exceeding a total of
$11,590.50 per semi-annual period for each semi-annual period beginning on and
after July 1, 1997. The term "STOCK" as used in this paragraph 6B shall include
warrants or options to purchase stock. There shall not be included in Restricted
Payments the payment of the following dividends, payable in cash by the Company
(i) accumulated dividends on its 6% Cumulative Preferred Stock par value $.25
per share (200,000 shares outstanding) and on its 10% Cumulative Preferred
Stock, par value $.25 per share (807,240 shares outstanding) in an aggregate
amount not to exceed $34,771.50, and (ii) dividends accruing at the same rate on
such Cumulative Preferred Stock not exceeding an aggregate amount equal to
$11,590.50 for any six-month period commencing on and after July 1, 1997.
6C. LIEN, DEBT AND OTHER RESTRICTIONS. The Company covenants that
it will not and will not permit any Subsidiary to:
6C(1) LIENS. Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Notes in accordance
with the provisions of paragraph 5C), except
(i) Liens for taxes (including ad valorem and property taxes)
not yet due or which are being actively contested in good faith by
appropriate proceedings,
(ii) other Liens incidental to the conduct of its business or
the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use thereof in
the operation of its business,
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary,
(iv) any Lien existing on any property of any corporation at
the time it becomes a Subsidiary, or existing prior to the time of
acquisition upon any property acquired by the Company or any Subsidiary
through purchase, merger or consolidation or otherwise, whether or not
assumed by the Company or such Subsidiary, or placed upon property at
the time of acquisition by the Company or any Subsidiary to secure all
or a portion of (or to secure Debt incurred to pay all or a portion of)
the purchase price
<PAGE>
thereof, provided that any such Lien shall not encumber any other
property of the Company or any Subsidiary,
(v) any Lien renewing, extending or refunding any Lien
permitted by clause (iv) above, provided that the principal amount
secured is not increased, and the Lien is not extended to any other
property of the Company or any Subsidiary,
(vi) the extension of existing Liens on real property to
fixtures subsequently attached to such real property,
(vii) any Lien securing Funded Debt permitted by paragraph
6C(2) and listed on Schedule 8D hereto attached;
(viii) any common law right of setoff or banker's lien arising
(whether by law, contract or otherwise) in connection with ordinary
course of business deposit arrangements maintained by the Company or
its Subsidiaries with its banks or other financial institutions so long
as any such bank or other financial institution (A) shall be a party to
the Bank Facility and the Intercreditor Agreement, (B) shall not at any
time make loans or otherwise extend credit to the Company or any
Subsidiary, (C) does not maintain accounts (for the deposit of cash or
otherwise) for the benefit of the Company or any Subsidiary, (D) shall
have delivered to each holder of a Note a Sharing Letter, (E) shall
have waived in writing for the benefit of each holder of a Note such
common law right of setoff or banker's lien or (F) holds no more than
$100,000 of obligations owed to the Company or any Subsidiary and the
total of all such obligations permitted solely by this clause (F) shall
not exceed $500,000; and
(ix) any Lien to the banks a party to the Bank Facility so
long as the Intercreditor Agreement is in full force and effect;
provided that the aggregate amount of Debt secured by all such Liens under
clauses (iv), (v) or (vii) above does not violate clause (iii) of paragraph
6C(2).
6C(2) DEBT. Maintain, create, incur, assume or in any other way become
liable in respect of any Debt, at any time, if:
(i) the aggregate outstanding amount of Consolidated Senior
Funded Debt, whether Secured or Unsecured, exceeds an aggregate amount
equal to the applicable percentage of Consolidated Tangible Gross Worth
set forth below for any date of determination:
<PAGE>
April 1, 1997 through
December 31, 1997 62%
January 1, 1998 through
March 31, 1999 58%
April 1, 1999 through
March 31, 2000 54%
For any date on or after
April 1, 2000 50%
(ii) the aggregate outstanding amount of Consolidated Total
Funded Debt exceeds an aggregate amount equal to the applicable
percentage of Consolidated Tangible Gross Worth set forth below for any
date of determination:
DATE OF DETERMINATION PERCENTAGE
April 1, 1997 through
December 31, 1997 78%
January 1, 1998 through
March 31, 1999 76%
April 1, 1999 through
March 31, 2000 73%
April 1, 2000 through
March 31, 2001 70%
For any date on or after
April 1, 2001 65%
; provided, however, that if after the date hereof the Company shall
reduce (by conversion to equity, optional prepayment or otherwise) its
Subordinated Debt by an aggregate amount equal to $20,000,000 or more
(the "SUB DEBT REDUCTION"), the Company agrees to adjust the foregoing
ratios to take into account the Sub Debt Reduction to levels acceptable
to the Required Holders, such adjustment to occur as soon as possible
and in no event later than 60 days after the Sub Debt Reduction.
<PAGE>
(iii) the aggregate amount of Priority Debt exceeds an
aggregate amount equal to 10% of Consolidated Tangible Net Worth.
6C(3) LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES. Make or
permit to remain outstanding any loan or advance to, or guarantee, endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the obligations, stock or dividends of, or own, purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person, except that the Company or any
Subsidiary may
(i) make or permit to remain outstanding loans or advances to
any Subsidiary,
(ii) own, purchase or acquire stock, obligations or securities
of a Subsidiary or of a corporation which immediately after such
purchase or acquisition will be a Subsidiary,
(iii) acquire and own stock, obligations or securities having
an aggregate value of less than $500,000 received in settlement of
debts (created in the ordinary course of business) owing to the Company
or any Subsidiary,
(iv) own, purchase or acquire (A) prime commercial paper of a
domestic issuer rated at least A-1 or P-1, (B) certificates of deposit
with maturities of one year or less from the date of acquisition issued
by any commercial bank organized under the laws of the United States or
any foreign bank operating within the United States of America or any
Canadian bank (in any case, having capital resources in excess of
$500,000,000 or the Canadian dollar equivalent, and a short term debt
rating of A-1 or P-1 and a long term debt rating of A or higher or with
respect to any Canadian bank, the rating equivalent thereof) and
denominated in U.S. dollars or (C) direct obligations of the United
States Government or any agency thereof, and obligations guaranteed by
the United States Government, with maturities of one year or less from
the date of acquisition,
(v) endorse negotiable instruments for collection in the
ordinary course of business,
(vi) guarantee obligations of Subsidiaries which are not
prohibited by paragraph 6C(2),
<PAGE>
(vii) guarantee obligations of grower cooperatives, such
guarantees to be limited to transactions in the ordinary course of
business for the purpose of obtaining agricultural products to be
marketed by the Company and/or its Subsidiaries,
(viii) guarantee the industrial revenue bonds described in
Schedule 8D hereto attached and other bonds or obligations (in an
aggregate principal amount with respect to an individual issuance not
in excess of $10,000,000) issued by industrial development agencies or
other governmental agencies or entities, which bonds or obligations
constitute debt which, if the Company were the primary obligor, would
not be prohibited by other provisions of this Agreement,
(ix) permit to remain outstanding such guaranties as are
listed on Schedule 6C(3) hereto attached and guaranties issued with
respect to renewals, replacements, extensions or refundings of the debt
guaranteed by the guaranties listed in Schedule 6C(3), and
(x) continue to hold the investments the cost of which shall
not exceed $6,079,000 in the form of capital stock of Moog, Inc. as of
the Date of Closing (the "MOOG INVESTMENT"), and
(xi) make or permit to remain outstanding loans or advances
to, or guarantee, endorse or otherwise be or become contingently liable
in connection with the obligations, stock or dividends of, or own,
purchase or acquire stock, obligations or securities of, any other
Person, provided that the aggregate principal amount of such loans and
advances, plus the aggregate amount of such contingent liabilities,
plus (without duplication) the aggregate amount of liabilities
permitted by clauses (i) and (v) of paragraph 6C(8), plus the aggregate
amount of the investment (at original cost) in such stock, obligations
and securities at any time outstanding for the Company and all
Subsidiaries exclusive of the Moog Investment (herein called
"RESTRICTED INVESTMENTS"), shall not exceed the amount permitted under
paragraph 6B; and further provided that no Subsidiary (other than
Marion Foods, Inc., SSP Company, Inc. and Seneca Foods International
Ltd.) shall make any loan or advance to, or acquire any stock,
obligations or securities of, the Company.
6C(4) SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise dispose
of, or part with control of, any shares of stock or Funded or Current Debt of
any Subsidiary, except to the Company or another Subsidiary, and except that all
shares of stock and Debt of any Subsidiary at the time owned by or owed to the
Company and any Subsidiary may be sold as an entirety for a cash consideration
<PAGE>
which represents the fair value (as determined in good faith by the Board of
Directors of the Company) at the time of sale of the shares of stock and Debt so
sold, provided that the assets of such Subsidiary do not constitute 10% or more
of Consolidated Tangible Gross Worth for the fiscal year then most recently
ended and that such Subsidiary shall not have contributed 10% or more of
Consolidated Net Earnings for any of the three fiscal years then most recently
ended, and further provided that, at the time of such sale, such Subsidiary
shall not own, directly or indirectly, any shares of stock or Debt of any other
Subsidiary (unless all of the shares of stock and Debt of such other Subsidiary
owned, directly or indirectly, by the Company and all Subsidiaries are
simultaneously being sold as permitted by this paragraph 6C(4));
6C(5) MERGER AND SALE OF ASSETS. Merge or consolidate with any other
corporation or sell, lease or transfer or otherwise dispose of assets if the net
value of all assets so disposed of constitute 10% or more of Consolidated
Tangible Gross Worth for the fiscal year then most recently ended, or assets
which shall have contributed 10% or more of Consolidated Net Earnings for any of
the three fiscal years then most recently ended, to any Person, except that
(i) any Subsidiary may merge with the Company (provided that
the Company shall be the continuing or surviving corporation) or with
any one or more other Subsidiaries,
(ii) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to the Company or another Subsidiary,
(iii) any Subsidiary may sell or otherwise dispose of all or
substantially all of its assets subject to the conditions specified in
paragraph 6C(4) with respect to a sale of the stock of such Subsidiary,
(iv) the Company may merge with any other corporation,
provided that (A) the Company shall be the continuing or surviving
corporation, and (B) the Company as the continuing or surviving
corporation shall not, immediately after such merger, be in default
under this Agreement or on the Notes, including all covenants herein
and therein contained,
(v) any Subsidiary may merge or consolidate with any other
corporation, provided that, immediately after giving effect to such
merger or consolidation (A) the continuing or surviving corporation of
such merger or consolidation shall constitute a Subsidiary, and (B) no
Event of Default or Default shall exist, and
<PAGE>
(vi) the Company may sell, lease, transfer or otherwise
dispose of any or all of the assets described in Schedule 6C(5);
6C(6) SALE AND LEASE-BACK. Enter into any arrangement with any lender
or investor or to which such lender or investor is a party providing for the
leasing by the Company or any Subsidiary of real or personal property which has
been or is to be sold or transferred by the Company or any Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or rental
obligations of the Company or any Subsidiary; provided, however, that the
Company or a Subsidiary may transfer property to, and lease-back such property
from, an industrial development agency or other governmental entity in a
transaction described in Schedule 6C(6) hereto attached or in a financing
transaction creating debt which is not prohibited under other provisions of this
Agreement;
6C(7) SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or discount
or otherwise sell for less than the face value thereof, any of its notes or
accounts receivable; or
6C(8) CERTAIN CONTRACTS. Except as hereinabove permitted, enter into or
be a party to
(i) any contract providing for the making of loans, advances
or capital contributions to any Person other than a Subsidiary (except
where the obligation is limited to a maximum amount which is within the
limitations of clause (xi) of paragraph 6C(3)), or for the purchase of
any property (other than purchases of inventory in the ordinary course
of business) from any Person, in each case in order to enable such
Person to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses, or
(ii) any contract for the purchase of materials, supplies or
other property or services if such contract (or any related document)
requires that payment for such materials, supplies or other property or
services shall be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made or
tendered, or
(iii) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in commercial
leases then in general use or requires that the lessee purchase or
otherwise acquire securities or obligation of the lessor, or
<PAGE>
(iv) any contract for the sale or use of materials, supplies
or other property, or the rendering of services, if such contract (or
any related document) requires that payment for such materials,
supplies or other property, or the use thereof, or payment for such
services, shall be subordinated to any indebtedness (of the purchaser
or user of such materials, supplies or other property or the Person
entitled to the benefit of such services) owed or to be owed to any
Person, or
(v) any other contract which, in economic effect, is
substantially equivalent to a guarantee, except where the obligation is
limited to a fixed maximum amount which is within the limitations of
clause (xi) of paragraph 6C(3).
6D. ISSUANCE OF STOCK BY SUBSIDIARIES. The Company covenants that it
will not permit any Subsidiary (either directly, or indirectly by the issuance
of rights or options for, or securities convertible into, such shares) to issue,
sell or otherwise dispose of any class of its stock (other than directors'
qualifying shares) except to the Company or another Subsidiary.
6E. NO PREPAYMENT, MODIFICATION OR CONSENT. The Company will not (i)
prepay the Pillsbury Subordinated Note except for any Permitted Payments (as
defined in the Pillsbury Subordinated Note) required thereunder and (ii) amend,
modify, supplement or waive any term, condition or other provision of (A) any
Pillsbury Security Document (other than as contemplated by Section 10.06 of the
Asset Purchase Agreement), (B) the Pillsbury Subordinated Note (except as
permitted under Section 2.02(a) of the Asset Purchase Agreement and the second
paragraph of Section 1 of the Pillsbury Subordinated Note), (C) Article XIX (and
related definitions), Section 23.8 with respect to Article XIX of the Alliance
Agreement (and related definitions) or any other material provision of the
Alliance Agreement (and related definitions) or (D) provisions of Sections 7.12
through 7.15 of the Bank Facility or (iii) consent, if the Company's consent is
so required, to an assignment by Pillsbury of the Alliance Agreement, in any
case, without the prior written consent of each Significant Holder.
6F. PERMITTED ACQUISITIONS. The Company will not enter into any
Acquisition except Permitted Acquisitions.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
<PAGE>
(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 3 Business Days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any obligation under a conditional
sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured
by a purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any period of
grace provided with respect thereto, or the Company or any Subsidiary
fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created
(or if any other event thereunder or under any such agreement shall
occur and be continuing) and the effect of such failure or other event
is to cause, or to permit the holder or holders of such obligation (or
a trustee on behalf of such holder or holders) to cause, such
obligation to become due (or to be repurchased or defeased by the
Company or any Subsidiary) prior to any stated maturity; or
(iv) any representation or warranty made by the Company herein
or by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein, including agreements,
terms or conditions incorporated herein by reference, and such failure
shall not be remedied within 30 days after any Principal Officer of the
Company obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as such
debts become due; or
<PAGE>
(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "BANKRUPTCY LAW"), of any
jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of
the Company or any Subsidiary, or of any substantial part of the assets
of the Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Company or any Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up
of the Company or such Subsidiary which requires (A) the divestiture of
assets constituting 10% or more of Consolidated Tangible Gross Worth
for the fiscal year then most recently ended, or (B) the divestiture of
the stock of a Subsidiary whose assets constitute 10% or more of
Consolidated Tangible Gross Worth for the fiscal year then most
recently ended, or (C) the divestiture of assets, or stock of a
Subsidiary, which shall have contributed 10% or more of Consolidated
Net Earnings for any of the three fiscal years then most recently
ended, and, in any case, such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
<PAGE>
(xiii) a final judgment in an amount in excess of $1,000,000
is rendered against the Company or any Subsidiary and, on the 60th day
following entry thereof, such judgment remains undischarged or
unvacated or execution thereof remains unstayed and on such day the
Company would not be able to incur a principal amount of Debt pursuant
to paragraph 6C(2) in an amount equal to the amount of such judgment,
or on the 60th day following expiration of any applicable stay, such
judgment is not discharged or vacated and on such day the Company would
not be able to incur a principal amount of Debt pursuant to paragraph
6C(2) equal to the amount of such judgment; or
(xiv) the security interest granted to the Collateral Agent
pursuant to the Pledge Agreement shall fail at any time to constitute a
first priority security interest in or assignment of the Collateral
described in such Pledge Agreement (except for any failure caused by
the action or inaction of the Collateral Agent); or the Pledge
Agreement shall cease to be in full force and effect in whole or in
part for any reason whatsoever; or the Company or any other Person
shall disavow or attempt to terminate any provision of the Pledge
Agreement; or
(xv) an (A) event of default (as defined therein) shall occur
under the Bank Facility or any of the Pillsbury Security Documents, or
(B) a) a condition to the availability of the commitment of the banks
that are a party to the Bank Facility to make loans has not been
satisfied (unless the satisfaction of such condition has been waived or
subsequently satisfied) and b) a majority of such banks shall fail or
refuse to advance funds under the Bank Facility; or
(xvi) any party shall fail to comply with any material term of
any Related Document to which it is a party (other than this Agreement)
beyond applicable grace periods, if any, specified in such Related
Documents; or
(xvii) a notice of termination is delivered under the Alliance
Agreement or the Alliance Agreement shall terminate for any reason
whatsoever; or
(xviii) the Company or any Person shall disavow or attempt to
terminate any Sharing Letter or any Sharing Letter shall cease to be in
full force and effect in whole or in part for any reason whatsoever
unless the Company shall have otherwise complied with the provisions of
6C(1)(viii); or
<PAGE>
(xix) any Person shall disavow or attempt to terminate the
Intercreditor Agreement or the Intercreditor Agreement shall cease to
be in full force and effect in whole or in part for any reason
whatsoever; or
(xx) Pillsbury shall in any material respect fail to perform
or otherwise breach or default under any provision of the Pillsbury
Note applicable to Pillsbury; or
(xxi) any amount of principal or interest is paid, credited or
otherwise satisfied (whether by payment, offset or any other method,
and whether by voluntary or mandatory prepayment) in violation of the
Pillsbury Subordinated Note or this Agreement other than the payment of
a Permitted Payment (as defined in the Pillsbury Subordinated Note); or
(xxii) Pillsbury, the Company or any other Person denies or
contests, including the bringing of any action or proceeding to
contest, the effectiveness or validity of the Subordination Letter or
of the subordination or non-recourse provisions of the Pillsbury
Subordinated Note, or any of such provisions is declared invalid or
unenforceable; or
(xxiii) the Company shall fail to maintain the Bank Facility
having a remaining term of at least one year at any time during which
the ratio of Funded Debt to Consolidated Tangible Gross Worth is
greater than 40 percent;
then:
(a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A, the holder of any Note (other than
the Company or any Subsidiary or Affiliate) may at its option, by
notice in writing to the Company, declare such Note to be, and such
Note shall thereupon be and become, immediately due and payable at par
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause
(vii), (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, all of the Notes at the time outstanding shall automatically
become immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Company, and
<PAGE>
(c) if such event is any other Event of Default, the Required
Holder(s) may at its or their option, by notice in writing to the
Company, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the holder or holders of at least 76% of the aggregate principal amount of
the Notes from time to time outstanding may, by notice in writing to the
Company, rescind and annul such declaration and its consequences if:
(i) all overdue interest on the Notes, the principal of and
Yield-Maintenance Amount, if any, payable with respect to any Notes
which have become due otherwise than by reason of such declaration, and
interest on such overdue interest and overdue principal and
Yield-Maintenance Amount at the rate specified in the Notes shall have
been paid,
(ii) any amounts which have become due solely by reason of
such declaration shall not have been paid,
(iii) all Events of Default and Defaults, other than
non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C,
and
(iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement.
No such rescission or annulment shall extend to or affect any subsequent Event
of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or
<PAGE>
by action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants:
8A. ORGANIZATION; AUTHORITY; ENFORCEABILITY. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of New York, each Subsidiary is duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated, and the
Company has and each Subsidiary has the corporate power to own its respective
property and to carry on its respective business as now being conducted, and in
the case of the Company, to enter into and perform all of its obligations under
this Agreement and the Notes and to issue and sell the Notes. Each of the
Company and its Subsidiaries is duly licensed or qualified to do business as a
foreign corporation in each state where the failure to be so licensed or
qualified would have a material adverse effect on the financial condition or
operations of the Company and its Subsidiaries taken as a whole and has all
corporate power, material licenses, franchises and other governmental
authorizations and approvals necessary to carry on its present business, with
respect to which the failure to so possess would have a material adverse effect
on the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole. Schedule 8A contains complete and correct
lists of (i) each jurisdiction in which the Company is licensed or qualified to
do business as a foreign corporation and (ii) the Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of the organization,
each jurisdiction in which it is licensed or qualified to do business as a
foreign corporation, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary. This Agreement is, and the Notes when issued and delivered
hereunder will be, legal, valid, binding and enforceable obligations of the
Company.
8B. FINANCIAL STATEMENTS. The Company has furnished to each Purchaser
with the following financial statements, identified by a principal financial
officer of the Company: (i) a consolidated balance sheet of the Company and its
Subsidiaries as at March 31 in each of the years 1995 to 1996, inclusive, and a
consolidated statement of income and statement of cash flows of the Company and
its Subsidiaries for each such year all certified by Deloitte & Touche
<PAGE>
LLP or its predecessor firm; and (ii) a consolidated balance sheet of the
Company and its Subsidiaries as at December 31 in each of the years 1995 and
1996 and a consolidated statement of income and statement of cash flows for the
three-month period ended on each such date, prepared by the Company. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and normal year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income and
statements of cash flows fairly present the results of the operations of the
Company and its Subsidiaries for the periods indicated. There has been no
material adverse change in the business, condition or operations (financial or
otherwise) of the Company and its Subsidiaries taken as a whole since March 31,
1996.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which might result in any material adverse change in the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as specified on Schedule 8D and as permitted by
paragraph 6C(2). There exists no default under the provisions of any instrument
evidencing such Debt or of any agreement relating thereto.
8E. POLLUTION AND OTHER REGULATIONS. Except as disclosed on Schedule 8E
hereto, each of the Company and its Subsidiaries is in compliance in all
material respects with all laws and regulations relating to pollution and
environmental control (including all regulations and standards of the
Environmental Protection Administration), equal employment opportunity and
employee safety in all jurisdictions in which it is presently doing business,
and the Company will use its best efforts to comply, and to cause each of its
Subsidiaries to comply, in all material respects with all such laws and
regulations which may be legally imposed in the future in jurisdictions in which
the Company or any of its Subsidiaries may then be doing business except where
the necessity of compliance is being contested in good faith by appropriate
proceedings and adequate reserves or other provisions therefor shall have been
established on the books of the Company in accordance with generally accepted
accounting principles or where the failure to comply would
<PAGE>
not materially adversely affect the financial condition or operations of the
Company and its Subsidiaries taken as a whole. There is no enforcement order in
effect with respect to the Company and its Subsidiaries issued by any federal or
state agency which regulates pollution, environmental control, equal employment
opportunity and employee safety.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, or financial condition. Neither the
execution nor delivery of this Agreement or the Notes, nor the offering,
issuance and sale of the Notes, nor fulfillment of nor compliance with the terms
and provisions hereof and of the Notes will conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to,
the charter or by-laws of the Company or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries is subject. Schedule 8G-1 is a true,
correct and complete list of all agreements (the "MATERIAL AGREEMENTS") that (i)
evidence Debt, (ii) contain financial covenants or financial restrictions on the
Company or any Subsidiary (iii) are between Pillsbury and the Company or any
Subsidiary, (iv) are being assigned to the Company under the Asset Purchase
Agreement or (v) are material in the operation of the Alliance Plants and
involve single sources of material supplies or services with respect to the
operations of the Alliance Plants and the conduct of the business of the Company
with respect thereto. Neither the Company nor any of its Subsidiaries is a party
to, or otherwise subject to any provision contained in, any instrument
evidencing indebtedness of the Company or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its charter)
which limits the amount of, or otherwise imposes restrictions on the incurring
of, Debt of the Company of the type to be evidenced by the Notes except as set
forth in the agreements listed in Schedule 8G-2 attached hereto.
<PAGE>
8H. OFFERING OF NOTE. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Note or any similar security of
the Company for sale to, or solicited any offers to buy the Note or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Note to the provisions of
section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction. The Company hereby represents and
warrants to each Purchaser that, within the preceding twelve months, neither it
nor any other Person acting on behalf of it has offered or sold to any Person
any Notes, or any securities of the same or a similar class as the Notes, or any
other substantially similar securities of the Company.
8I. USE OF PROCEEDS. Neither the Company nor any Subsidiary owns (other
than the Moog Investment) or has any present intention of acquiring any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). The proceeds of sale
of the Notes will be used to acquire the assets identified on Schedule 8I
hereto, to expand operations in connection with the Company's existing business
and as contemplated by the Pillsbury Agreements and for other general corporate
purposes. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock or for the purpose of maintaining, reducing or retiring any
Debt which was originally incurred to purchase or carry any stock that is
currently a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation G. Neither
the Company nor any agent acting on behalf of the Company has taken or will take
any action which might cause this Agreement or the Notes to violate Regulation
G, Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company to
be incurred with respect to any Plan (other than a Multiemployer Plan) by the
Company or any of its Subsidiaries which is or would be materially adverse to
the Company and its Subsidiaries taken as a whole. [Except as described on
Schedule 8J,] neither the Company nor any of its Subsidiaries has incurred or
presently expects to incur any withdrawal liability under Title IV of ERISA with
respect to any Multiemployer Plan which is or would be materially adverse to the
Company
<PAGE>
and its Subsidiaries taken as a whole. No Plan providing welfare benefits to
retired former employees of the Company or any of its Subsidiaries has been
established or is maintained for which the present value of future benefits
payable, in excess of irrevocably designated funds for such purpose, is or would
be materially adverse to the financial condition of the Company and its
Subsidiaries taken as a whole. The execution and delivery of this Agreement and
the issuance and sale of the Note will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA or in connection with which
a penalty could be imposed under Section 502(i) of ERISA or a tax could be
imposed pursuant to section 4975 of the Code. The representation by the Company
in the next preceding sentence is made in reliance upon and subject to the
accuracy of representation of each Purchaser in paragraph 9B. The Borrower
represents and warrants that, (i) with respect to each "plan" identified
pursuant to clause (v) of paragraph 9, the Borrower is neither a "party in
interest" (as defined in Title I, Section 3(14) of ERISA) nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986,
as amended), and (ii) with respect to each "plan" identified pursuant to clause
(iv) of Paragraph 9, neither it nor any "affiliate" (as defined in Section V(c)
of PTE 84-14) is described in the proviso to such clause (iv).
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Note is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Date of Closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Note or fulfillment of or compliance with the
terms and provisions hereof or of the Note.
8L. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to a Purchaser by or on behalf of the Company
in connection herewith contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein not misleading. There is no fact peculiar to the Company or
any of its Subsidiaries which materially adversely affects or in the future may
(so far as the Company can now foresee) materially adversely affect the
business, property or assets, or financial condition of the Company or any of
its Subsidiaries and which has not been set forth in this Agreement or in the
other documents, certificates and statements furnished to a Purchaser by or on
behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby.
<PAGE>
8M. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
balance sheet as at March 31, 1996 referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business and other
than exceptions to which, taken as a whole, are not material) and any assets
purchased pursuant to the Asset Purchase Agreement, subject to no Lien of any
kind except Liens not prohibited by paragraph 6C(1) and Liens required to be
discharged at the time of Closing (all of which will be so discharged). All
leases necessary in any material respect for the conduct of the respective
businesses of the Company and its Subsidiaries, taken as a whole, are valid and
subsisting and are in full force and effect.
8N. PATENTS, LICENSES, FRANCHISE, ETC. The Company and its Subsidiaries
possess all franchises, certificates, licenses, permits and other authorizations
from governmental political subdivisions or regulatory authorities and all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, free from burdensome restrictions, that are necessary in any material
respect for the ownership, maintenance and operation of their respective
properties and assets, as presently conducted and as proposed to be conducted,
and neither the Company nor any of its Subsidiaries is in violation of any such
authorizations and rights in any material respect. No event has occurred which
permits, or after notice or lapse of time (except expiration of the stated term
thereof), or both, would permit, the revocation or termination of any such
franchise, license, authorization or other rights so as to affect adversely in
any material respect the business, condition, or operations (financial or
otherwise) of the Company and its Subsidiaries, taken as whole. All such
franchises, permits, licenses and other authority have been validly issued to
the Company or its Subsidiaries, as the case may be, by the appropriate
governmental authority and each such franchise, permit, license or other
authority is valid and subsisting. The Company and its Subsidiaries are
operating their respective businesses in material compliance with the terms and
conditions of such franchises, permits, licenses and other authority and are in
material compliance with all applicable Federal, state and local law.
8O. INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "INVESTMENT COMPANY", or a company "CONTROLLED" by an
"INVESTMENT COMPANY", within the meaning of the Investment Company Act of 1940,
as amended.
8P. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor
any of its Subsidiaries is a "HOLDING COMPANY", or a "SUBSIDIARY COMPANY" of a
"HOLDING COMPANY" or an "AFFILIATE" of a "HOLDING COMPANY" or of a "SUBSIDIARY
<PAGE>
COMPANY" of a "HOLDING COMPANY", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
8Q. SOLVENCY. As of the Date of Closing and after giving effect to the
transactions contemplated hereunder (i) the amount of the "present fair salable
value" of the assets of the Company will, as of such date, exceed the amount of
all "liabilities of the Company, contingent or otherwise," as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the solvency of debtors, (ii) the present fair
salable value of the assets of the Company will, as of the Date of Closing, be
greater than the amount that will be required to pay the liability of the
Company on its debts as such debts become absolute and matured, (iii) the
Company will not have, as of the Date of Closing, an unreasonably small amount
of capital with which to conduct its business, and (iv) the Company will be able
to pay its debts as they mature. For purposes of this paragraph 8Q "DEBT" means
"liability or a claim", and "CLAIM" means any (x) right to payment, whether or
not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
8R. ABSENCE OF FOREIGN OR ENEMY STATUS. Neither the Company, nor any of
its Subsidiaries is an "ENEMY" or an "ALLY OF THE ENEMY" within the meaning of
section 2 of the Trading with the Enemy Act (50 U.S.C. App. ss.ss. 1 et seq.),
as amended. Neither the Company nor any of its Subsidiaries is in violation of,
and neither the issuance and sale of the Notes by the Company nor the use of the
proceeds thereof as contemplated by this Agreement will violate, the Trading
with the Enemy Act, as amended, or any executive orders, proclamations or
regulations issued pursuant thereto, including, without limitation, regulations
administered by the Office of Foreign Asset Control of the Department of the
Treasury (31 C.F.R., Subtitle B, Chapter V).
8S. PILLSBURY AGREEMENTS. Each Purchaser has received a true, correct
and duly authorized and executed copy of each of the Pillsbury Agreement and
each other principal document between Pillsbury and the Company, including all
schedules and exhibits thereto and side letters, if any, affecting the terms
thereof or delivered in connection therewith, together with all amendments and
waivers thereto, and no material provision of the foregoing agreements has been
amended, supplemented or otherwise modified or waived without the prior written
consent of each Purchaser.
<PAGE>
8T. BANK FACILITY. Each Purchaser has received a true, correct and duly
authorized and executed copy of each of the documents executed in connection
with the Bank Facility, including all schedules and exhibits thereto and side
letters, if any, affecting the terms thereof or delivered in connection
therewith, together with all amendments and waivers thereto, and no material
provision of any of the foregoing agreements has been amended, supplemented or
otherwise modified or waived without the prior written consent of each
Purchaser. The Company has the corporate authority to request and receive, and
each of the banks a party to the Bank Facility has an obligation to advance,
funds under the Bank Facility pursuant to the terms and conditions thereof.
9. REPRESENTATIONS OF THE PURCHASER. Each Purchaser (other than CoBank,
ACB) represents and warrants, as to itself, that, with respect to each source of
funds to be used by it to purchase the Notes (respectively, the "SOURCE"), at
least one of the following statements is accurate as of the Closing Date:
(i) the Source is an "insurance company general account," as
such term is defined in section V(e) of prohibited Transaction Class
Exemption 95-60 (issued July 12, 1995) (PTE 95-60), and the purchase is
exempt under the provisions of PTE 95-60.
(ii) The Source is a "governmental plan" as defined in Title
I, Section 3(32) of ERISA;
(iii) The Source is either (i) an insurance company pooled
separate account, and the purchase is exempt in accordance with
Prohibited Transaction Exemption 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, in which case the purchaser is
exempt in accordance with PTE 91-38 (issued July 12, 1991);
(iv) The Source is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84- 14, issued March 13, 1984) which QPAM has been identified in
writing, and the purchase is exempt under PTE 84-14 provided that no
other party to the transaction described in this Agreement and no
"affiliate" of such other party (as defined in Section V(c) of PTE
84-14) has at this time, and has not exercised at any time during the
immediately preceding year, the authority to appoint or terminate said
QPAM as manager of the assets of any "plan" identified in writing
pursuant to this clause (iv) or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified "plans";
<PAGE>
(v) The Source is one or more "plans" or a separate account or
trust fund compromised of one or more "plans," each of which has been
identified in writing pursuant to this clause (v).
As used in this section, "plan" or "plans" shall have the meaning set
forth in Title I, Section 3(3) of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined
in the introductory sentence shall have the respective meanings specified
therein, and the following terms shall have the meanings specified with respect
thereto below:
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, .50% over the yield to maturity implied by (i) the yields reported,
as of 10:00 A.M. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to
<PAGE>
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between yields reported for various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"TELERATE" shall mean Telerate Access Services or if no longer
available such other comparable service as the Required Holders may select as a
substitute therefor.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. OTHER TERMS.
"ACQUISITION" means any transaction, or any series of related
transactions, by which the Company and/or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger or otherwise, (b) acquires (in one transaction or as the most recent
transaction in a series of transactions) control of at least a majority in
ordinary voting power of the securities of a Person which have ordinary voting
power for the election of
<PAGE>
directors or (c) otherwise acquires control of a more than 5% ownership interest
in any such Person.
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under Control with, such
first Person, and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "AFFILIATE"
is a reference to an Affiliate of the Company.
"ALLIANCE AGREEMENT" shall mean that certain Alliance Agreement by and
among the Company, Pillsbury and Grand Metropolitan, Inc., dated December 8,
1994, as it has been amended by that certain First Amendment dated February 10,
1995 and as it may be further amended, modified or supplemented from time to
time in accordance with its terms and the terms hereof.
"ALLIANCE PLANTS" shall have the meaning specified in the Alliance
Agreement.
"ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase Agreement by
and between the Company and Pillsbury dated December 8, 1994, as it has been
amended by that certain First Amendment dated February 10, 1995 and as it may be
further amended, modified or supplemented in accordance with its terms and the
terms hereof.
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BANK FACILITY" shall mean the Amended and Restated Credit Agreement
dated as of September 24, 1997 among the Company,The Chase Manhattan Bank, as
Agent and banks a party thereto, having an aggregate commitment of at least
$75,000,000, and any substitution therefor, as it may be amended, modified or
supplemented from time to time in accordance with its terms and the terms
hereof.
<PAGE>
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"CHANGE OF CONTROL EVENT" shall mean (i) the beneficial ownership or
acquisition by any Person or group of affiliated Persons (other than directly or
indirectly through the Wolcott or Kayser families) in any transaction or series
of related transactions of shares of the Company representing more than 50% of
the total number of votes which the Company's shareholders (assuming full
participation of all of the shareholders) shall be entitled to cast in the
election of the Board of Directors of the Company; and (ii) the Wolcott and
Kayser families shall cease to own shares, directly or indirectly, or have the
power to vote shares held by trusts of which all of the trustees of such trusts
are family members and such trustees have independent discretion regarding the
exercise of the associated voting rights, having in the aggregate at least 25%
of the total number of votes which the Company's shareholders (assuming full
participation of all of the shareholders) shall be entitled to cast in the
election of the Board of Directors of the Company.
"CLOSING" shall have the meaning set forth in paragraph 2 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean, collectively, the "COLLATERAL" described in
the Pledge Agreement.
"COLLATERAL AGENT" shall mean The Chase Manhattan Bank, serving as
Collateral Agent under the Pledge Agreement.
"CONSOLIDATED" shall mean the consolidated financial information of the
Company and each of its Subsidiaries under generally accepted accounting
principles.
"CONSOLIDATED EBITDA" shall mean, for any fiscal period of the Company,
an amount equal to (A) the sum for such fiscal period of Consolidated Net Income
(Loss) and, to the extent subtracted in determining such Consolidated Net Income
(Loss), provisions for (i) taxes based on income, (ii) Consolidated Interest
<PAGE>
Expense, and (iii) depreciation and amortization expense minus (B) any items of
gain (or plus any items of loss) which were included in determining such
Consolidated Net Income (Loss) and were (x) not realized in the ordinary course
of business (whether or not classified as "ordinary" by generally accepted
accounting principles), or (y) the result of any sale of assets, or (z)
resulting from minority investments plus (C) $15,078,000 for the non-recurring
write-off that occurred in the second Fiscal Quarter of 1996 plus (D) $4,279,000
capital gain on the sale of the Peabody property located in Peabody,
Massachusetts that occurred in second fiscal quarter of 1996.
"CONSOLIDATED INTEREST EXPENSE" for any period shall mean the
Consolidated interest expense (whether cash or non-cash interest expense or
deferred or accrued interest expense and including, without limitation,
capitalized interest expense and the interest portion of all Capitalized Lease
Obligations during such period) determined in accordance with generally accepted
accounting principles.
"CONSOLIDATED NET EARNINGS" shall have the meaning specified in
paragraph 6B.
"CONSOLIDATED NET INCOME (LOSS)" shall mean, for any fiscal period of
the Company, the Consolidated net income (or loss) of the Company and its
Subsidiaries for such period (taken as a single accounting period) determined in
conformity with generally accepted accounting principles, but excluding
therefrom (to the extent otherwise included therein) (i) any gains or losses,
together with any related provision for taxes, realized upon any sale of assets
other than in the ordinary course of business, (ii) any income or loss of any
Person accrued prior to the date such Person becomes a Subsidiary of the Company
or is merged into or consolidated with the Company or any Subsidiary or all or
substantially all of such Person's assets are acquired by the Company or any
Subsidiary, and (iii) the income of the Company or any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by the
Company or such Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation.
"CONSOLIDATED TANGIBLE GROSS WORTH" shall mean Total Funded Debt plus
Total Stockholders' Equity, minus Intangibles.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean Total Stockholders' Equity
minus Intangibles.
<PAGE>
"CURRENT ASSETS" shall mean the Consolidated current assets after
eliminating all inter-company items, in accordance with generally accepted
accounting principles.
"CURRENT DEBT" shall mean any obligation for borrowed money (and any
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money) payable on demand or within a
period of one year from the date of the creation thereof; provided that any
obligation, other than the Bank Facility, shall be treated as Funded Debt
regardless of its term, if such obligation is renewable pursuant to the terms
thereof or of a revolving credit or similar agreement effective for more than
one year after the date of the creation of such obligation or of any such
agreement. Any obligation secured by a Lien on, or payable out of the proceeds
of production from, property of the Company or any Subsidiary shall be deemed to
be Funded or Current Debt, as the case may be, of the Company or such Subsidiary
even though such obligation shall not be assumed by the Company or such
Subsidiary.
"CURRENT LIABILITIES" shall mean the Consolidated total liabilities
(after eliminating all inter-company items) which may be properly classified as
current liabilities, in accordance with generally accepted accounting
principles.
"DATE OF CLOSING" shall have the meaning set forth in paragraph 2
hereof.
"DEBT" shall mean Funded Debt and/or Current Debt, as the case may be.
"ENVIRONMENTAL AUTHORITY" shall mean any foreign, federal, state, local
or regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.
"ENVIRONMENTAL JUDGMENTS AND ORDERS" shall mean all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
degree or order.
"ENVIRONMENTAL LIABILITIES" shall mean any liabilities, whether accrued
or contingent, arising from or relating in any way to any Environmental
Requirements.
"ENVIRONMENTAL NOTICES" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
<PAGE>
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also shall
mean (i) any written communication from any private Person threatening
litigation or administrative proceedings against or involving any of the Company
or a Subsidiary relating to alleged violation of any Environmental Requirements
and (ii) any complaint, petition or similar documents filed by any private
Person commencing litigation or administrative proceedings against or involving
the Company or a Subsidiary relating to alleged violation of any Environmental
Requirements.
"ENVIRONMENTAL PROCEEDINGS" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"ENVIRONMENTAL RELEASES" shall mean releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) by the
Company or any of its Subsidiaries of Hazardous Materials. Environmental
Releases does not include releases for which no remediation or reporting is
required by applicable Environmental Requirements and which do not present a
danger to health, safety or the environment.
"ENVIRONMENTAL REQUIREMENTS" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FISCAL QUARTER" shall mean the approximately 13-week period ending on
a Saturday near the close of each calendar quarter of each year as established
on an annual basis by the Company.
<PAGE>
"FUNDED DEBT" shall mean, on any date of determination, any obligation
payable more than one year from the date of the creation thereof, which under
generally accepted accounting principles is shown on the balance sheet as a
liability (excluding reserves for deferred income taxes and other reserves to
the extent that such reserves do not constitute an obligation); plus the highest
amount of the aggregate principal amount of Current Debt outstanding during a
period selected by the Company of 45 consecutive days, within the 12-month
period immediately preceding such date.
"HANCOCK" shall mean John Hancock Mutual Life Insurance Company and its
successors and assigns.
"HAZARDOUS MATERIALS" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable federal, state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product or constituent, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in any
applicable federal, state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable federal, state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"INSTITUTIONAL HOLDER" shall mean (i) any original holder of the Notes
under this Agreement so long as such purchaser shall hold any Notes, (ii) any
other holder of Notes which is an insurance company, pension fund, investment
company, bank, or investment banking firm or any affiliate of a Person described
in clause (i) or (ii).
"INTANGIBLES" shall mean goodwill, patents, trademarks, trade names,
organization expense and other like intangibles, determined in accordance with
generally accepted accounting principles.
"INTERCREDITOR AGREEMENT" shall mean that certain Amended and Restated
Intercreditor Agreement dated as of February 23, 1995 among the Collateral
Agent, The Prudential Insurance Company of America, each bank a party to the
Bank Facility and each Purchaser, substantially in the form of Exhibit F, as it
may be further amended, modified or supplemented from time to time in accordance
with its terms.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of (x)
the sum of Consolidated EBITDA for such period to (y) the sum of Consolidated
Interest Expense for such period.
<PAGE>
"LIEN" shall mean any mortgage, pledge, priority, security interest,
encumbrance, deposit arrangement, lien (statutory or otherwise), any common law
right of setoff or banker's lien (whether by law, contract or otherwise) in
connection with ordinary course of business deposit arrangements or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof, and
the filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction).
"MATERIAL AGREEMENTS" shall have the meaning specified in paragraph 8G.
"MOOG INVESTMENT" shall have the meaning specified in paragraph 6C(3).
"1995 NOTE AGREEMENT" shall mean that certain Note Agreement dated
February 23, 1995, as amended, among the Company, Hancock and The Prudential
Insurance Company of America.
"NOTE" or "NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by a Principal Officer.
"PERMITTED ACQUISITION" means an Acquisition that:
(i) the Person to be acquired has formally approved, or its
governing body has recommended, such Acquisition; and
(ii) the fixed assets to be acquired do not exceed an
aggregate fair market value of $10,000,000; and
(iii) the total consideration (including without limitation
any Debt assumed in connection with such Acquisition) paid by the
Company for all Permitted Acquisitions, including the proposed
Acquisition, during any calendar year shall not exceed $25,000,000.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof. For purposes of paragraph 5B, "PERSON"
shall not include any employee or representative of any government or any agency
or department thereof.
"PILLSBURY" shall mean The Pillsbury Company, a Delaware corporation.
<PAGE>
"PILLSBURY ACKNOWLEDGMENT" shall mean that certain Acknowledgment and
Agreement dated as of the date hereof executed by Pillsbury and the Senior
Entity, substantially in the form of Exhibit C hereto.
"PILLSBURY AGREEMENTS" shall mean each of the following, as any may be
amended, modified or supplemented from time to time in accordance with its terms
and the terms hereof:
(i) Asset Purchase Agreement; and
(ii) Alliance Agreement;
(iii) each of the Pillsbury Security Documents; and
(iv) Pillsbury Acknowledgment.
"PILLSBURY CONSENT" shall mean that certain written consent to the
Pledge Agreement executed by each of Pillsbury and the Senior Entity,
substantially in the form of Exhibit A to the Pledge Agreement.
"PILLSBURY SS. 1111(B) ELECTION" shall mean that certain Agreement
dated February 23, 1995 relating to 11 U.S.C. ss. 1111(b) executed by Pillsbury,
as it may have been or may be amended, modified or supplemented from time to
time in accordance with its terms.
"PILLSBURY SECURITY DOCUMENTS" shall mean each of the following, as any
may be amended, modified or supplemented from time to time in accordance with
its terms and the terms hereof:
(i) the Pillsbury Subordinated Note;
(ii) Security Agreement dated as of February 10, 1995 between
the Company and Pillsbury;
(iii) Mortgage, Security Agreement and Fixture Financing
Statement dated as of February 10, 1995 executed by the Company in
favor of Pillsbury; and
(iv) the Subordination Letter.
"PILLSBURY SUBORDINATED NOTE" shall mean that certain 8% Secured
Nonrecourse Subordinated Promissory Note dated February 1, 1995 issued by the
Company in favor of Pillsbury and any other nonrecourse subordinated note issued
<PAGE>
by the Company in favor of Pillsbury, as contemplated by Section 2.02(a) of the
Asset Purchase Agreement, as any may be amended, modified or supplemented from
time to time in accordance with its terms and the terms hereof.
"PLAN" shall mean any "EMPLOYEE PENSION BENEFIT PLAN" (as such term is
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or by any trade
or business, whether or not incorporated, which, together with the Company, is
under common control, as described in section 414(b) or (c) of the Code.
"PLEDGE AGREEMENT" shall mean that certain Pledge, Security and
Assignment Agreement dated February 23, 1995 by the Company in favor of the
Collateral Agent, as it has been amended by Amendment No. 1 to Pledge, Security
and Assignment Agreement dated March 31, 1997 and by Amendment No. 2 to Pledge,
Security and Assignment Agreement dated as of the date hereof and as it may be
further amended, modified or supplemented from time to time in accordance with
its terms.
"PRINCIPAL OFFICER" shall mean the chairman, chief executive officer,
chief financial officer, treasurer or chief accounting officer of the Company.
"PRIORITY DEBT" shall mean all unsecured Funded Debt of any Subsidiary
and all Secured Debt of the Company and its Subsidiaries other than (A) Debt
secured by Liens permitted under clauses (i) through (iii) of paragraph 6C(1),
(B) Debt listed on Schedule 8D under the heading "PRIORITY DEBT" without giving
effect to any amendment, modification, supplement, increase, extension, renewal
or refunding after the Date of Closing except for any extension of the
expiration date of a letter of credit issued in connection with any of the
industrial revenue bonds identified as Priority Debt so long as any such
extension is not beyond the stated maturity date of such bonds and except for
any substitution of such letter of credit, (C) Debt described on Schedule 6C(6),
(D) Debt secured solely by bankers' lien and subject to the Intercreditor
Agreement or a Sharing Letter and (E) any Debt secured by a Lien granted to a
bank or financial institution as permitted by paragraph 6C(1)(viii)(F).
"PROPERTIES" shall mean all real property owned, leased or otherwise
used or occupied by the Company or any Subsidiary, wherever located.
"PURCHASERS" shall mean, collectively, each of the Persons specified in
the Purchaser Schedules hereto.
"RELATED DOCUMENTS" shall mean each of this Agreement, each Note, the
Pledge Agreement, the Pillsbury Consent, the Pillsbury ss. 1111(b) Election, any
<PAGE>
Pillsbury Subordinated Note, any Sharing Letter, the Intercreditor Agreement and
the Subordination Letter and any other certificate, instrument or other document
delivered in connection with any of the foregoing.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least
66-2/3% of the aggregate principal amount of the Notes from time to time
outstanding.
"RESTRICTED INVESTMENTS" shall have the meaning specified in clause (x)
of paragraph 6C(3).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURED DEBT" shall mean any Debt or obligation of any Person which is
secured by, or otherwise benefiting from, a Lien on any property, tangible or
intangible, of the Company or any Subsidiary, whether or not the Company or such
Subsidiary has assumed or become liable for the payment of such Debt. Secured
Debt shall not include the Bank Facility or this Agreement to the extent secured
by the Pledge Agreement.
"SENIOR ENTITY" shall mean Grand Metropolitan Public Limited Company, a
United Kingdom corporation and parent of its indirect wholly-owned subsidiary,
Pillsbury.
"SENIOR FUNDED DEBT" shall mean all Funded Debt of the Company or its
Subsidiaries other than Subordinated Debt.
"SHARING LETTER" shall mean that certain Letter Agreement, if any,
entered into from time to time by and among each holder of a Note and a bank as
contemplated by paragraph 6C(1)(viii), substantially in the form of Exhibit D
hereto, as any may be amended, modified and supplemented from time to time in
accordance with its terms.
"SIGNIFICANT HOLDER" shall mean (i) each Purchaser, so long as such
Purchaser shall hold (or be committed under this Agreement to purchase) any
Note, or (ii) any other holder of at least 10% of the aggregate principal amount
of the Notes from time to time outstanding.
"SOLD PLANTS" shall have the meaning set forth in the Alliance
Agreement.
"SUBORDINATED DEBT" shall mean the Pillsbury Subordinated Note and any
other Funded Debt of the Company or its Subsidiaries which (i) is validly and
expressly subordinated in right of payment and in liquidation to the obligations
in respect of the Notes, in form and substance satisfactory to each Significant
Holder;
<PAGE>
and (ii) has, when issued, a weighted average life to maturity greater than the
remaining weighted average life to maturity of the Notes.
"SUBORDINATION LETTER" shall mean that certain Agreement Regarding
Subordination dated September 26, 1997 among Pillsbury and the Purchasers, in
the form of a letter from Pillsbury.
"SUBSIDIARY" shall mean (i) any corporation organized under the laws of
any state of the United States of America, Canada, or any province of Canada,
which conducts the major portion of its business in and makes the major portion
of its sales to Persons located in the United States of America and Canada, and
all of the stock of every class of which, except directors' qualifying shares,
shall, at the time as of which any determination is being made, be owned by the
Company either directly or through Subsidiaries and (ii) Seneca Foods
International Ltd.
"THIRD PARTY" shall mean all lessees, sublessees, licensees and other
users of the Properties.
"TOTAL FUNDED DEBT" shall mean, as of any date of determination, the
sum of (i) the aggregate outstanding principal amount of Senior Funded Debt of
the Company or its Subsidiaries plus (ii) the aggregate outstanding principal
amount of Subordinated Debt of the Company or its Subsidiaries.
"TOTAL STOCKHOLDERS' EQUITY" shall mean, as of any date of
determination, stockholders' equity as it would appear on the audited
consolidated balance sheet of the Company and its Subsidiaries as of such date
prepared in accordance with generally accepted accounting principles minus an
amount, in no event less than zero, equal to the product of (i) the sum of (A)
the net book value of the Sold Plants minus (B) the undepreciated value of any
capital improvements to the Sold Plants by the Company, as calculated in
accordance with generally accepted accounting principles, minus (C) the
aggregate principal amount of the Pillsbury Subordinated Note then outstanding
times (ii) the difference of 1 minus the marginal tax rate then applicable to
the Company.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by a Purchaser under this Agreement.
"UNSECURED" with respect to Debt means that such Debt is not Secured
Debt.
10C. ACCOUNTING TERMS AND DETERMINATION. All references in this
Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall be deemed to refer
to generally accepted accounting principles in effect in the United States at
the time
<PAGE>
of application thereof, subject to the next sentence. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
audited consolidated financial statements of the Company and its Subsidiaries
delivered pursuant to clause (ii) of paragraph 5A(1).
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as a Purchaser
shall hold any Note, it will make payments of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit on the date due to such Purchaser's account or accounts as specified in
the Purchaser Schedule attached hereto, or such other account or accounts in the
United States as such Purchaser may designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the place of payment.
Each Purchaser agrees that, before disposing of any Note, such Purchaser will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest thereon has
been paid. The Company agrees to afford the benefits of this paragraph 11A to
any Transferee which shall have made the same agreement as the Purchasers have
made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each Purchaser and
any Transferee harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with such transactions, including, without
limitation:
(i) all taxes (together in each case with interest and
penalties, if any), other than local, state or federal income taxes or
franchise taxes of a holder of a Note, including without limitation,
all stamp, intangibles, recording and other taxes, which may be payable
with respect to the execution and delivery of this Agreement or any
Related Document or the execution, delivery or acquisition of any Note;
(ii) all document production and duplication charges and the
fees and expenses of any special counsel engaged by the Purchasers or
any Transferee in connection with this Agreement, the transactions
contemplated hereby and any subsequent proposed modification of, or
<PAGE>
proposed consent under, this Agreement or any Related Document, whether
or not such proposed modification shall be effected or proposed consent
granted, and
(iii) the costs and expenses, including attorneys' fees,
incurred by a Purchaser or any Transferee in connection with the
restructuring, refinancing or "WORKOUT" of this Agreement, any Note or
any other Related Document or the transactions contemplated hereby or
thereby in enforcing (or determining whether or how to enforce) any
rights under this Agreement, any Note or any other Related Document or
in responding to any subpoena or other legal process issued in
connection with this Agreement or any other Related Document or the
transactions contemplated hereby or thereby or by reason of a Purchaser
or any Transferees having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case in which
the Company or any of its Subsidiaries is the debtor or the bankrupt;
provided, however that in connection with enforcement of any provision hereof
and in connection with any amendment, waiver or consent hereto, the Company
shall not be obligated pursuant to this paragraph 11B to pay the fees and
expenses of more than one counsel (which may include, without limitation, any
disbursements of such counsel to pay the fees and expenses of one local counsel
in each relevant jurisdiction where necessary or advisable in connection with
any modification (whether or not consummated) which contemplates the taking by
the holders of the Notes of a security interest in any assets of the Company or
any of its Subsidiaries or in connection with the enforcement of any rights
under this Agreement or the Notes) for the holder of the Notes taken as a group;
and provided, further, that the Company shall not be obligated pursuant to this
paragraph 11B to pay any expenses incurred in connection with the transfer of
any Note. The obligations of the Company under this paragraph 11B shall survive
the transfer of any Note or portion thereof or interest therein by a Purchaser
or any Transferee and the payment of any Note.
11C. AMENDMENTS AND WAIVERS.
11C(1) REQUIREMENTS. This Agreement or any other Related Document may
be amended, and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company shall
obtain the written consent to such amendment, action or omission to act, of the
Required Holder(s) except to the extent otherwise specified in any Related
Document and that, without the written consent of the holder or holders of all
Notes at the time outstanding, no amendment to this Agreement shall change:
<PAGE>
(i) the maturity of any Note,
(ii) the principal of, or the rate or time of payment of
interest on, or any Yield-Maintenance Amount payable with respect to
any Note,
(iii) the time, amount or allocation of any prepayments, or
(iv) the proportion of the principal amount of the Notes
required with respect to any consent, amendment, waiver or declaration.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding. Each holder of any Note at the
time or thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. As used herein and in the Notes, the term "THIS AGREEMENT" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11C(2) CONSENT IN CONTEMPLATION OF TRANSFER. Any consent made pursuant
to this paragraph 11C by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company, any Subsidiary or any Affiliate of the
Company and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force or effect except solely
as to such holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be void and of no
force or effect except solely as to such holder.
11C(3) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
<PAGE>
11C(4) COURSE OF DEALING. No course of dealing between the Company and
the holder of any Note nor any delay in exercising any rights hereunder or under
any Note shall operate as a waiver of any rights of any holder of such Note.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Note are issuable as registered notes without coupons in denominations of at
least $100,000, except as may be necessary to reflect any principal amount not
evenly divisible by $100,000. The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement (or, if such holder is not an Institutional Holder having
capital and surplus in excess of $50,000,000, a surety bond) in form and
substance reasonably satisfactory to the Company and its counsel or in the case
of any such mutilation upon surrender and cancellation of such Note, the Company
will make and deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount,
if any, and for all other purposes whatsoever, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the contrary.
Subject to the preceding sentence, the holder of any Note may from time to time
grant
<PAGE>
participations in all or any part of such Note to any Person on such terms and
conditions as may be determined by such holder in its sole and absolute
discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by a Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of a Purchaser or any Transferee. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between each Purchaser and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of the Company or any Subsidiary in connection
with or pursuant to this Agreement to:
(i) such holder's directors, officers, employees, agents,
Affiliates and professional consultants,
(ii) any other holder of any Note,
(iii) any Person to which such holder offers to sell such Note
or any part thereof,
(iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note,
(v) any federal or state regulatory authority having
jurisdiction over such holder,
(vi) the National Association of Insurance Commissioners
or any similar organization or
<PAGE>
(vii) any other Person to which such delivery or disclosure
may be necessary or appropriate (a) in compliance with any law, rule,
regulation or order applicable to such holder, (b) in response to any
subpoena or other legal process or informal investigative demand, (c)
in connection with any litigation to which such holder is a party or
(d) in order to protect such holder's investment in such Note.
11I. NOTICES. All written communications provided for hereunder shall
be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and:
(i) if to a Purchaser, addressed to such Purchaser at the
address specified for such communications in the Purchaser Schedule
attached hereto, or at such other address as such Purchaser shall have
specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to such
other holder at such address as such other holder shall have specified
to the Company in writing or, if any such other holder shall not have
so specified an address to the Company, then addressed to such other
holder in care of the last holder of such Note which shall have so
specified an address to the Company, and
(iii) if to the Company, addressed to it at 1162
Pittsford-Victor Road, Pittsford, New York 14534, Attention: Treasurer,
or at such other address as the Company shall have specified to the
holder of each Note in writing; provided, however, that any such
communication to the Company may also, at the option of the holder of
any Note, be delivered by facsimile transmission addressed to the
Company, Attention: Treasurer, at (716) 385-4249.
11J. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to each Purchaser or to the Required Holder(s), the
determination of such satisfaction shall be made by such Purchaser or the
Required Holder(s), as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
11K. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO
THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF
<PAGE>
NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT
TO THE SOLE AND ABSOLUTE ELECTION OF THE REQUIRED HOLDERS AND TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER RELATED DOCUMENT SHALL BE LITIGATED IN SUCH
COURTS, AND THE COMPANY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH
COURTS.
11L. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11M. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11N. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
Yield-Maintenance Amount or interest on any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business Day and shall
include the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
11O. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original,but all of which together shall
constitute one instrument.
[Signature pages commence on next page.]
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between each of
the Purchasers and the Company.
Very truly yours,
SENECA FOODS CORPORATION
By /s/Philip G. Paras
Title: Vice President, Finance
[Signatures continued on next page.]
<PAGE>
The foregoing Agreement is
hereby accepted as of the date
first above written.
SIGNATURE 1A (CAYMAN), LTD.
BY: JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, PORTFOLIO ADVISOR
By /s/Scott A. McFetridge
Title: Investment Officer
MELLON BANK, N.A., AS
TRUSTEE FOR THE LONG-TERM INVESTMENT
TRUST
By /s/Carole Bruno
Title: Authorized Signatory
MELLON BANK, N.A., AS
TRUSTEE FOR NYNEX MASTER PENSION TRUST
By /s/ Carole Bruno
Title: Authorized Signatory
COBANK, ACB
By /s/Ralph T. Lawrence
Title: Vice President
EXHIBIT A
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN VIOLATION
OF SUCH ACT.
SENECA FOODS CORPORATION
_____% SENIOR NOTE DUE __________, 200_
No. R-1 __________, 19__
$----------
FOR VALUE RECEIVED, the undersigned, SENECA FOODS CORPORATION (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the State of New York, hereby promises to pay to
___________________________________, or registered assigns, the principal sum of
____________________________ on ___________, 2004, with interest (computed on
the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at
the rate of ____% per annum from the date hereof, payable quarterly on the ____
day of _______, ________, ________ and _______ in each year, commencing with the
_______ next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Yield-Maintenance Amount (as defined in the Note Agreement
referred to below), payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) _____% or (ii) 2.0% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made at the main office of Morgan
Guaranty Trust Company of New York in New York City or at such other place as
the holder hereof shall designate to the Company in writing, in lawful money of
the United States of America.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to a Note Agreement, dated as of ______________, 1997
(herein
<PAGE>
A-2
called the "AGREEMENT"), among the Company and the Purchasers a party thereto
and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make required prepayments of principal on the
dates and in the amounts specified in the Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE. AS
PROVIDED IN PARAGRAPH 11K OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE.
SENECA FOODS CORPORATION
By________________________________
Title:
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. The Notes...........................................................1
A. Authorization of Issue of Notes............................1
B. Security for the Notes.....................................1
2. Purchase and Sale of Notes..........................................1
3. Conditions Precedent................................................2
A. Related Documents..........................................2
B. Opinion of Purchaser's Special Counsel.....................2
C. Opinions of Counsel........................................2
D. Representations and Warranties; No Default.................3
E. Purchase Permitted By Applicable Laws......................3
F. Proceedings................................................3
G. Certificates of Good Standing/Qualification to Do Business.3
H. No Material Adverse Change.................................4
I. Private Placement Numbers..................................4
J. Perfection of Liens........................................4
K. Pillsbury Agreements.......................................4
L. Material Agreements........................................4
M. Expenses...................................................5
N. Other Documents............................................5
4. Prepayments.........................................................5
A. Required Prepayments.......................................5
B. Optional Prepayment With Yield-Maintenance Amount..........5
C. Notice of Optional Prepayment..............................5
D. Partial Payments Pro Rata..................................6
E. Retirement of Notes........................................6
F. Change in Control..........................................6
G. Pillsbury Payments.........................................7
5. Affirmative Covenants...............................................7
A. Reporting Requirements.....................................7
B. Information Required by Rule 144A.........................11
C. Inspection of Property....................................11
D. Covenant to Secure Notes Equally..........................11
E. Guaranteed Obligations....................................12
F. Corporate Existence, Etc..................................12
i
<PAGE>
G. Payment of Taxes and Claims...............................12
H. Compliance With Laws, Etc.................................13
I. No Integration............................................13
J. Maintenance of Insurance..................................13
L. Other Covenants...........................................14
6. Negative Covenants.................................................14
A. Current Ratio and Interest Coverage.......................14
B. Dividend Limitation.......................................15
C. Lien, Debt and Other Restrictions.........................16
D. Issuance of Stock by Subsidiaries.........................23
E. No Prepayment, Modification or Consent....................23
F. Permitted Acquisitions....................................23
7. Events of Default..................................................23
A. Acceleration..............................................23
B. Rescission of Acceleration................................28
C. Notice of Acceleration or Rescission......................28
D. Other Remedies............................................28
8. Representations, Covenants and Warranties..........................29
A. Organization; Authority; Enforceability...................29
B. Financial Statements......................................29
C. Actions Pending...........................................30
D. Outstanding Debt..........................................30
E. Pollution and Other Regulations...........................30
F. Taxes.....................................................31
G. Conflicting Agreements and Other Matters..................31
H. Offering of Note..........................................32
I. Use of Proceeds...........................................32
J. ERISA.....................................................32
K. Governmental Consent......................................33
L. Disclosure................................................33
M. Title to Properties.......................................34
N. Patents, Licenses, Franchise, Etc.........................34
O. Investment Company Act....................................34
P. Public Utility Holding Company Act........................34
Q. Solvency..................................................35
R. Absence of Foreign or Enemy Status........................35
S. Pillsbury Agreements......................................35
T. Bank Facility.............................................36
ii
<PAGE>
9. Representations of the Purchaser...................................36
10. Definitions........................................................37
A. Yield-Maintenance Terms...................................37
B. Other Terms...............................................38
C. Accounting Terms and Determination........................49
11. Miscellaneous......................................................50
A. Note Payments.............................................50
B. Expenses..................................................50
C. Amendments and Waivers....................................51
D. Form, Registration, Transfer and Exchange of Notes; Lost
Notes.....................................................53
E. Persons Deemed Owners; Participations.....................53
F. Survival of Representations and Warranties; Entire
Agreement.................................................54
G. Successors and Assigns....................................54
H. Disclosure to Other Persons...............................54
I. Notices...................................................55
J. Satisfaction Requirement..................................55
K. GOVERNING LAW.............................................55
L. Severability..............................................56
M. Descriptive Headings......................................56
N. Payments Due on Non-Business Days.........................56
O. Counterparts..............................................56
PURCHASER SCHEDULES
Exhibit A - Form of Note
Exhibit B - Form of Opinion of Company's Counsel
Exhibit C - Form of Acknowledgment and Agreement
of Pillsbury and Grand Met
Exhibit D - Form of Sharing Letter
Exhibit E - Form of Letter Agreement
Exhibit F - Form of Amended and Restated Intercreditor
Agreement
Schedule 3G - Good Standing Certificates
Schedule 3L - Specified Material Agreements
Schedule 6C(3) - Outstanding Guarantees
Schedule 6C(5) - Excluded Assets
Schedule 6C(6) - Sale/Lease-Back
Schedule 8A - Corporate Organization
iii
<PAGE>
Schedule 8D - Outstanding Funded Debt
Schedule 8E - Environmental Disclosure
Schedule 8G-1 - Material Agreements
Schedule 8G-2 - Agreements Restricting Debt
Schedule 8I - Use of Proceeds
iv
<PAGE>
EXECUTION COUNTERPART
SENECA FOODS CORPORATION
$15,000,000 9.17% SENIOR NOTES DUE 2004
---------------------------
NOTE AGREEMENT
---------------------------
DATED AS OF SEPTEMBER 26, 1997
