Exhibit 99.1
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Lender
and
STOKELY USA, INC.
as Borrower
Dated: May 21, 1996
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated May 21, 1996, is entered into
by and between Congress Financial Corporation (Central), an Illinois
corporation ("Lender") and Stokely USA, Inc., a Wisconsin corporation
("Borrower").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower has requested that Lender enter into certain
financing arrangements with Borrower pursuant to which Lender may make
loans and provide other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code as in effect in the State of Illinois shall
have the meanings given therein unless otherwise defined in this
Agreement. All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural. All references
to Borrower and Lender pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced. An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with
Section 11.3. Any accounting term used herein unless otherwise defined
in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP. For purposes of this Agreement, the following
terms shall have the respective meanings given to them below:
1.1 "Acceptable Foreign Account" means an Account for which
the chief executive office of the account debtor with respect thereto is
located outside the United States and either the account debtor has
delivered to Borrower an irrevocable letter of credit issued or confirmed
by a bank satisfactory to Lender, sufficient to cover such Account, in
form and substance satisfactory to Lender and, if required by Lender, the
original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the
proceeds of such letter of credit to Lender, (ii) such Account is subject
to credit insurance payable to Lender issued by an insurer and on terms
and in an amount acceptable to Lender or the account debtor with respect
to such Account is one of the entities listed on Exhibit B hereto or a
Person otherwise acceptable to Lender in its discretion.
1.2 "Acceptable Third Party Agreement" shall mean an agreement
executed by the appropriate Person (i) in the form of Exhibit C hereto or
(ii) in form and substance satisfactory to Lender acknowledging Lender's
first priority security interest in all of the Inventory of Borrower in
the possession of such Person or located on property owned by such Person
or which such Person has a mortgage (or similar interest), as applicable,
waiving security interests and claims by such Person against such
Inventory and permitting Lender access to, and the right to remain on,
the applicable premises to exercise Lender's rights and remedies and
otherwise deal with Collateral.
1.3 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or
not earned by performance.
1.4 "Adjusted Eurodollar Rate" shall mean, with respect to
each Interest Period for any Eurodollar Rate Loan, the rate per annum
(rounded upwards, if necessary, to the next 1/100 of 1%) determined by
dividing the Eurodollar Rate for such Interest Period by a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed
as a decimal, prescribed by any United States or foreign banking
authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or
an international banking office of Reference Bank used to fund a
Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds
of such deposit, whether or not the Reference Bank actually holds or has
made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.5 "AGRIPAC" shall mean AGRIPAC, an Oregon corporation.
1.6 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Revolving Loans and Letter of
Credit Accommodations which would otherwise be available to Borrower
under the lending formula(s) provided for herein: (a) to reflect events,
conditions, contingencies or risks which, as determined by Lender in good
faith, do or may affect either (i) the Collateral or any other property
which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Obligor or (iii) the security
interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect
Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to
Lender is or may have been incomplete, inaccurate or misleading in any
material respect or (c) in respect of any state of facts which Lender
determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default;
provided, however, that no Availability Reserves shall be established as
a result of any event, condition, contingency or risk which is
appropriately reserved for pursuant to the Supplier Reserve.
1.7 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
1.8 "Breakage Fees" shall mean with respect to any Eurodollar
Rate Loan which is at any time paid prior to the last day of its Interest
Period, regardless of the reason for such prepayment, the positive
difference, if any, between the total amount of interest that would have
been due for the balance of the scheduled Interest Period on such
Eurodollar Rate Loan if it had not been so prepaid and the amount of
interest that would be earned if the amount of the prepaid Eurodollar
Rate Loan were invested for the remaining balance of such Interest Period
at the CD Rate in effect on the first day of the month in which such
prepayment occurs. As used herein, "CD Rate" shall mean the rate quoted
in the "Money Rates" section of The Wall Street Journal for the average
of the top rates paid by New York banks on primary new issues of
negotiable certificates of deposit in amounts of $1 million and more
having a 1-month maturity, as published on the first Business Day of the
month in which any prepayment of a Eurodollar Rate Loan occurs.
1.9 "Business Day" shall mean (a) with respect to any
borrowing, payment or rate selection relating to Eurodollar Rate Loans,
a day other than Saturday or Sunday on which banks are open for business
in the States of New York and Illinois and the Commonwealth of
Pennsylvania and on which dealings in United States dollars are carried
on in the London interbank market or other applicable Eurodollar Rate
market, and (b) for all other purposes, a day other than Saturday or
Sunday on which banks are open for business in the States of New York and
Illinois and the Commonwealth of Pennsylvania.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as
the same now exists or may from time to time hereafter be amended,
modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.11 "Collateral" shall have the meaning set forth in Section
5 hereof.
1.12 "Consent Opinion" shall mean an opinion of counsel to
Borrower, addressed to Lender and in form and substance satisfactory to
Lender, that this Agreement, with a Maximum Credit equal to $70,000,000,
does not violate, conflict with, breach or cause a default under any
agreement, instrument, or other document to which Borrower is party or
which Borrower or its property is bound.
1.13 "Dean Foods" shall mean Dean Foods Vegetable Company, a
Wisconsin corporation.
1.14 "Dean Foods Agreement" shall mean the Agreement in
Principle made April ___, 1996 among Dean Foods, AGRIPAC and Borrower;
provided that at all times on or after the execution and delivery of the
definitive purchase agreements to be executed and delivered in connection
with such Agreement in Principle, "Dean Foods Agreement" shall mean such
definitive agreements.
1.15 "Eligible Accounts" shall mean Accounts (other than
Accounts which arise from the sale of seed) created by Borrower which are
and continue to be acceptable to Lender based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale
and shipment (or, in the case of bill and hold goods, billing) of goods
by Borrower or rendition of services by Borrower in the ordinary course
of its business which transactions are completed in accordance with the
terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than one hundred and
twenty (120) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under
which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or
such Accounts are Acceptable Foreign Accounts;
(f) such Accounts do not consist of progress billings,
bill and hold invoices or retainage invoices, except as to bill and hold
invoices, if Lender shall have received an agreement in writing from the
account debtor, in form and substance satisfactory to Lender, confirming
the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has
not asserted a counterclaim, defense or dispute and does not have, and
does not engage in transactions which may give rise to, any right of
setoff against such Accounts;
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or
reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid
and perfected security interest of Lender and any goods giving rise
thereto are not, and were not at the time of the sale thereof, subject to
any liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee
of the account debtor with respect to such Accounts is an officer,
employee or agent of or affiliated with Borrower directly or indirectly
by virtue of family membership, ownership, control, management or
otherwise;
(k) the account debtors with respect to such Accounts are
not any foreign government, the United States of America, any State,
political subdivision, department, agency or instrumentality thereof,
unless, if the account debtor is the United States of America, any State,
political subdivision, department, agency or instrumentality thereof,
either (i) upon Lender's request, the Federal Assignment of Claims Act of
1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Lender or (ii) Lender has
not made any such request;
(l) there are no proceedings or actions which the Borrower
has knowledge of (or reasonably should have knowledge of) which are
threatened or pending against the account debtors with respect to such
Accounts which might result in any material adverse change in any such
account debtor's financial condition;
(m) such Accounts of a single account debtor or its
affiliates do not constitute more than thirty percent (30%) of all
otherwise Eligible Accounts (but the portion of the Accounts not in
excess of such percentage may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who
has Accounts unpaid more than one hundred twenty (120) days after the
date of the original invoice for them which constitute more than fifty
(50%) percent of the total Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to
such account debtors as reasonably determined by Lender from time to time
(but the portion of the Accounts not in excess of such credit limit may
still be deemed Eligible Accounts);
(p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as reasonably determined by Lender;
(q) such Accounts are payable in U.S. Dollars in the
United States of America; and
(r) the account debtor is not located in New Jersey,
Tennessee, Indiana, Minnesota or West Virginia unless Borrower has (i)
filed a Notice of Business Activities Report with the applicable state
taxing authority in such state, or (ii) qualified as a foreign
corporation in good standing in such state.
General criteria for Eligible Accounts may be established and revised
from time to time by Lender in good faith to reflect other matters or
circumstances which may impact the collectability of one or more
Accounts. Any Accounts which are not Eligible Accounts shall
nevertheless be part of the Collateral.
1.16 "Eligible Inventory" shall mean Inventory consisting of
finished goods held for resale in the ordinary course of the business of
Borrower and raw seeds which are acceptable to Lender based on the
criteria set forth below. In general, Eligible Inventory shall not
include (a) work-in-process (other than Inventory in transit between
locations as long as such Inventory would otherwise constitute Eligible
Inventory were it located at either of such locations); (b) components
which are not part of finished goods; (c) spare parts for equipment; (d)
packaging and shipping materials; (e) supplies used or consumed in
Borrower's business; (f) Inventory at premises other than those owned and
controlled by Borrower (other than Inventory in transit between locations
as long as such Inventory would otherwise constitute Eligible Inventory
were it located at either of such locations), except if Lender shall have
received an Acceptable Third Party Agreement from the person in
possession of such Inventory and/or the owner or operator of such
premises; (g) Inventory subject to a security interest or lien in favor
of any person other than Lender except those permitted in this Agreement;
(h) bill and hold goods, the sale of which has given rise to an Account;
(i) unserviceable, obsolete or slow moving Inventory; (j) Inventory which
is not subject to the first priority, valid and perfected security
interest of Lender; (k) returned, damaged and/or defective Inventory; and
(l) Inventory purchased or sold on consignment. General criteria for
Eligible Inventory may be established and revised from time to time by
Lender in good faith to reflect other matters or circumstances which may
impact the saleability or value of such Inventory or the Lender's first
priority perfected security interest therein. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.17 "Environmental Laws" shall mean all federal, state,
district, local and foreign laws, rules, regulations, ordinances, and
consent decrees relating to health, safety, hazardous substances,
pollution and environmental matters, as now or at any time hereafter in
effect, applicable to Borrower's business and facilities (whether or not
owned by it), including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contamination, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to
the generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or hazardous, toxic or dangerous substances, materials or
wastes.
1.18 "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment, machinery, computers, computer hardware,
owned and licensed computer software, vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.19 "ERISA" shall mean the United States Employee Retirement
Income Security Act of 1974, as the same now exists or may hereafter from
time to time be amended, modified, recodified or supplemented, together
with all rules, regulations and interpretations thereunder or related
thereto.
1.20 "ERISA Affiliate" shall mean any person required to be
aggregated with Borrower or any of its Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
1.21 "Eurodollar Rate" shall mean, with respect to any Interest
Period for a Eurodollar Rate Loan requested by Borrower by not less than
three (3) Business Days' prior notice to Lender, the interest rate per
annum equal to the arithmetic mean of the rates of interest per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by Borrower
and approved by Lender, which approval shall not be unreasonably
withheld) at or about 9:00 a.m. (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to Borrower in accordance with this Agreement,
with a maturity of comparable duration to the Interest Period selected by
Borrower. Upon receipt of Borrower's request for a Eurodollar Rate Loan,
Lender will, if requested, provide Borrower with an indication of the
prevailing Eurodollar Rate on the Business Day of such request; provided,
however, that the actual Eurodollar Rate which is applicable to the
requested Interest Period shall be determined as provided above and may
be higher or lower than such indicative rate.
1.22 "Eurodollar Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.
1.23 "Event of Default" shall mean the occurrence or existence
of any event or condition described in Section 10.1 hereof.
1.24 "Frozen Vegetable Sale" shall mean the sale by the
Borrower to Dean Foods and to AGRIPAC of Borrower's frozen food Inventory
and Borrower's plants and related assets located in Grandview, Washington
and Walla Walla, Washington in accordance with the Dean Foods Agreement.
1.25 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements, trademark
security agreements, blocked account agreements, and other agreements,
documents and instruments now or at any time hereafter executed and/or
delivered by Borrower or any Obligor in connection with this Agreement,
as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.26 "GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time as set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards
Boards which are applicable to the circumstances as of the date of
determination consistently applied.
1.27 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without
limitation, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including, without limitation,
materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials,
or wastes and including any other substances, materials or wastes that
are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under
any Environmental Law).
1.28 "Information Certificate" shall mean the Information
Certificate of Borrower constituting Exhibit A hereto containing material
information with respect to Borrower, its business and assets provided by
or on behalf of Borrower to Lender in connection with the preparation of
this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.29 "Interest Period" shall mean for any Eurodollar Rate Loan,
a period of approximately one (1), two (2) or three (3) months duration
as Borrower may elect, the exact duration to be determined in accordance
with the customary practice in the applicable Eurodollar Rate market;
provided that Borrower may not elect an Interest Period which will end
after the last day of the then-current term of this Agreement.
1.30 "Interest Rate" shall mean: (a) as to Revolving Loans
which are Prime Rate Loans and all other non-contingent Obligations not
expressly covered in the following clause (b), a rate of three-fourths of
one percent (.75%) per annum in excess of the Prime Rate, and (b) as to
Revolving Loans which are Eurodollar Rate Loans, a rate of three and one
quarter percent (3.25%) per annum in excess of the Adjusted Eurodollar
Rate for the applicable Interest Period selected by Borrower in
accordance with the terms hereof; provided that the Interest Rate shall
mean the rate of (i) two and three quarters percent (2.75%) per annum in
excess of the Prime Rate as to Revolving Loans which are Prime Rate Loans
and all other non-contingent Obligations not expressly covered in the
following clause (ii) and (ii) five and one quarter percent (5.25%) per
annum in excess of the Adjusted Eurodollar Rate as to Revolving Loans
which are Eurodollar Rate Loans, in each case at Lender's option, without
notice, (a) for the period on and after the date of termination or non-
renewal hereof, or the date of the occurrence of any Event of Default for
so long as such Event of Default is continuing as determined by Lender
and until such time as such Event of Default has been waived or all
Obligations are indefeasibly paid in full (notwithstanding entry of any
judgment against Borrower) and (b) on the Revolving Loans at any time
outstanding in excess of the amounts available to Borrower under Section
2 (if such excess(es) arise or are made without Lender's consent);
provided, however, that Lender reserves the right to condition any
consent to such excess(es) and/or waiver of an Event of Default resulting
therefrom, inter alia, on receiving the higher Interest Rates set forth
in the preceding proviso.
1.31 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired crops, farm products, seed, raw materials,
work in process, finished goods and all other inventory of whatsoever
kind or nature, wherever located.
1.32 "Letter of Credit Accommodations" shall mean the letters
of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Lender for the account of Borrower
or any Obligor or (b) with respect to which Lender has agreed to
indemnify the issuer or guaranteed to the issuer the performance by
Borrower of its obligations to such issuer.
1.33 "Letter of Credit Percentage" shall mean, at any time, one
hundred percent (100%) minus the percentage being applied for advances
against Eligible Inventory of the type being acquired in the transaction
which the applicable letter of credit relates to.
1.34 "Line Fee Amount" at any time shall mean $65,000,000 less
the amount by which the Line Fee Amount has been reduced pursuant to
Section 2.3 hereof.
1.35 "Loans" shall mean the Revolving Loans.
1.36 "Maximum Credit" shall mean the amount of (i) at all times
on or prior to the delivery of the Consent Opinion $65,000,000 and (ii)
at all times after the delivery of the Consent Opinion, $70,000,000, in
each case as such amount may be permanently reduced from time to time by
Borrower in accordance with Section 2.3.
1.37 "Net Amount of Acceptable Foreign Accounts" shall mean the
gross amount of Acceptable Foreign Accounts less (a) sales, excise or
similar taxes included in the amount thereof and (b) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto.
1.38 "Net Amount of Eligible Domestic Accounts" shall mean the
gross amount of Eligible Accounts (other than Acceptable Foreign
Accounts) less sales, excise or similar taxes included in the amount
thereof and returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.39 "Obligations" shall mean any and all Revolving Loans,
Letter of Credit Accommodations and all other obligations, liabilities
and indebtedness of every kind, nature and description owing by Borrower
to Lender and/or its affiliates, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term
of this Agreement or after the commencement of any case with respect to
Borrower under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts
which would accrue and become due but for the commencement of such case),
whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.40 "Obligor" shall mean any guarantor, endorser, acceptor,
surety or other person now or hereafter liable on or with respect to the
Obligations or who is the owner of any property which is now or hereafter
security for the Obligations, other than Borrower.
1.41 "PACA" shall mean the Perishable Agricultural Commodities
Act, 7 U.S.C. Section 499 et seq.
1.42 "Payment Account" shall have the meaning set forth in
Section 6.3 hereof.
1.43 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), business trust, unincorporated
association, joint stock corporation, trust, joint venture or other
entity or any government or any agency or instrumentality or political
subdivision thereof.
1.44 "Prime Rate" shall mean the rate from time to time
publicly announced by CoreStates Bank, N.A., or its successors, at its
office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank.
1.45 "Prime Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Prime Rate in accordance with
the terms thereof.
1.46 "Records" shall mean all of Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any account debtor, together with the
tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Borrower with respect to the foregoing
maintained with or by any other person).
1.47 "Reference Bank" shall mean CoreStates Bank, N.A., or such
other bank as Lender may from time to time reasonably designate.
1.48 "Revolving Loans" shall mean the loans now or hereafter
made by Lender to or for the benefit of Borrower on a revolving basis
(involving advances, repayments and readvances) as set forth in Section
2.1 hereof.
1.49 "Supplier Reserve" at any time shall mean a reserve equal
to the aggregate amount owed by Borrower at such time to any and all
Persons as the purchase price of agricultural goods.
1.50 "Value" shall mean, as determined by Lender in good faith,
with respect to Inventory, the lower of cost computed on an average cost
basis in accordance with GAAP or market value.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to Borrower from
time to time in amounts requested by Borrower up to the amount equal to
the sum of:
(i) eighty-five percent (85%) of the Net Amount of
Eligible Domestic Accounts, plus
(ii) eighty-five percent (85%) of the Net Amount of
Acceptable Foreign Accounts described in clause (i) of the definition of
Acceptable Foreign Account, plus
(iii) seventy percent (70%) of the Net Amount of
Acceptable Foreign Accounts (other than Acceptable Foreign Accounts
described in clause (i) of the definition of Acceptable Foreign Account),
plus
(iv) the lesser of: (A) the sum of (1) seventy
percent (70%) of the Value of Eligible Inventory consisting of finished
goods which have been appropriately packaged in cans or which have been
packaged as frozen goods and which Dean Foods has, as of such time,
agreed to purchase pursuant to the Dean Foods Agreement (provided, that
with respect to such Inventory packaged as frozen goods, if the Dean
Foods Agreement is terminated, unenforceable or in default, the Lender
and Borrower shall negotiate in good faith to cause the advance rate with
respect to such Inventory to be changed from seventy percent (70%) to the
fifty-two and one-half percent (52.5%)) plus (2) fifty-two and one-half
percent (52.5%) of the Value of Eligible Inventory consisting of finished
goods which have been packaged as frozen goods and which Dean Foods has,
as of such time, not agreed to purchase pursuant to Dean Foods Agreement
plus (3) fifty percent (50%) of the Value of Eligible Inventory
consisting of raw seed or the amount equal to: (1) the Maximum Credit
at such time minus (2) the aggregate of the Letter of Credit Percentages
of the then undrawn amounts of the outstanding Letter of Credit
Accommodations for the purpose of purchasing Eligible Inventory, less
(v) the Supplier Reserve at such time, less
(vi) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon
not less than five (5) days prior notice to Borrower, (i) reduce the
lending formula with respect to Eligible Accounts and/or Acceptable
Foreign Accounts to the extent that Lender determines in good faith that:
(A) the dilution with respect to the Accounts for any period (based on
the ratio of (1) the aggregate amount of reductions in Accounts other
than as a result of payments in cash to (2) the aggregate amount of total
sales) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels,
or (B) the general creditworthiness of account debtors has declined or
(ii) reduce the lending formula(s) with respect to Eligible Inventory to
the extent that Lender determines that: (A) the number of days of the
turnover of the Inventory for any period has changed in any material
respect or (B) the liquidation value of the Eligible Inventory, or any
category thereof, has decreased, or (C) the nature and quality of the
Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts,
Acceptable Foreign Accounts, Eligible Inventory or in establishing
Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at any time
shall not exceed the Maximum Credit. In the event that the outstanding
amount of any component of the Loans, or the aggregate amount of the
outstanding Loans and Letter of Credit Accommodations, exceed the amounts
available under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(c) or the Maximum Credit, as
applicable, such event shall not limit, waive or otherwise affect any
rights of Lender in that circumstance or on any future occasions and
Borrower shall, upon demand by Lender, which may be made at any time or
from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Lender agrees to provide or
arrange for Letter of Credit Accommodations for the account of Borrower
containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations
shall constitute additional Revolving Loans to Borrower pursuant to this
Section 2.
(b) In addition to any charges, fees or expenses charged
by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Lender a letter of credit fee at a
rate equal to one and one half percent (1.5%) per annum on the average
daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of
the first day of each succeeding month. Such letter of credit fee shall
be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrower to pay such fee shall
survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject to the
Maximum Credit and any Availability Reserves) are equal to or greater
than: if the proposed Letter of Credit Accommodation is for the purpose
of purchasing Eligible Inventory for which Lender has a first priority
perfected security interest in any and all documents of title related to
such Inventory, the sum of the Letter of Credit Percentage of the cost
of such Eligible Inventory, plus freight, taxes, duty and other amounts
which Lender estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of Borrower's locations for Eligible
Inventory within the United States of America and if the proposed Letter
of Credit Accommodation is for any other purpose, an amount equal to one
hundred (100%) percent of the face amount thereof and all other commit-
ments and obligations made or incurred by Lender with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, the
amount of Revolving Loans which might otherwise be available to Borrower
shall be reduced by the applicable amount set forth in Section 2.2(c)(i)
or Section 2.2(c)(ii).
(d) Except in Lender's discretion, (i) the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in connection therewith, shall not
at any time exceed $10,000,000 and (ii) the amount of all outstanding
Letter of Credit Accommodations for the purpose of purchasing Eligible
Inventory and all other commitments and obligations made or incurred by
Lender in connection therewith shall not at any time exceed: the amount
of the then Revolving Loans available to Borrower but not outstanding
based on Eligible Inventory pursuant to Section 2.1(a)(iv) hereof. At
any time an Event of Default exists or has occurred and is continuing,
upon Lender's request, Borrower will either furnish cash collateral to
secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for
the Letter of Credit Accommodations, and in either case, the Revolving
Loans otherwise available to Borrower shall not be reduced as provided in
Section 2.2(c) to the extent of such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs and
expenses which Lender may suffer or incur in connection with any Letter
of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any
issuer or correspondent with respect to any Letter of Credit
Accommodation; provided, however, that Borrower shall not be required to
indemnify Lender for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by (i) the willful misconduct or gross
negligence of Lender in determining whether a request presented under any
Letter of Credit Accommodation complied with the terms of such Letter of
Credit Accommodation or (ii) Lender's failure to pay under any Letter of
Credit Accommodation after the timely presentation to it of a request for
payment strictly complying with the terms and conditions of such Letter
of Credit Accommodation. Borrower assumes all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary
shall be deemed Borrower's agent. Borrower assumes all risks for, and
agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder.
Borrower hereby releases and holds Lender harmless from and against any
acts, waivers, errors, delays or omissions, whether caused by Borrower,
by any issuer or correspondent or otherwise with respect to or relating
to any Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or
non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of Lender
in any manner. Lender shall have no liability of any kind with respect
to any Letter of Credit Accommodation provided by an issuer other than
Lender unless Lender has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right
and authority to, and Borrower shall not, at any time an Event of Default
exists or has occurred and is continuing, (A) approve or resolve any
questions of non-compliance of documents, (B) give any instructions as to
acceptance or rejection of any documents or goods and/or (C) execute any
and all applications for steamship or airway guaranties, indemnities or
delivery orders. Lender may take such actions either in its own name or
in Borrower's name. Without the prior written consent of Lender,
Borrower shall not (i) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or
documents and/or (ii) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions
of any of the applications, Letter of Credit Accommodations, or docu-
ments, drafts or acceptances thereunder or any letters of credit included
in the Collateral.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor
of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by
Borrower to Lender. Any duties or obligations undertaken by Lender to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Lender in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
2.3 Optional Reductions in Maximum Credit.
(a) Borrower may, at its option, from time to time after
the execution and delivery by all of the parties thereto of definitive
documentation with respect to each portion of the Frozen Vegetable Sale,
request in writing that the Maximum Credit be reduced to any amount not
less than $30,000,000. Any such request shall be irrevocable, unless
Lender shall otherwise agree.
(b) Effective on the first Business Day which is fifteen
(15) days after the date of the receipt by Lender of such written
request, the Maximum Credit shall be reduced as requested by Borrower;
provided, that, each such reduction shall be in the aggregate amount of
$10,000,000 or an integral multiple of $10,000,000 in excess thereof. In
addition, in connection with each reduction of the Maximum Credit
pursuant to this Section 2.3, the Line Fee Amount shall be reduced by an
amount equal to the product of (i) the Line Fee Amount immediately prior
to such reduction multiplied by (ii) a fraction the numerator of which is
the amount of such reduction and the denominator of which is the Maximum
Credit immediately prior to such reduction.
(c) Without limiting any of the other rights of Lender
pursuant to the terms hereof, effective on each date when any reduction
is effective pursuant to Section 2.3(b) above, Borrower agrees to
automatically and without demand make a payment to Lender in respect of
the Loans in an amount equal to the excess if any, of the aggregate
principal amount of the Loans and outstanding Letter of Credit
Obligations then outstanding over the amount of the Loans then available
to Borrower pursuant to the Maximum Credit as so reduced. All interest
accrued on the principal amount of the Loans paid pursuant to this
Section 2.3(c) shall be paid, or may be charged to any of the loan
account(s) of Borrower maintained by Lender, at Lender's option, on the
date such payment of principal is due.
2.4 Availability Reserves. All Revolving Loans otherwise available
to Borrower pursuant to the lending formulas and subject to the Maximum
Credit and other applicable limits hereunder shall be subject to Lender's
continuing right to establish and revise Availability Reserves.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest on the daily
average outstanding principal amount of the Loans and, to the extent
permitted by applicable law, the other non-contingent Obligations from
and after the date when actually paid by Lender, at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of
Default or termination or non-renewal hereof shall be payable on demand.
Lender shall make a good faith effort to pay third-party fees and
expenses when due and not to charge Borrower's loan account for
reimbursement of such Obligations until actually paid by Lender.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans, that Eurodollar Rate Loans
be converted to Prime Rate Loans and/or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from
Borrower shall specify the amount of the Prime Rate Loans which will be
converted to Eurodollar Rate Loans (subject to the limits set forth
below) and the Interest Period to be applicable to such Eurodollar Rate
Loans on not less than three (3) Business Days prior notice to Lender.
Subject to the terms and conditions contained herein, three (3) Business
Days after receipt by Lender of such a request from Borrower, such Prime
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar
Rate Loans shall continue, as the case may be, provided that (i) no Event
of Default, or event which, merely with notice or passage of time or
both, would constitute an Event of Default, exists or has occurred and is
continuing, (ii) no party hereto shall have sent any notice of
termination or non-renewal of this Agreement, (iii) Borrower shall have
complied with all reasonable and customary procedures as are established
by Lender and specified by Lender to Borrower from time to time for
requests by Borrower for Eurodollar Rate Loans, (iv) no more than four
(4) Interest Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi)
the maximum amount of the Eurodollar Rate Loans at any time requested by
Borrower shall not exceed the amount equal to sixty-six and two thirds
percent (66 2/3%) of the daily average of the principal amount of the
Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, in each case as reasonably determined by
Borrower pursuant to a good faith written computation (but with no
obligation of Lender to make such Revolving Loans except as otherwise
provided in this Agreement), and (vii) Lender shall have determined that
the Interest Period or Adjusted Eurodollar Rate is available to Lender
through the Reference Bank and can be readily determined as of the
Business Day following the date of the request for such Eurodollar Rate
Loan by Borrower. Any request by Borrower to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Lender and Reference Bank shall not be required to purchase
United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but
the provisions hereof shall be deemed to apply as if Lender and Reference
Bank had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert
to Prime Rate Loans upon the last day of the applicable Interest Period,
unless Lender has received a request to continue such Eurodollar Rate
Loan at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Eurodollar Rate Loans shall, at
Lender's option, upon notice by Lender to Borrower, convert to Prime Rate
Loans in the event that (i) an Event of Default shall exist, (ii) this
Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been
converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans
continued, as the case may be, at the beginning of an Interest Period
shall at any time during such Interest Period exceed the sum of the then
outstanding principal amount of the Term Loan plus the Revolving Loans
then available to Borrower under Section 2 hereof. Borrower shall pay to
Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account of Borrower) any Breakage Fees and, without duplication
thereof, any other reasonable and customary amounts required to
compensate Lender, the Reference Bank or any Participant for any loss
(including loss of anticipated profits), cost or expense reasonably
incurred by such person, as a result of the conversion of Eurodollar Rate
Loans to Prime Rate Loans pursuant to any of the foregoing; provided,
however, that no such Breakage Fee or other costs shall be payable if
such conversion of Eurodollar Rate Loans to Prime Rate Loans prior to the
end of the applicable Interest Period results from Lender's establishment
of Availability Reserves, changes in criteria for Eligible Accounts or
Eligible Inventory, or reduction of the lending formula set forth in
Section 2.1(a).
(d) Interest shall be payable by Borrower to Lender
monthly in arrears not later than the first Business Day of each calendar
month and shall be calculated on the daily average principal balance of
the non-contingent Obligations outstanding on the basis of a three
hundred sixty (360) day year and actual days elapsed (including the date
of borrowing but excluding the date of payment if made in accordance with
Section 6.3(b)). The interest rate on non-contingent Obligations (other
than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day
of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such
change occurs. In no event shall charges constituting interest payable
by Borrower to Lender exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision
of this Agreement is in contravention of any such law or regulation, such
part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Lender as a closing fee the
amount of $700,000, which shall be fully earned as of the date hereof and
$350,000 of which shall be payable on the date hereof and $350,000 of
which shall be payable on the first anniversary of the date hereof.
3.3 Servicing Fee. Borrower shall pay to Lender a servicing fee in
an amount equal to $65,000 per annum in respect of Lender's services for
each year (or part thereof) while this Agreement remains in effect and
for so long thereafter as any of the Obligations are outstanding, which
fee shall be fully earned as of the date hereof and be payable quarterly
in advance on the date hereof and on the first day of each calendar
quarter hereafter.
3.4 Unused Line Fee. Borrower shall pay to Lender monthly an
unused line fee at a rate equal to one quarter of one percent (.25%) per
annum calculated upon the amount by which the average daily Line Fee
Amount exceeds the average daily principal balance of the outstanding
Revolving Loans and Letter of Credit Accommodations during the
immediately preceding month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each month in
arrears.
3.5 Changes in Laws; Increased Costs of Loans; Breakage Fees.
(a) Notwithstanding anything to the contrary contained
herein, all Eurodollar Rate Loans shall, upon notice by Lender to
Borrower, convert to Prime Rate Loans in the event that any change in
applicable law or regulation (or the interpretation or administration
thereof by a banking authority or regulator) shall make it unlawful for
Lender, Reference Bank or any Participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the
Eurodollar Rate Loans. In the event that any change in applicable law or
regulation (or the interpretation or administration thereof by a banking
authority or regulator) shall (i) result in the increase in the costs to
Lender, Reference Bank or any Participant of making or maintaining any
Eurodollar Rate Loans or (ii) reduce the amounts received or receivable
by Lender in respect thereof, by an amount deemed by Lender to be
material, Borrower shall pay to Lender, upon demand by Lender (or Lender
may, at its option, charge any loan account of Borrower) any amounts
required to compensate Lender, the Reference Bank or any Participant with
Lender for any loss (including loss of anticipated profits), cost or
expense reasonably incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or expense reasonably
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the Eurodollar
Rate Loans or any portion thereof. A certificate of Lender setting forth
the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error. In the event that Lender shall
determine that the applicable Eurodollar Rate does not adequately reflect
the cost to Lender of making or maintaining the Eurodollar Rate Loans,
then, unless Borrower compensates Lender for Lender's increased cost of
funds, Lender may suspend generally the prospective availability of the
Eurodollar Rate option for new Interest Periods and/or Loans until such
condition no longer exists.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Lender other than on the last day
of the applicable Interest Period (whether pursuant to acceleration, upon
maturity or otherwise), including any payments pursuant to the
application of collections under Section 6.3 or any other payments made
with the proceeds of Collateral, Borrower shall pay to Lender upon demand
by Lender (or Lender may, at its option, charge any loan account of
Borrower) Breakage Fees and, without duplication thereof, any other
reasonable and customary amounts required to compensate Lender, the
Reference Bank or any Participant with Lender for any additional loss
(including loss of anticipated profits), cost or expense reasonably
incurred by such person as a result of such prepayment or payment,
including, without limitation, any loss, cost or expense reasonably
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain such Eurodollar
Rate Loans or any portion thereof. A certificate of Lender setting forth
the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Lender shall have received evidence, in form and
substance satisfactory to Lender, that Lender has valid perfected and
first priority security interests in and liens upon the Collateral and
any other property which is intended to be security for the Obligations
or the liability of any Obligor in respect thereof, subject only to the
security interests and liens permitted herein or in the other Financing
Agreements;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall
be satisfactory in form and substance to Lender, and Lender shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action and proceedings which
Lender may have requested in connection therewith, such documents where
requested by Lender or its counsel to be certified by appropriate
corporate officers or governmental authorities;
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Lender's
latest field examination and no change or event shall have occurred which
would impair the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Lender to enforce the Obligations or realize
upon the Collateral;
(d) Lender shall have completed a field review of the
Records and such other information with respect to the Collateral as
Lender may require to determine the amount of Revolving Loans available
to Borrower, the results of which shall be satisfactory to Lender, not
more than three (3) business days prior to the date hereof;
(e) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or
desirable in order to permit, protect and perfect its security interests
in and liens upon the Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, acknowledgements by lessors, mortgagees and
warehousemen of Lender's security interests in the Collateral, waivers by
such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and
the right to remain on, the premises to exercise its rights and remedies
and otherwise deal with the Collateral;
(f) Lender shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lender, and
certificates of insurance policies and/or endorsements naming Lender as
loss payee;
(g) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower with
respect to the Financing Agreements and such other matters as Lender may
request; and
(h) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition
precedent to Lender making Loans and/or providing Letter of Credit
Accommodations to Borrower, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein
and in the other Financing Agreements shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such
Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto; and
(b) no Event of Default and no event or condition which,
with notice or passage of time or both, would constitute an Event of
Default, shall exist or have occurred and be continuing on and as of the
date of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower
hereby grants to Lender a continuing security interest in, a lien upon,
and a right of set off against, and hereby assigns to Lender as security,
the following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or
licensee, choses in action and other claims and existing and future
leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, letters of credit, bankers' acceptances
and guaranties;
5.3 all present and future monies, certificated and uncertificated
securities, investment property, credit balances, deposits, deposit
accounts and other property of Borrower now or hereafter held or received
by or in transit to Lender or its affiliates or at any other depository
or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and
all present and future liens, security interests, rights, remedies, title
and interest in, to and in respect of Accounts and other Collateral,
including, without limitation, rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and
other insurance related to the Collateral, rights of stoppage in
transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, goods described
in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other Collateral,
including, without limitation, returned, repossessed and reclaimed goods,
and deposits by and property of account debtors or other persons
securing the obligations of account debtors;
5.4 Inventory;
5.5 Records; and
5.6 all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain one or more
loan account(s) on its books in which shall be recorded all Loans,
Letter of Credit Accommodations and other Obligations and the Collateral,
all payments made by or on behalf of Borrower and all other appropriate
debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in
the loan account(s) shall be made in accordance with Lender's customary
practices as in effect from time to time.
6.2 Statements. Lender shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s)
maintained by Lender for Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Lender but
shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrower and conclusively binding upon Borrower as an
account stated except to the extent that Lender receives a written notice
from Borrower of any specific exceptions of Borrower thereto within
thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan account(s)
shall be presumptive evidence of the amounts due and owing to Lender by
Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its
expense, blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"), as Lender may specify, with such banks
as are acceptable to Lender into which Borrower shall promptly deposit
and direct its account debtors to directly remit all payments on Accounts
and all payments constituting proceeds of Inventory or other Collateral
in the identical form in which such payments are made, whether by cash,
check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance
satisfactory to Lender, providing that all items received or deposited in
the Blocked Accounts are the property of Lender, that the depository bank
has no lien upon, or right to setoff against, the Blocked Accounts, the
items received for deposit therein, or the funds from time to time on
deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to such bank account of
Lender as Lender may from time to time designate for such purpose
("Payment Account"). Borrower agrees that all payments made to such
Blocked Accounts or other funds received and collected by Lender, whether
on the Accounts or as proceeds of Inventory or other Collateral or
otherwise shall be the property of Lender.
(b) For purposes of calculating interest on the
Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business
Day following the date of receipt of immediately available funds by
Lender in the Payment Account. For purposes of calculating the amount of
the Revolving Loans available to Borrower such payments will be applied
(conditional upon final collection) to the Obligations on the business
day of receipt by Lender in the Payment Account, if such payments are
received within sufficient time (in accordance with Lender's usual and
customary practices as in effect from time to time) to credit Borrower's
loan account on such day, and if not, then on the next business day.
(c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same
to be remitted, in kind, to Lender. In no event shall the same be
commingled with Borrower's own funds. Borrower agrees to reimburse
Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in
the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The
obligation of Borrower to reimburse Lender for such amounts pursuant to
this Section 6.3 shall survive the termination or non-renewal of this
Agreement.
6.4 Payments. All Obligations shall be payable to the Payment
Account as provided in Section 6.3 or such other place as Lender may
designate from time to time. Lender may apply payments received or
collected from Borrower or for the account of Borrower (including,
without limitation, the monetary proceeds of collections or of
realization upon any Collateral) to such of the Obligations, in such
order and manner as Lender determines. At Lender's option, all
principal, interest, fees, costs, expenses and other charges provided for
in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrower. Borrower shall make all
payments to Lender on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment
of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or
proceeds to any Person for any reason, then the Obligations intended to
be satisfied by such payment or proceeds shall be reinstated and continue
and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Lender. Borrower shall be
liable to pay to Lender, and does hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any
contrary action which may be taken by Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall
specify the date on which the requested advance is to be made or Letter
of Credit Accommodations established (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after 11:00 a.m.
Chicago time on any day shall be deemed to have been made as of the
opening of business on the immediately following business day. All Loans
and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for
the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrower or in accordance with the terms and conditions of this
Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of
the Loans provided by Lender to Borrower hereunder only for:
(a) payments to each of the persons listed in the disbursement direction
letter furnished by Borrower to Lender on or about the date hereof and
(b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other
Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided by Lender to Borrower pursuant to the provisions
hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the
Loans to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular
basis as required by Lender, a schedule of Accounts; (b) on a monthly
basis or more frequently as Lender may request, (i) perpetual inventory
reports, (ii) inventory reports by category and (iii) agings of accounts
payable, (c) on a weekly basis or as more frequently requested by
Lender, a listing of the amounts owing by Borrower to Persons as the
purchase price of agricultural goods, (d) upon Lender's request, (i)
copies of customer statements and credit memos, remittance advices and
reports, and copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and copies of purchase orders, invoices
and delivery documents for Inventory acquired by Borrower; (e) agings of
accounts receivable on a monthly basis or more frequently as Lender may
request; and such other reports as to the Collateral as Lender shall
request from time to time. If any of Borrower's records or reports of
the Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, Borrower hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Lender and to follow Lender's
instructions with respect to further services at any time that an Event
of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrower shall notify Lender promptly of: any
material delay in Borrower's performance of any of its obligations to any
account debtor or the assertion of any claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with
account debtors, or any settlement, adjustment or compromise thereof,
all material adverse information relating to the financial condition of
any account debtor and any event or circumstance which, to Borrower's
knowledge would reasonably cause Lender to consider any then existing
Accounts as no longer constituting Eligible Accounts or Acceptable
Foreign Accounts. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Lender's consent, except in the ordinary course of Borrower's
business in accordance with practices and policies previously disclosed
in writing to Lender (or otherwise disclosed to Lender during Lender's
due diligence process or a routine audit). So long as no Event of
Default exists or has occurred and is continuing, Borrower shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has
occurred and is continuing, Lender shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Borrower shall promptly report to Lender any return
of Inventory by an account debtor. At any time that Inventory is
returned, reclaimed or repossessed, the related Account shall not be
deemed an Eligible Account. In the event any account debtor returns
Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Lender's request, (i) hold the returned
Inventory in trust for Lender, (ii) segregate all returned Inventory from
all of its other property, (iii) dispose of the returned Inventory solely
according to Lender's instructions, and (iv) not issue any credits,
discounts or allowances with respect thereto without Lender's prior
written consent.
(c) With respect to each Account: (i) the amounts shown on
any invoice delivered to Lender or schedule thereof delivered to Lender
shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lender pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor except as
reported to Lender in accordance with this Agreement and except for
credits, discounts, allowances or extensions made or given in the
ordinary course of Borrower's business in accordance with practices and
policies previously disclosed to Lender (or otherwise disclosed to Lender
during Lender's due diligence process or a routine audit), (iv) there
shall be no material setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto
except as reported to Lender in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in
accordance with its terms.
(d) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the
validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to
Lender, with appropriate endorsement and assignment, with full recourse
to Borrower, all chattel paper and instruments which Borrower now owns or
may at any time acquire immediately upon Borrower's receipt thereof,
except as Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all
account debtors that the Accounts have been assigned to Lender and that
Lender has a security interest therein and Lender may direct any or all
accounts debtors to make payment of Accounts directly to Lender, (ii)
extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any
other party or parties in any way liable for payment thereof without
affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender
may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations
have been assigned to Lender and are payable directly and only to Lender
and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services
giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a)
Borrower shall at all times maintain inventory records reasonably
satisfactory to Lender, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory,
Borrower's cost therefor and daily withdrawals therefrom and additions
thereto; (b) Borrower shall conduct a physical count of the Inventory at
least once each year, but at any time or times as Lender may request on
or after an Event of Default, and promptly following such physical
inventory shall supply Lender with a report in the form and with such
specificity as may be reasonably satisfactory to Lender concerning such
physical count; (c) Borrower shall not remove any Inventory from the
locations set forth herein or for which Borrower has complied with the
requirements set forth in Section 9.2 hereof, without the prior written
consent of Lender, except for sales of Inventory in the ordinary course
of Borrower's business and except to move Inventory directly from one
such location to another such location; (d) after an Event of Default
and upon Lender's request, Borrower shall, at its expense, at any time or
times as Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender or upon which Lender
is expressly permitted to rely; (e) Borrower shall produce, use, store
and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity
with applicable laws (including, but not limited to, the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production,
use, sale or other disposition of the Inventory; (g) Borrower shall not
sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to repurchase
such Inventory; (h) Borrower shall keep the Inventory in good and
marketable condition; and (i) Borrower shall not, without prior written
notice to Lender, acquire or accept any Inventory on consignment or
approval (other than empty cans or pie filling).
7.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in Borrower's or
Lender's name, to: (a) at any time an Event of Default or event which
with notice or passage of time or both would constitute an Event of
Default exists or has occurred and is continuing (i) demand payment on
Accounts or other proceeds of Inventory or other Collateral, (ii) enforce
payment of Accounts by legal proceedings or otherwise, (iii) exercise all
of Borrower's rights and remedies to collect any Account or other
Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as the Lender deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the post office authorities to change the address
for delivery of Borrower's mail to an address designated by Lender, and
open and dispose of all mail addressed to Borrower, (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement and the other Financing
Agreements and (x) sign Borrower's name on any verification of Accounts
and notices thereof to account debtors and (b) at any time to (i) take
control in any manner of any item of payment or proceeds thereof, (ii)
have access to any lockbox or postal box into which Borrower's mail is
deposited, endorse Borrower's name upon any items of payment or proceeds
thereof and deposit the same in the Lender's account for application to
the Obligations, (iv) endorse Borrower's name upon any chattel paper,
document, instrument, invoice, or similar document or agreement relating
to any Account or any goods pertaining thereto or any other Collateral,
and (v) with respect to Collateral, execute in Borrower's name and file
any UCC financing statements or amendments thereto. Borrower hereby
releases Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and
in furtherance thereof, whether of omission or commission, except as a
result of Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
7.5 Right to Cure. Lender may, at its option, (a) cure any default
by Borrower under any agreement with a third party or pay or bond on
appeal any judgment entered against Borrower, (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or
existing with respect to the Collateral (except those permitted by the
terms of this Agreement) and (c) pay any amount, incur any expense or
perform any act which, in Lender's judgment, is necessary or appropriate
to preserve, protect, insure or maintain the Collateral and the rights of
Lender with respect thereto. Lender may add any amounts so expended to
the Obligations and charge Borrower's account therefor, such amounts to
be repayable by Borrower on demand. Lender shall be under no obligation
to effect such cure, payment or bonding and shall not, by doing so, be
deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Lender,
at the cost and expense of Borrower, (a) Lender or its designee shall
have complete access to all of Borrower's premises during normal business
hours and after notice to Borrower, or at any time and without notice to
Borrower if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and
all of Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as Lender may request, and
(c) use during normal business hours such of Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following
(which shall survive the execution and delivery of this Agreement), the
truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Lender to
Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries.
Borrower is a corporation duly organized and in good standing under the
laws of its state of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the
ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a
material adverse effect on Borrower's financial condition, results of
operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement,
the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within Borrower's corporate powers, have
been duly authorized and are not in contravention of law or the terms of
Borrower's certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which
Borrower is a party or by which Borrower or its property are bound. This
Agreement and the other Financing Agreements constitute legal, valid and
binding obligations of Borrower enforceable in accordance with their
respective terms. Borrower does not have any subsidiaries except as set
forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change. All
financial statements relating to Borrower which have been or may
hereafter be delivered by Borrower to Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the
results of operation of Borrower as at the dates and for the periods set
forth therein (provided that monthly or quarterly statements are subject
to normal year-end adjustments and may not contain all footnote
information required by GAAP). Except as disclosed in any interim
financial statements furnished by Borrower to Lender prior to the date of
this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of
Borrower, since the date of the most recent audited financial statements
furnished by Borrower to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief
executive office of Borrower and Borrower's Records concerning Accounts
are located only at the address set forth below and its only other places
of business and the only other locations of Collateral, if any, are the
addresses set forth in the Information Certificate, subject to the right
of Borrower to establish new locations in accordance with Section 9.2
below. The Borrower is not "engaged" in "farming operations" within the
meanings of such terms under Section 9-109 of the Uniform Commercial Code
as in effect from time to time in any or all applicable jurisdictions.
The Information Certificate correctly identifies any of such locations
which are not owned by Borrower and sets forth the owners and/or
operators thereof and to the best of Borrower's knowledge, the holders of
any mortgages on such locations.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to existing
liens indicated on Schedule 8.4 hereto and, with respect to Collateral
other than Accounts and Inventory, the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to
Lender and such others as are specifically listed on Schedule 8.4 hereto
or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are
required to be filed by it (without requests for extension except as
previously disclosed in writing to Lender). All information in such tax
returns, reports and declarations is complete and accurate in all
material respects. Borrower has paid or caused to be paid all taxes due
and payable or claimed due and payable in any assessment received by it,
except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and
with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or
not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information
Certificate, there is no present investigation by any governmental agency
pending, or to the best of Borrower's knowledge threatened, against or
affecting Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of Borrower's
knowledge threatened, against Borrower or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement,
which if adversely determined against Borrower would result in any
material adverse change in the assets, business or prospects of Borrower
or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is
a party or of Lender to enforce any Obligations or realize upon any
Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Other
than defaults in existence on the date hereof and described on Schedule
8.7 hereto, Borrower is not in default in any material respect under, or
in violation in any material respect of any of the terms of, any
agreement, contract, instrument, lease or other commitment to which it is
a party or by which it or any of its assets are bound and Borrower is in
compliance in all material respects with all applicable provisions of
laws, rules, regulations, licenses, permits, approvals and orders of any
foreign, Federal, State or local governmental authority (it being
understood that Borrower may from time to time enter into arrangements
pursuant to which suppliers of cans extend the time period for the
payment of amounts due from Borrower to such supplier).
8.8 Environmental Compliance.
(1) Except as set forth on Schedule 8.8 hereto, Borrower
has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its
premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the
operations of Borrower complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.
(2) Except as set forth on Schedule 8.8 hereto, there has
been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any governmental authority or any other person nor
is any pending or to the best of Borrower's knowledge threatened, with
respect to any non-compliance with or violation of the requirements of
any Environmental Law by Borrower or the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or
safety matter, which affects Borrower or its business, operations or
assets or any properties at which Borrower has transported, stored or
disposed of any Hazardous Materials.
(3) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened
or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal
of any Hazardous Materials.
(d) Borrower has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law
and all of such licenses, permits, certificates, approvals or similar
authorizations are valid and in full force and effect.
8.9 Employee Benefits.
(a) Borrower has not engaged in any transaction in
connection with which Borrower or any of its ERISA Affiliates could be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, including any
accumulated funding deficiency described in Section 8.9(c) hereof and any
deficiency with respect to vested accrued benefits described in Section
8.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty
Corporation has been or is expected by Borrower to be incurred with
respect to any employee pension benefit plan of Borrower or any of its
ERISA Affiliates. There has been no reportable event (within the meaning
of Section 4043(b) of ERISA) or any other event or condition with respect
to any employee pension benefit plan of Borrower or any of its ERISA
Affiliates which presents a risk of termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which
Borrower or any of its ERISA Affiliates is required under Section 302 of
ERISA and Section 412 of the Code to have paid under the terms of each
employee pension benefit plan as contributions to such plan as of the
last day of the most recent fiscal year of such plan ended prior to the
date hereof, and 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 employee pension benefit plan, including any penalty
or tax described in Section 8.9(a) hereof and any deficiency with respect
to vested accrued benefits described in Section 8.9(d) hereof.
(d) The current value of all vested accrued benefits
under all employee pension benefit plans maintained by Borrower that are
subject to Title IV of ERISA does not exceed the current value of the
assets of such plans allocable to such vested accrued benefits, including
any penalty or tax described in Section 8.9(a) hereof and any accumulated
funding deficiency described in Section 8.9(c) hereof. The terms
"current value" and "accrued benefit" have the meanings specified in
ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is
or has ever been obligated to contribute to any "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA) that is subject to
Title IV of ERISA.
8.10 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Lender in connection
with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without
limitation, all information on the Information Certificate is true and
correct in all material respects on the date as of which such information
is dated or certified and does not omit any material fact necessary in
order to make such information not misleading. No event or circumstance
has occurred which has had or could reasonably be expected to have a
material adverse affect on the business, assets or prospects of Borrower,
which has not been fully and accurately disclosed to Lender in writing.
8.11 Assignment of Futures Contracts. Borrower shall continue to
enter into futures, options and forward purchase contracts in the
ordinary course of its business and consistent with its past practices.
If Borrower enters into agreements to hedge its risks with respect to
finished goods, Borrower shall execute and deliver to Congress
assignments of such contracts or such other documents as Congress may
request to assign to it Borrower's rights as Collateral. From and after
an Event of Default, Borrower shall not withdraw any funds from its
brokerage accounts relating to any or all of such arrangements or
agreements without the prior written consent of Congress.
8.12 Purchase of Farm Products. Borrower will take reasonable
actions consistent with past practices to ensure that all farm products
purchased by it are free and clear of all Liens (other than the trust
under PACA), including conducting Lien searches for new suppliers and
monitoring the receipt of notices of Liens and shall, whenever a Lien
exists, issue joint checks to the seller and the secured party or
otherwise obtain a release of the Lien. Borrower will furnish to
Congress such information as Congress may request in order to monitor
such matters. Borrower has received no notice given pursuant of the
Federal Food Security Act and there has not been filed any financing
statement or notice, purporting to perfect a security interest in farm
products purchased by Borrower in favor of a secured creditor of the
seller of such farm products. Borrower has registered, pursuant to the
Federal Food Security Act, with the Secretary of State of each State in
which are produced farm products purchased by Borrower and which has
established or hereafter establishes a central filing system, as a buyer
of farm products produced in such State (and each such registration is
in full force and effect).
8.13 Oconomowoc Canning. The fair market value of the assets of
Oconomowoc Canning Company, Inc. is less than $5,000.
8.14 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and
in addition to any other representations or warranties which Borrower
shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall at all times
preserve, renew and keep in full, force and effect its corporate
existence and rights and franchises with respect thereto and maintain in
full force and effect the trademarks "Stokely," "Stokely's Finest,"
Stokely's Gold," "Stokely's Traditional," "Newport" and "School Days" and
all permits, licenses, trademarks, tradenames, approvals, authorizations,
leases and contracts necessary to carry on the business as presently or
proposed to be conducted. Borrower shall give Lender thirty (30) days
prior written notice of any proposed change in its corporate name, which
notice shall set forth the new name and Borrower shall deliver to Lender
a copy of the amendment to the Certificate of Incorporation of Borrower
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation of Borrower as soon as it is available.
9.2 New Collateral Locations. Borrower may open, or move
Collateral to, any new location within the continental United States
provided Borrower gives Lender five (5) Business Days (or such lesser
time as agreed to by Lender) prior written notice of the intended opening
of any such new location, executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to
protect its interests in the Collateral at such location, including,
without limitation, UCC financing statements and if applicable, delivers
appropriate Acceptable Third Party Agreements with respect to such
location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, at all times, comply in all material
respects with all laws, rules, regulations, licenses, permits, approvals
and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without
limitation, the Employee Retirement Security Act of 1974, as amended, the
Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including, without limitation, all of the
Environmental Laws.
(b) Borrower shall establish and maintain, at its
expense, a system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system shall include
annual reviews of such compliance by employees or agents of Borrower who
are familiar with the requirements of the Environmental Laws. Copies of
all environmental surveys, audits, assessments, feasibility studies and
results of remedial investigations shall be promptly furnished, or caused
to be furnished, by Borrower to Lender. Borrower shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Borrower shall give both oral and written notice to
Lender immediately upon Borrower's receipt of any notice of, or
Borrower's otherwise obtaining knowledge of, (i) the occurrence of any
event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint,
order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by Borrower or
(B) the release, spill or discharge, threatened or actual, of any
Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety
matter, which affects Borrower or its business, operations or assets or
any properties at which Borrower transported, stored or disposed of any
Hazardous Materials.
(d) Borrower shall indemnify and hold harmless Lender,
its directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims,
damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to
the use, generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a Hazardous
Material, including, without limitation, the costs of any required or
necessary repair, cleanup or other remedial work with respect to any
property of Borrower and the preparation and implementation of any
closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall
survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges
upon or against it or its properties or assets, except for taxes the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect
to which adequate reserves have been set aside on its books. Borrower
shall be liable for any tax or penalties imposed on Lender as a result of
the financing arrangements provided for herein and Borrower agrees to
indemnify and hold Lender harmless with respect to the foregoing, and to
repay to Lender on demand the amount thereof, and until paid by Borrower
such amount shall be added and deemed part of the Loans, provided, that,
nothing contained herein shall be construed to require Borrower to pay
any income or franchise taxes attributable to the income of Lender from
any amounts charged or paid hereunder to Lender. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds
and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to
Lender as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Lender as Lender shall require
as proof of such insurance, and, if Borrower fails to do so, Lender is
authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Borrower in obtaining, and at any
time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrower
shall cause Lender to be named as a loss payee and an additional insured
(but without any liability for any premiums) under such insurance
policies and Borrower shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory
to Lender. Such lender's loss payable endorsements shall specify that
the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid
regardless of any act or omission by Borrower or any of its affiliates.
At its option, Lender may apply any insurance proceeds received by Lender
at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in
such manner as Lender may determine or hold such proceeds as cash
collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which
true and complete entries shall be made of all dealings or transactions
of or in relation to the Collateral and the business of Borrower and its
subsidiaries (if any) in accordance with GAAP and Borrower shall furnish
or cause to be furnished to Lender: (i) within thirty (30) days after
the end of each fiscal month other than March and April, (and within
sixty (60) days after the end of each fiscal March and forty-five (45)
days after the end of each fiscal April), monthly unaudited consolidated
financial statements, and, if Borrower has any subsidiaries, unaudited
consolidating financial statements (including in each case balance
sheets, statements of income and loss and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its
subsidiaries as of the end of and through such fiscal month, subject to
normal year-end adjustments, and (ii) within ninety (90) days after the
end of each fiscal year, audited consolidated financial statements and,
if Borrower has any subsidiaries, unaudited consolidating financial
statements of Borrower and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow
and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its
subsidiaries as of the end of and for such fiscal year, together with the
opinion of independent certified public accountants, which accountants
shall be an independent accounting firm selected by Borrower and
reasonably acceptable to Lender, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower and its subsidiaries as of
the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property
which is security for the Obligations or which would result in any
material adverse change in Borrower's business, properties, assets,
goodwill or condition, financial or otherwise and (ii) the occurrence of
any Event of Default or event which, with the passage of time or giving
of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports
which Borrower sends to its stockholders generally and copies of all
reports and registration statements which Borrower files with the
Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information
respecting the Collateral and the business of Borrower, as Lender may,
from time to time, reasonably request. Lender is hereby authorized to
deliver a copy of any financial statement or any other information
relating to the business of Borrower to any court or other government
agency or to any participant or assignee or prospective participant or
assignee who shall be directed to maintain the confidentiality of such
information. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Lender, at Borrower's expense,
copies of the financial statements of Borrower and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrower and to disclose to Lender such information as they may have
regarding the business of Borrower. Any documents, schedules, invoices
or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Borrower to Lender in writing.
(e) Not later than January 1 of each year hereafter
during the term of this Agreement, Borrower shall deliver to Lender, via
certified mail, return receipt requested, an updated letter addressed to
Borrower's auditors substantially in the form of the auditors' letter
delivered by Borrower on or before the date of the initial Loan.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, directly or indirectly, (a) merge into or with or
consolidate with any other Person or permit any other Person to merge
into or with or consolidate with it, or (b) sell, assign, lease,
transfer, abandon or otherwise dispose of any stock (other than stock of
the Borrower), indebtedness or all or substantially all of its assets to
any other Person (except for (i) sales of Inventory in the ordinary
course of business, (ii) the disposition of worn-out or obsolete
Equipment or Equipment or Real Estate no longer used in the business of
Borrower so long as such sales do not involve Equipment and/or Real
Estate having an aggregate fair market value in the aggregate in excess
of $10,000,000 for all such Equipment and/or Real Estate disposed of in
any fiscal year of Borrower) and (iii) the sale of assets to Dean Foods
and AGRIPAC pursuant to the Frozen Vegetable Sale and (iv) other sales of
assets made with the prior written consent of Lender (in its sole
discretion)), or (c) form or acquire any subsidiaries, or (d) wind up,
liquidate or dissolve or (e) agree to do any of the foregoing. In
addition, Borrower shall give Lender at least twenty days prior notice of
any disposition of any material portion of its assets.
9.8 Encumbrances. Borrower shall not create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on any of its assets or
properties, including, without limitation, the Collateral, except: (a)
liens and security interests of Lender; (b) liens securing the payment of
taxes, either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have
been set aside on its books; (c) non-consensual statutory liens (other
than liens securing the payment of taxes) arising in the ordinary course
of Borrower's business to the extent: (i) such liens secure indebtedness
which is not overdue or (ii) such liens secure indebtedness relating to
claims or liabilities which are fully insured and being defended at the
sole cost and expense and at the sole risk of the insurer or being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair
the value of the real property which may be subject thereto; purchase
money security interests in Equipment (including capital leases) and
purchase money mortgages on real estate not to exceed $5,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower other than the
Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be; and the security interests and liens set
forth on Schedule 8.4 hereto.
9.9 Indebtedness. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
obligations or indebtedness, except (a) the Obligations; (b) trade
obligations and normal accruals in the ordinary course of business not
yet due and payable, or with respect to which the Borrower is contesting
in good faith the amount or validity thereof by appropriate proceedings
diligently pursued and available to Borrower, and with respect to which
adequate reserves have been set aside on its books; (c) purchase money
indebtedness (including capital leases) to the extent not incurred and
paid or secured by liens (including capital leases) in violation of any
other provision of this Agreement; and (d) obligations or indebtedness
set forth on the Information Certificate; provided, that, (i) Borrower
may only make regularly scheduled payments of principal and interest in
respect of such indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such indebtedness as
in effect on the date hereof, (ii) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such
indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof, or (B) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (iii) Borrower shall furnish to
Lender all notices or demands in connection with such indebtedness either
received by Borrower or on its behalf, promptly after the receipt
thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not,
directly or indirectly, make any loans or advance money or property to
any person, or invest in (by capital contribution, dividend or otherwise)
or purchase or repurchase the stock or indebtedness or all or a
substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or
indirectly) the indebtedness, performance, obligations or dividends of
any Person or agree to do any of the foregoing, except: (a) the
endorsement of instruments for collection or deposit in the ordinary
course of business; (b) investments in: (i) short-term direct obligations
of the United States Government, (ii) negotiable certificates of deposit
issued by any bank satisfactory to Lender, payable to the order of the
Borrower or to bearer and delivered to Lender, and (iii) commercial paper
rated A1 or P1; provided, that, as to any of the foregoing, unless waived
in writing by Lender, Borrower shall take such actions as are deemed
necessary by Lender to perfect the security interest of Lender in such
investments (c) the guarantees set forth in the Information Certificate
and (d) loans and advances to employees in the ordinary course of
business for travel and moving expenses in an aggregate amount not to
exceed $1,000,000 at any time outstanding.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of
class of capital stock of Borrower now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or
redeem, retire, defease, purchase or otherwise acquire any shares of any
class of capital stock (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration other than common stock or
apply or set apart any sum, or make any other distribution (by reduction
of capital or otherwise) in respect of any such shares or agree to do any
of the foregoing, except as set forth on Schedule 9.11 hereto.
9.12 Transactions with Affiliates. Borrower shall not enter into
any transaction (other than sales of Inventory to Stokely U.K. in the
ordinary course of Borrower's business consistent with Borrower's past
practices) for the purchase, sale or exchange of property or the
rendering of any service to or by any affiliate, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to the
Borrower than Borrower would obtain in a comparable arm's length
transaction with an unaffiliated person.
9.13 Compliance with ERISA. Borrower shall not with respect to any
"employee pension benefit plans" maintained by Borrower or any of its
ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit
plans so as to incur any liability to the Pension Benefit Guaranty
Corporation established pursuant to ERISA, (ii) allow or suffer to exist
any prohibited transaction involving any of such employee pension benefit
plans or any trust created thereunder which would subject Borrower or
such ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail
to pay to any such employee pension benefit plan any contribution which
it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to
any such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.13, the term "employee
pension benefit plans," "employee benefit plans", "accumulated funding
deficiency" and "reportable event" shall have the respective meanings
assigned to them in ERISA, and the term "prohibited transaction" shall
have the meaning assigned to it in Section 4975 of the Code and ERISA.
9.14 Use of Proceeds. No proceeds of any Loan shall be used to
make a payment on or with respect to any indebtedness (other than trade
credit incurred and paid in the ordinary course of business) of Borrower
other than (i) payments hereunder, (ii) payments on or with respect to
indebtedness at the time and in the amount scheduled therefor as of the
date hereof (or as of the date of incurrence of such indebtedness, if
such indebtedness is originally incurred after the date hereof) and (iii)
with the prior written consent of Lender (which consent shall not be
unreasonably withheld), such other payments as so consented to by Lender.
9.15 Costs and Expenses. Borrower shall pay to Lender on demand
all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof
and thereof, including, but not limited to: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all title
insurance and other insurance premiums, appraisal fees and search fees;
(c) costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and
expenses of preserving and protecting the Collateral; (f) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Lender,
selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender
arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Borrower's
operations, plus a per diem charge at the rate of $650 per person per day
for Lender's examiners in the field and office; and (h) the reasonable
fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
9.16 Compliance with Federal Food Security Act. Borrower will
register, pursuant to the Federal Food Security Act, with the Secretary
of State of each state in which are produced farm products purchased by
Borrower and which has established or hereafter establishes a central
filing system, as a buyer of farm products produced in such state, and
Borrower will maintain each such registration in full force and affect.
Borrower will give written notice to Lender, no later than 30 days after
the end of each fiscal quarter of Borrower, of each state in which it is
required to file a registration under the Federal Food Security Act,
accompanied by evidence that Borrower has made such required filings.
9.17 Further Assurances. At the request of Lender at any time and
from time to time, Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain
and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Lender may at any
time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of
Loans and providing Letter of Credit Accommodations contained herein are
satisfied. In the event of such request by Lender, Lender may, at its
option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Lender has received such certificate and, in
addition, Lender has determined that such conditions are satisfied. With
respect to Collateral and where permitted by law, Borrower hereby
authorizes Lender to execute and file one or more UCC financing
statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
"Event of Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations
or fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact
made by Borrower to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any
material respect;
(c) any Obligor revokes, terminates or fails to perform
any of the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $100,000 in any one case or
in excess of $500,000 in the aggregate and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall
at any time not be effectively stayed, or any judgment other than for the
payment of money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general
partner of an Obligor which is a partnership) dies or Borrower or any
Obligor, which is a partnership or corporation, dissolves or suspends or
discontinues doing business;
(f) Borrower or any Obligor becomes insolvent (however
defined or evidenced), makes an assignment for the benefit of creditors,
makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at law or in equity) is filed against
Borrower or any Obligor or all or any part of its properties and such
petition or application is not dismissed within thirty (30) days after
the date of its filing or Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding
or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed by Borrower or
any Obligor or for all or any part of its property; or
(i) any default by Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for
borrowed money owing to any person other than Lender, or any capitalized
lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in
favor of any person other than Lender, in any case in an amount in excess
of $250,000 if the effect of such default is that the applicable Person
has accelerated the maturity of any or all of the obligations under any
or all of the applicable documents;
(j) any default (other than a default in existence on the
date hereof and described on Schedule 8.7 hereto) by Borrower or any
Obligor under any material contract, lease, license or other obligation
to any person other than Lender, which default continues for more than
the applicable cure period, if any, with respect thereto if such default
may have a material adverse effect on the Collateral, assets, business or
prospects of Borrower;
(k) any change in the controlling ownership of Borrower;
(l) the indictment of Borrower or any Obligor under any
criminal statute, pursuant to which statute the penalties or remedies
sought or available include forfeiture of any of the property of Borrower
or such Obligor;
(m) the commencement of criminal or civil proceedings
against Borrower or any Obligor pursuant to which proceedings the
penalties or remedies sought or available include forfeiture of any
property of Borrower or such Obligor and which proceeding may have a
material adverse effect on the Collateral, assets, business or prospects
of Borrower or such Obligor;
(n) there shall be a material adverse change in the
business, assets or prospects of Borrower or any Obligor after the date
hereof; or
(o) there shall be an event of default under any of the
other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements,
the Uniform Commercial Code or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of
this Agreement or any of the other Financing Agreements. Lender may, at
any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation, (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided,
that, upon the occurrence of any Event of Default described in Sections
10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which
any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense,
to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on
or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose,
(vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or
terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing
being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower and/or (vii) terminate this Agreement. If any of the Collateral
is sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Lender. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral
is to be made, shall be deemed to be reasonable notice thereof and
Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by
way of prejudgment remedy, Borrower waives the posting of any bond which
might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral
actually received by Lender from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or
in part and in such order as Lender may elect, whether or not then due.
Borrower shall remain liable to Lender for the payment of any deficiency
with interest at the highest rate provided for herein and all costs and
expenses of collection or enforcement, including attorneys' fees and
legal expenses.
(d) Without limiting the foregoing, upon the occurrence
of an Event of Default or an event which with notice or passage of time
or both would constitute an Event of Default, Lender may, at its option,
without notice, (i) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Revolving
Loans and Letter of Credit Accommodations available to Borrower and/or
(ii) terminate any provision of this Agreement providing for any future
Loans or Letter of Credit Accommodations to be made by Lender to
Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out
of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the
State of Illinois (without giving effect to principles of conflicts of
law).
(b) Borrower and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Illinois and the United States
District Court for the Northern District of Illinois and waive any
objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the
other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Lender shall have the right to
bring any action or proceeding against Borrower or its property in the
courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce
its rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address
set forth on the signature pages hereof and service so made shall be
deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Lender's option, by service upon
Borrower in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrower shall appear in
answer to such process, failing which Borrower shall be deemed in default
and judgment may be entered by Lender against Borrower for the amount of
the claim and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding
on Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all
other demands and notices of any kind or nature whatsoever with respect
to the Obligations, the Collateral and this Agreement, except such as are
expressly provided for herein. No notice to or demand on Borrower which
Lender may elect to give shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally
or by course of conduct, but only by a written agreement signed by an
authorized officer of Lender. Lender shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any
of its rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of Lender. Any such waiver
shall be enforceable only to the extent specifically set forth therein.
A waiver by Lender of any right, power and/or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto; provided, however, that
nothing contained in this Section shall prohibit the Borrower from
bringing a separate action with respect to any claim that it has.
11.5 Indemnification. Borrower shall indemnify and hold Lender,
and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or
expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any
act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs,
and the fees and expenses of counsel. To the extent that the undertaking
to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrower
shall pay the maximum portion which it is permitted to pay under
applicable law to Lender in satisfaction of indemnified matters under
this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof
and shall continue in full force and effect for a term ending on the date
two (2) years from the date hereof (the "Renewal Date"); provided, that,
Lender may, at its option, and upon Borrower's request, extend the
Renewal Date to the date two (2) years from the date of the then current
Renewal Date. On each extension of the Renewal Date, Borrower shall pay
Lender a renewal fee equal to one half of one percent (.5%) of the
Maximum Credit, which fee shall be fully earned and payable on each
applicable Renewal Date. Lender or Borrower may terminate this Agreement
and the other Financing Agreements effective on the then current Renewal
Date by giving to the other party at least sixty (60) days prior written
notice; provided, that, this Agreement and all other Financing Agreements
must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall
pay to Lender, in full, all outstanding and unpaid Obligations and shall
furnish cash collateral to Lender in such amounts as Lender determines
are reasonably necessary to secure Lender from loss, cost, damage or
expense, including attorneys' fees and legal expenses, in connection with
any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited
to the Obligations and/or as to which Lender has not yet received final
and indefeasible payment. Such cash collateral shall be remitted by wire
transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrower for such purpose.
Interest shall be due until and including the next business day, if the
amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrower of its
respective duties, obligations and covenants under this Agreement or the
other Financing Agreements until all Obligations have been fully and
finally discharged and paid, and Lender's continuing security interest in
the Collateral and the rights and remedies of Lender hereunder, under the
other Financing Agreements and applicable law, shall remain in effect
until all such Obligations have been fully and finally discharged and
paid.
(c) If for any reason this Agreement is terminated prior
to the end of the then current term or renewal term of this Agreement, in
view of the impracticality and extreme difficulty of ascertaining actual
damages and by mutual agreement of the parties as to a reasonable
calculation of Lender's lost profits as a result thereof, Borrower agrees
to pay to Lender, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is
effective in the period indicated:
Amount Period
(i) 1.5% of Maximum Credit from the date hereof to and
including the first anniversary
of the date hereof
(ii) .5% of Maximum Credit from but excluding the first
anniversary of the date hereof
to the end of the then current
term or renewal term of this
Agreement.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower
agrees that it is reasonable under the circumstances currently existing.
The early termination fee provided for in this Section 12.1 shall be
deemed included in the Obligations.
12.2 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Lender at its address set forth below and to
Borrower at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier
service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this Agreement shall
be construed as though it did not contain the particular provision held
to be invalid or unenforceable and the rights and obligations of the
parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements
and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrower
and their respective successors and assigns, except that Borrower may not
assign its rights under this Agreement, the other Financing Agreements
and any other document referred to herein or therein without the prior
written consent of Lender. Lender may, after notice to Borrower, assign
its rights and delegate its obligations under this Agreement and the
other Financing Agreements and further may assign, or sell participations
in, all or any part of the Loans, the Letter of Credit Accommodations or
any other interest herein to another financial institution or other
person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits
as it would have if it were the Lender hereunder, except as otherwise
provided by the terms of such assignment or participation.
12.5 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or
therewith represents the entire agreement and understanding concerning
the subject matter hereof and thereof between the parties hereto, and
supersede all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers
and contracts concerning the subject matter hereof, whether oral or
written.
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION STOKELY USA, INC.
(CENTRAL)
By: By:
Title: Title:
Address: Chief Executive Office:
100 South Wacker Drive, Suite 1940 1055 Corporate Center Dr.
Chicago, Illinois 60606 Oconomowoc, Wisconsin 53066
Attention: William Bloom
EXHIBIT B
Customer Name Location
[TO BE PROVIDED]
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . -11-
2.1 Revolving Loans. . . . . . . . . . . . . . . . -11-
2.2 Letter of Credit Accommodations. . . . . . . . -12-
2.3 Optional Reductions in Maximum Credit. . . . . -15-
2.4 Availability Reserves. . . . . . . . . . . . . -15-
SECTION 3. INTEREST AND FEES . . . . . . . . . . . . . . . . . -15-
3.1 Interest . . . . . . . . . . . . . . . . . . . -15-
3.2 Closing Fee. . . . . . . . . . . . . . . . . . -17-
3.3 Servicing Fee. . . . . . . . . . . . . . . . . -17-
3.4 Unused Line Fee. . . . . . . . . . . . . . . . -17-
3.5 Changes in Laws; Increased Costs of Loans;
Breakage Fees. . . . . . . . . . . . . . . . . -17-
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . -18-
4.1 Conditions Precedent to Initial Loans and Letter
of Credit Accommodations . . . . . . . . . . . -18-
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations. . . . . . . . . . . . . -19-
SECTION 5. GRANT OF SECURITY INTEREST. . . . . . . . . . . . . -20-
SECTION 6. COLLECTION AND ADMINISTRATION . . . . . . . . . . . -21-
6.1 Borrower's Loan Account. . . . . . . . . . . . -21-
6.2 Statements . . . . . . . . . . . . . . . . . . -21-
6.3 Collection of Accounts . . . . . . . . . . . . -21-
6.4 Payments . . . . . . . . . . . . . . . . . . . -22-
6.5 Authorization to Make Loans. . . . . . . . . . -23-
6.6 Use of Proceeds. . . . . . . . . . . . . . . . -23-
SECTION 7. COLLATERAL REPORTING AND COVENANTS. . . . . . . . . -23-
7.1 Collateral Reporting . . . . . . . . . . . . . -23-
7.2 Accounts Covenants . . . . . . . . . . . . . . -24-
7.3 Inventory Covenants. . . . . . . . . . . . . . -25-
7.4 Power of Attorney. . . . . . . . . . . . . . . -26-
7.5 Right to Cure. . . . . . . . . . . . . . . . . -26-
7.6 Access to Premises . . . . . . . . . . . . . . -27-
-i-
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . -27-
8.1 Corporate Existence, Power and Authority;
Subsidiaries. . . . . . . . . . . . . . . . . -27-
8.2 Financial Statements; No Material Adverse
Change. . . . . . . . . . . . . . . . . . . . -28-
8.3 Chief Executive Office; Collateral Locations. -28-
8.4 Priority of Liens; Title to Properties. . . . -28-
8.5 Tax Returns . . . . . . . . . . . . . . . . . -28-
8.6 Litigation. . . . . . . . . . . . . . . . . . -28-
8.7 Compliance with Other Agreements and Applicable
Laws. . . . . . . . . . . . . . . . . . . . . -29-
8.8 Environmental Compliance. . . . . . . . . . . -29-
8.9 Employee Benefits . . . . . . . . . . . . . . -30-
8.10 Accuracy and Completeness of Information. . . -30-
8.11 Assignment of Futures Contracts . . . . . . . -31-
8.12 Purchase of Farm Products . . . . . . . . . . -31-
8.13 Oconomowoc Canning. . . . . . . . . . . . . . -31-
8.14 Survival of Warranties; Cumulative. . . . . . -31-
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS. . . . . . . . . -31-
9.1 Maintenance of Existence. . . . . . . . . . . -31-
9.2 New Collateral Locations. . . . . . . . . . . -32-
9.3 Compliance with Laws, Regulations, Etc. . . . -33-
9.4 Payment of Taxes and Claims . . . . . . . . . -33-
9.5 Insurance . . . . . . . . . . . . . . . . . . -33-
9.6 Financial Statements and Other Information. . -33-
9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc. . . . . . . . . . . . . . . -35-
9.8 Encumbrances. . . . . . . . . . . . . . . . . -35-
9.9 Indebtedness. . . . . . . . . . . . . . . . . -36-
9.10 Loans, Investments, Guarantees, Etc . . . . . -36-
9.11 Dividends and Redemptions . . . . . . . . . . -36-
9.12 Transactions with Affiliates. . . . . . . . . -37-
9.13 Compliance with ERISA . . . . . . . . . . . . -37-
9.14 Use of Proceeds . . . . . . . . . . . . . . . -37-
9.15 Costs and Expenses. . . . . . . . . . . . . . -37-
9.16 Compliance with Federal Food Security Act . . -38-
9.17 Further Assurances. . . . . . . . . . . . . . -38-
SECTION 10. EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . -39-
10.1 Events of Default . . . . . . . . . . . . . . -39-
10.2 Remedies. . . . . . . . . . . . . . . . . . . -40-
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW . . . . . . . . . . . . . . . . . . . -42-
11.1 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver. . . . . . . . . . -42-
11.2 Waiver of Notices . . . . . . . . . . . . . . -43-
11.3 Amendments and Waivers. . . . . . . . . . . . -43-
11.4 Waiver of Counterclaims . . . . . . . . . . . -43-
11.5 Indemnification . . . . . . . . . . . . . . . -43-
-ii-
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS. . . . . . . . . . -44-
12.1 Term. . . . . . . . . . . . . . . . . . . . . -44-
12.2 Notices . . . . . . . . . . . . . . . . . . . -45-
12.3 Partial Invalidity. . . . . . . . . . . . . . -45-
12.4 Successors. . . . . . . . . . . . . . . . . . -45-
12.5 Entire Agreement. . . . . . . . . . . . . . . -45-
-iii-
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B List of account debtors for Acceptable
Foreign Accounts
Exhibit C Form of Acceptable Third Party Agreement
Schedule 8.4 Liens
Schedule 8.7 Defaults
Schedule 8.8 Environmental
Schedule 9.11 Permitted Dividends and Other
Distributions on Capital Stock
-iv-