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EXHIBIT 10.39
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MICHAEL FOODS, INC.
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LOAN AGREEMENT
Dated as of February 26, 1997
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7.58% Senior Notes Due February 26, 2009
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TABLE OF CONTENTS
LOAN AGREEMENT
SECTION 1. ISSUE OF NOTES ....................................... 1
Section 1.1. Authorization ..................................... 1
Section 1.2. Loan; Closing ..................................... 1
Section 1.3. Other Agreements .................................. 2
SECTION 2. REPRESENTATIONS AND WARRANTIES ....................... 2
Section 2.1. Financial Statements of Company and
its Subsidiaries .................................. 2
Section 2.2. Financial Statements of the Papetti
Companies ......................................... 2
Section 2.3. No Material Changes ............................... 3
Section 2.4. Liens ............................................. 3
Section 2.5. Organization, Authority and Good
Standing .......................................... 3
Section 2.6. Title to Properties ............................... 4
Section 2.7. Leases and Liens .................................. 4
Section 2.8. Licenses .......................................... 4
Section 2.9. Litigation ........................................ 5
Section 2.10. No Burdensome Provisions .......................... 5
Section 2.11. Compliance with Other Instruments ................. 5
Section 2.12. Foreign Asset Control Regulations ................. 6
Section 2.13. ERISA ............................................. 6
Section 2.14. Tax Liability ..................................... 7
Section 2.15. Regulation G; Use of Proceeds; Hart-
Scott Rodino ...................................... 7
Section 2.16. Investment Company Act ............................ 7
Section 2.17. Governmental Action ............................... 7
Section 2.18. Environmental Matters ............................. 7
Section 2.19. Disclosure ........................................ 8
Section 2.20. Offering of Notes ................................. 8
Section 2.21. Priority of Notes ................................. 9
SECTION 3. CONDITIONS OF THE LOANS .............................. 9
Section 3.1. Opinion of Company Counsel ........................ 9
Section 3.2. Opinion of Lenders' Special Counsel ............... 11
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Section 3.3. Closing Certificate ............................... 12
Section 3.4. Legality .......................................... 12
Section 3.5. Related Transactions .............................. 13
Section 3.6. Payment of Lenders' Special Counsel
Fees .............................................. 13
Section 3.7. Proceedings ...................................... 13
SECTION 4. REPRESENTATIONS OF LENDERS ........................... 13
Section 4.1. ................................................... 13
Section 4.2. ................................................... 13
SECTION 5. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES;
ADDITIONAL INFORMATION; INSPECTION ................... 15
Section 5.1. Financial Statements and Reports .................. 15
Section 5.2. Right to Inspect Properties, Books, Etc. .......... 18
SECTION 6. MISCELLANEOUS ........................................ 18
Section 6.1. Expenses .......................................... 18
Section 6.2. Stamp Taxes, etc .................................. 19
Section 6.3. Successors and Assigns ............................ 19
Section 6.4. Direct Payment .................................... 19
Section 6.5. Notices ........................................... 19
Section 6.6. Defined Terms ..................................... 20
Section 6.7. Pending Reorganization ............................ 20
Section 6.8. Confidential Information .......................... 21
Section 6.9. Law Governing ..................................... 22
Section 6.10. Headings .......................................... 22
Section 6.11. Counterparts ...................................... 22
EXHIBIT A TO LOAN AGREEMENT - FORM OF NOTE ............................... 1
SECTION 1. THE NOTES; TRANSFERS, EXCHANGE, ETC .................. 1
Section 1.01. The Notes ................................... 1
Section 1.02. Registration, Transfer or
Exchange of Notes ........................... 1
Section 1.03. Loss, Theft, Destruction or
Mutilation of Notes ......................... 2
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SECTION 2. PREPAYMENT OF NOTES ................................ 2
Section 2.01. Mandatory Prepayments ....................... 2
Section 2.02. Optional Prepayments ....................... 2
Section 2.03. Prepayment Upon Event Risk Occurrence ....... 4
Section 2.04. Interest After Date Fixed for Prepayment .... 7
Section 2.05. Allocation of Prepayments ................... 7
Section 2.06. Surrender of Notes; Notation Thereon ........ 8
SECTION 3. AFFIRMATIVE COVENANTS .............................. 8
Section 3.01. Maintenance of Company Office ............... 8
Section 3.02. To Keep Books ............................... 8
Section 3.03. Payment of Taxes; Corporate
Existence; Maintenance of
Properties .................................. 8
Section 3.04. Insurance ................................... 9
Section 3.05. Payment of Indebtedness ..................... 9
Section 3.06. Compliance with Laws ........................ 10
SECTION 4. RESTRICTIVE COVENANTS .............................. 10
Section 4.01. Limitation on Indebtedness .................. 10
Section 4.02. Limitation on Liens ......................... 11
Section 4.03. Maintenance of Net Worth .................... 12
Section 4.04. Maintenance of Interest Expense
Coverage .................................... 12
Section 4.05. Restricted Payments ......................... 12
Section 4.06. Limitation on Disposition of
Assets ...................................... 13
Section 4.07. Merger, Consolidation, Sale or
Lease ....................................... 13
Section 4.08. Transactions with Affiliates ................ 14
Section 4.09. Restrictions on Subsidiaries ................ 14
Section 4.10. Restrictions on Investments ................. 15
Section 4.11. Acquisition of Notes; No
Reissuance .................................. 15
SECTION 5. CONSENTS, WAIVERS AND AMENDMENTS ................... 16
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SECTION 6. DEFINITIONS ........................................ 17
SECTION 7. DEFAULTS AND REMEDIES .............................. 23
Section 7.0l. Events of Default ............................. 23
Section 7.02. Suits for Enforcement ......................... 26
Section 7.03. Remedies Not Exclusive, Etc ................... 26
SECTION 8. MISCELLANEOUS ...................................... 27
Section 8.01. Costs and Expenses ............................ 27
Section 8.02. Notices ....................................... 27
Section 8.03. Covenants Bind Successors and
Assigns ....................................... 27
Section 8.04. Governing Law ................................. 27
Section 8.05. Headings ...................................... 27
EXHIBIT B TO LOAN AGREEMENT -- LIENS SECURING INDEBTEDNESS OF THE
COMPANY FOR MONEY BORROWED
EXHIBIT C TO LOAN AGREEMENT -- SUBSIDIARIES
EXHIBIT D TO LOAN AGREEMENT -- LITIGATION
EXHIBIT E TO LOAN AGREEMENT -- FORM OF NOVATION AND ASSUMPTION
AGREEMENT
EXHIBIT F TO LOAN AGREEMENT -- ERISA AFFILIATES
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MICHAEL FOODS, INC.
LOAN AGREEMENT
Re: $125,000,000 7.58% Senior Notes
due February 26, 2009
Dated as of February 26, 1997
To the Lender named
in Schedule I
hereto which is a
signatory to this
Loan Agreement
Ladies and Gentlemen:
MICHAEL FOODS, INC. a Delaware corporation (herein called the "Company"),
agrees with you as follows:
SECTION 1. ISSUE OF NOTES.
Section 1.1. Authorization. The Company has duly authorized an issue of
$125,000,000 aggregate principal amount of its 7.58% senior notes due February
26, 2009 (herein called the "Notes"), such Notes to be in the form and have
terms and provisions substantially as set forth in Exhibit A hereto. The term
"Notes" as used herein shall include all notes delivered pursuant to the
provisions of this Agreement and each of the notes delivered pursuant to the
separate agreements with the other lenders named in Schedule I hereto and all
notes delivered in substitution or exchange therefor or in lieu thereof, and,
where applicable, shall include the singular number as well as the plural. The
term "Note" shall mean one of the Notes. You are herein sometimes referred to
as a Lender and you and the other lenders named in Schedule I hereto are herein
sometimes collectively referred to as the "Lenders".
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Section 1.2. Loan; Closing. The Company hereby agrees to borrow from you,
and you, subject to the terms and conditions herein set forth, hereby agree to
lend to the Company, the principal amount set opposite your name on Schedule I
hereto on February 26, 1997 (the "Closing", and the date of such Closing to be
herein referred to as the "Closing Date").
Your loan will be evidenced by and be made against delivery to you at
10:00 A.M. Minneapolis time, on the Closing Date, at the principal offices of
Maun & Simon, PLC, 2000 Midwest Plaza Building West, 801 Nicollet Mall,
Minneapolis, Minnesota 55402, of a single registered Note in the full amount of
your loan (unless different denominations are specified by you), registered in
your name or in the name of such nominee as you may specify at any time prior
to the Closing Date. Delivery of the Notes hereunder shall be made against
payment to the Company by wire transfer of immediately available funds to its
account number 75-83613 at Bank of America-Illinois in Chicago, Illinois (ABA #
071000039), in the aggregate principal amount of such loan.
Section 1.3. Other Agreements. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into similar agreements
with the other Lenders under which such other Lenders agree to loan to the
Company the principal amounts set opposite such Lenders' names in Schedule I
hereto, and your obligation and the obligations of the Company hereunder are
subject to the execution and delivery of the similar agreements by the Lenders
of the entire $125,000,000 aggregate principal amount. This Agreement and said
similar agreements with the other Lenders are herein collectively referred to
as the "Agreements". The obligations of each Lender shall be several and not
joint and no Lender shall be liable or responsible for the acts of any other
Lender.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants that:
Section 2.1. Financial Statements of Company and its Subsidiaries. You
have been furnished with copies of (a) the
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consolidated balance sheets of the Company and its Subsidiaries at December 31,
1994 and December 31, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
fiscal periods ended on said dates, accompanied in each case by the opinion of
Grant Thornton LLP, its independent certified public accountants, and (b) the
consolidated balance sheet and related consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries as of
the end of the nine months' fiscal period ended September 30, 1996, certified
by an authorized financial officer of the Company.
Said financial statements, including the related schedules and notes, to
the Company's best knowledge and belief, are complete and correct and fairly
present (a) the financial condition of the Company and its Subsidiaries as at
the respective dates of said balance sheets and (b) the results of the
operations of the Company and its Subsidiaries for the fiscal periods ended on
said dates, all in conformity with generally accepted accounting principles
applied on a consistent basis (except as otherwise stated therein or in the
notes thereto) throughout the periods involved. The consolidated balance
sheets as of December 31, 1994 and December 31, 1995 and the related schedules
and notes show all material liabilities, direct and contingent, of the Company
and its Subsidiaries as of such dates.
Section 2.2. Financial Statements of the Papetti Companies. You have
been furnished with copies of the combined balance sheets of the Papetti
Companies at December 31, 1995 and December 31, 1994, and the related combined
statements of income, equity and cash flows of the Papetti Companies for the
fiscal periods ended on said dates, accompanied by (i) the opinion of Coopers &
Lybrand LLP in the case of the fiscal period ended December 31, 1995 and (ii)
the opinion of Ehrenkrantz and Company in the case of the fiscal period ended
December 31, 1994.
Said financial statements, including the related notes, to the Company's
best knowledge and belief, are complete and correct and fairly present (a) the
financial condition of the Papetti Companies as at the respective dates of said
balance sheets and
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(b) the results of the operations of the Papetti Companies for the fiscal
periods ended on said dates, all in conformity with generally accepted
accounting principles applied on a consistent basis (except as otherwise stated
therein or in the notes thereto) throughout the periods involved. To the best
knowledge and belief of the Company the combined balance sheets as of December
31, 1994 and December 31, 1995 and the related schedules and notes show all
material liabilities, direct and contingent, of the Papetti Companies as of
such dates.
Section 2.3. No Material Changes. There has been no material and adverse
change in the business, operations, properties, prospects, assets or condition,
financial or other, of the Company and its Subsidiaries subsequent to December
31, 1995 except for matters discussed in "management's discussion and analysis
of financial condition and results of operations" which accompanied the
financial statements of the Company and its Subsidiaries for the nine month
period ended September 30, 1996 referred to in Section 2.1 above. To the best
knowledge and belief of the Company, there has been no material and adverse
change in the business, operations, properties, prospects, assets or condition,
financial or otherwise, of the Papetti Companies subsequent to December 31,
1995.
Section 2.4. Liens. Exhibit B hereto correctly sets forth all Liens
securing Indebtedness of the Company or its Subsidiaries for money borrowed
existing on, January 31, 1997 and there has been no material change in such
information as at the date hereof. Exhibit B also correctly sets forth all
Liens securing Indebtedness of the Papetti Companies which will be outstanding
at the time of the acquisition of the Papetti Companies by the Company or
Subsidiary.
Section 2.5. Organization, Authority and Good Standing. Exhibit C hereto
correctly sets forth (a) the name and jurisdiction of incorporation of each
Subsidiary of the Company, (b) a statement of the capitalization of each such
Subsidiary and (c) the name, form of organization and, in the case of
corporations, the jurisdiction of incorporation of each of the Papetti
Companies. All of the shares of stock listed in
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Section A of Exhibit C, other than directors qualifying shares, are owned by
the Company and/or the Subsidiaries and are owned as of the date of this
Agreement, free and clear of all Liens, and all such shares have been duly
issued and are fully paid and non-assessable. The Company, each of its
Subsidiaries and each of the Papetti Companies which has been organized in
corporate form is a duly organized and validly existing corporation in good
standing under the laws of its respective jurisdiction of incorporation and has
full power and authority to own the properties and assets and to carry on the
business which it now owns and carries on. The Company, each of its
Subsidiaries and each of such Papetti Companies is duly qualified and in good
standing as a foreign corporation in each jurisdiction wherein the nature of
the property owned or leased by it or the nature of the business transacted by
it makes such qualification necessary, except where the failure to so qualify
would not have a material and adverse effect on the business, operations,
properties, prospects, assets or condition, financial or other, of the Company,
its Subsidiaries and the Papetti Companies, taken as a whole.
Section 2.6. Title to Properties. (a) The Company and its Subsidiaries
have good and marketable fee title to all the real properties and good and
marketable title to all other property reflected on the consolidated balance
sheet of the Company and its Subsidiaries as at December 31, 1995 referred to
in Section 2.1, or purported to have been acquired by the Company or any of its
Subsidiaries after said date, excepting, however, property sold or otherwise
disposed of subsequent to said date in the ordinary course of business.
(b) The Papetti Companies have good and marketable fee title to all the
real properties and good and marketable title to all other property reflected
on the combined balance sheet of the Papetti Companies as at December 31, 1995
referred to in Section 2.2, or purported to have been acquired by any of the
Papetti Companies after said date, excepting, however, property sold or
otherwise disposed of subsequent to said date in the ordinary course of
business.
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Section 2.7. Leases and Liens. (a) None of the properties or assets
reflected in the consolidated balance sheet of the Company and its Subsidiaries
as at December 31, 1995 referred to in Section 2.1, or purported to have been
acquired by the Company or any of its Subsidiaries after said date, is held
subject to any Lien which would not be permitted by Section 3.03A or Section
4.02 of the Notes. The Company and its Subsidiaries enjoy peaceful and
undisturbed possession under all of the material leases under which they are
operating and all such leases are valid and subsisting and in full force and
effect.
(b) None of the properties or assets reflected in the combined balance
sheet of the Papetti Companies as at December 31, 1995 referred to in Section
2.2, or acquired by any of the Papetti Companies after said date or purported
to have been acquired by any of the Papetti Companies after said date, is held
subject to any Lien which, after giving effect to the acquisition of the
Papetti Companies by the Company or a Subsidiary, would not be permitted by
Section 3.03A or Section 4.02 of the Notes. To the best knowledge and belief
of the Company, the Papetti Companies enjoy peaceful and undisturbed possession
under all of the material leases under which they are operating and all such
leases are valid and subsisting and in full force and effect.
Section 2.8. Licenses. The Company, its Subsidiaries and, to the best
knowledge and belief of the Company, the Papetti Companies possess all
trademarks, trade names, copyrights, patents, governmental licenses,
franchises, certificates, consents, permits and approvals necessary to enable
them to carry on their business in all material respects as now conducted and
to own and operate the properties material to their business as now owned and
operated, without known conflict with the rights of others. All such
trademarks, trade names, copyrights, patents, licenses, franchises,
certificates, consents, permits and approvals which are material to the
Company, its Subsidiaries and the Papetti Companies are valid and subsisting.
To the best knowledge and belief of the Company, except as specifically set
forth in Exhibit D hereto, there is no violation by any Person of any right of
the Company or any of its Subsidiaries with respect
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to any trademark, trade name, copyright, patent or other right owned or used by
the Company or any of its Subsidiaries which involves the likelihood of any
material and adverse change in the business, operations, properties, prospects,
assets or condition, financial or other, of the Company, its Subsidiaries and
the Papetti Companies, taken as a whole.
Section 2.9. Litigation. Except as set forth in Exhibit D hereto, there
are no actions, suits or proceedings (whether or not purportedly on behalf of
the Company, any of its Subsidiaries or any of the Papetti Companies) pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any of its Subsidiaries or any of the Papetti Companies, at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involve any of the
transactions herein contemplated or the likelihood of any material and adverse
change in the business, operations, properties, prospects, assets or condition,
financial or other, of the Company, its Subsidiaries and the Papetti Companies,
taken as a whole; and neither the Company, nor any of its Subsidiaries, nor any
of the Papetti Companies is in default or violation of any judgment, order,
writ, injunction, decree or award or in violation in any way which would have a
material and adverse effect on the business, operations, properties, prospects,
assets or condition, financial or other, of the Company, its Subsidiaries and
the Papetti Companies, taken as a whole, of any statute, rule or regulation of
any court, arbitrator or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
Section 2.10. No Burdensome Provisions. Neither the Company, nor any
Subsidiary, nor any of the Papetti Companies is a party to any agreement or
instrument or subject to any charter or other corporate restriction or statute
or any judgment, order, writ, injunction, decree, award, rule or regulation
which materially and adversely affects or in the future may (so far as the
Company can now foresee) materially and adversely affect the business,
operations, properties, prospects, assets or condition, financial
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or other, of the Company, its Subsidiaries and the Papetti Companies, taken as
a whole.
Section 2.11. Compliance with Other Instruments. Except as may have been
permanently waived in writing and except for nonmonetary defaults with respect
to Indebtedness outstanding under that certain Loan Agreement dated as of
September 1, 1989 between the City of Lenox, Iowa and Papetti's of Iowa Food
Products, Inc., which Indebtedness will be paid in full by the Company or a
Subsidiary in connection with the acquisition of the Papetti Companies, neither
the Company, nor any Subsidiary, nor any of the Papetti Companies is in default
in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in any bond, debenture, note or
other evidence of indebtedness of the Company, any Subsidiary or any of the
Papetti Companies or contained in any instrument under or pursuant to which any
thereof has been issued or made and delivered the effect of which would
materially and adversely affect the business, operations, properties,
prospects, assets or condition, financial or other, of the Company, its
Subsidiaries and the Papetti Companies, taken as a whole. Neither the
execution and delivery of the Agreements by the Company, the consummation by
the Company of the transactions herein contemplated nor compliance by the
Company with the terms, conditions and provisions of the Agreements and of the
Notes will violate any provision of law or rule or regulation thereunder or any
order, injunction or decree of any court or other governmental body to which
the Company is a party or by which the Company is bound or conflict with or
result in a breach of any of the terms, conditions or provisions of the
corporate charter or by-laws of the Company or of any agreement or instrument
to which the Company is a party or by which the Company is bound, or constitute
a default thereunder, or result in the creation or imposition of any Lien of
any nature whatsoever upon any of the properties or assets of the Company. No
consent of the stockholders of the Company is required for the execution,
delivery and performance of the Agreements or the Notes by the Company.
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Section 2.12. Foreign Asset Control Regulations. Neither the Agreements
nor any of the transactions contemplated thereby will result in a violation of
any of the foreign asset control regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any ruling issued
thereunder or any enabling legislation or Presidential Executive Order in
connection therewith.
Section 2.13. ERISA. The Company and its ERISA Affiliates have fulfilled
each of their obligations under the minimum funding standards of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the Internal
Revenue Code of 1986, as amended (the "Code") with respect to each Plan, as
defined in Section 4021(a) of ERISA, in respect of which the Company or its
ERISA Affiliates is an "employer" or a "substantial employer", as such terms
are defined in Sections 3(5) and 4001(a)(2) of ERISA (a "Plan"). The Company
and its ERISA Affiliates are in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and neither the Company
nor any ERISA Affiliate has incurred any liability to the Pension Benefit
Guaranty Corporation (the "PBGC") (other than for the payment of premiums) or
to any Plan which, in the aggregate, would have a material and adverse effect
on the business or financial condition of the Company and its Subsidiaries,
taken as a whole. Each Plan is in compliance in all material respects with,
and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable federal or
state law, and no event or condition is occurring or exists with respect to any
Plan concerning which the Company would be under an obligation to furnish a
report to you in accordance with Section 5.1(g) hereof. The execution and
delivery of the Agreements and the issuance of the Notes hereunder will not
involve any transaction that is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code. Attached hereto as Exhibit F is a complete list
of all ERISA "affiliates" (as hereinafter defined) and all "employee benefit
plans" with respect to which the Company or any "affiliate" (as hereinafter
defined) is a "party in interest" (as
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hereinafter defined) or in respect of which the Notes could constitute an
"employer security" (as hereinafter defined). The Company will, concurrently
with the delivery of financial statements pursuant to Section 5.1(b), update
such list to add any ERISA "affiliate" and "employee benefit plan" with respect
to which the Company or any "affiliate" become "parties in interest" after the
Closing Date and before the full prepayment of the Notes. As used in this
Section 2.13, the terms "employee benefit plan" and "party in interest" have
the meanings specified in section 3 of ERISA, and "affiliate" and "employer
security" have the meanings specified in Section V(a)(1) of Prohibited
Transaction Exemption 95-60, published at 60 FR 35925, July 12, 1995, provided,
however, that the term "affiliate" shall not include any individual Person.
Section 2.14. Tax Liability. The Company, its Subsidiaries and, to the
best knowledge and belief of the Company, the Papetti Companies have filed all
tax returns which are required to be filed and have paid (i) all taxes which
have become due pursuant to such returns, and (ii) all taxes, assessments, fees
and other governmental charges upon the Company, its Subsidiaries and the
Papetti Companies, or upon their respective properties, assets, income and
franchises which have become due and payable by the Company, its Subsidiaries
and the Papetti Companies (except those wherein the amount, applicability or
validity are being contested by the Company, or any of its Subsidiaries or any
of the Papetti Companies by appropriate proceedings in good faith and in
respect of which adequate reserves have been established). In the opinion of
the Company, all tax liabilities of the Company, its Subsidiaries and the
Papetti Companies are adequately provided for on the books of the Company, its
Subsidiaries and the Papetti Companies.
Section 2.15. Regulation G; Use of Proceeds; Hart-Scott Rodino. The
proceeds from the issuance of the Notes will be used by the Company to finance
the cash portion of the acquisition of the Papetti Companies, to prepay
Indebtedness of the Company and Indebtedness to be assumed in the acquisition
of the Papetti Companies, to prepay all or a portion of the Indebtedness of
North Star Universal, Inc., a Minnesota corporation ("NSU") in
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connection with the Pending Reorganization, and for general corporate
expenditures. None of such proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any "margin stock" as defined in
Regulation G (12 C.F.R., Chapter II, Part 207) of the Board of Governors of the
Federal Reserve System (herein called "margin stock") or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulation G.
Neither the Company nor any agent acting on its behalf has taken or will take
any action which might cause the transaction contemplated herein to violate
said Regulation G, Regulation T (12 C.F.R., Chapter II, Part 220) or Regulation
X (12 C.F.R., Chapter II, Part 224) or to violate any provision of the
Securities Exchange Act of 1934, regulating the Company's use of proceeds from
the issuance of the Notes. The Company has made all filings, if any, required
to be made under, and has no reason to believe that the acquisition of the
Papetti Companies will be in violation of, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
Section 2.16. Investment Company Act. The Company is not an "investment
company," or a Person "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 2.17. Governmental Action. No action of, or filing with, any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with, the execution, delivery and (except for
such filings as may be required in connection with the acquisition of the
Papetti Companies) performance of the Agreements or the Notes by the Company.
Section 2.18. Environmental Matters. To the best of the Company's
knowledge and belief, the Company, its Subsidiaries and the Papetti Companies
have complied in all material respects with all Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control and neither
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the Company, nor any Subsidiary, nor any of the Papetti Companies has received
notice of any failure so to comply which alone or together with any other such
failure could result in a material and adverse effect on the business,
operations, properties, prospects, assets or condition, financial or other, of
the Company, its Subsidiaries and the Papetti Companies, taken as a whole. To
the best knowledge and belief of the Company, the Company's, the Subsidiaries'
and the Papetti Companies' plants do not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as those
terms are used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act or the
Clean Water Act, in violation of any regulation promulgated thereunder or in
any other applicable law where such violation would result, individually or
together with other violations in a material and adverse effect on the
business, operations, properties, prospects, assets or condition, financial or
other, of the Company, its Subsidiaries and the Papetti Companies, taken as a
whole.
Section 2.19. Disclosure. Neither this Agreement, nor any of the Exhibits
hereto, nor the Memorandum (exclusive of Appendix G and the provisions of
Section III which constitute opinions, forecasts or forward looking
information, as to which the Company makes no representation or warranty) or
any other certificate or other data furnished to you in writing by or on behalf
of the Company in connection with the transactions contemplated by this
Agreement, when taken as a whole, contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained herein
or therein not misleading. There is no fact now known to the Company which
materially and adversely affects or in the future may (so far as the Company
can now reasonably foresee) materially and adversely affect the business,
operations, properties, prospects, assets or condition, financial or other, of
the Company, its Subsidiaries and the Papetti Companies, taken as a whole,
which has not been disclosed to you.
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Section 2.20. Offering of Notes. Neither the Company nor any agent acting
in its behalf has, either directly or indirectly, sold or offered for sale or
disposed of, or attempted or offered to dispose of, the Notes or any part
thereof, or any similar obligation of the Company, to, or has solicited any
offers to buy any thereof from, or has otherwise approached or negotiated in
respect thereof with, any Person or Persons other than the Lenders and not more
than 69 other Persons, all of whom were institutional investors; and the
Company agrees that, for a period of one year after the Closing Date, neither
it nor any agent acting on its behalf and pursuant to instructions received
from the Company, will sell or offer for sale or dispose of, or attempt or
offer to dispose of, any thereof to, or solicit any offers to buy any thereof
from, or otherwise approach or negotiate in respect thereof with, any Person or
Persons so as thereby to bring the issuance or delivery of the Notes within the
provisions of Section 5 of the Securities Act of 1933, as amended.
Section 2.21. Priority of Notes. The obligations of the Company under the
Notes, when issued, will rank at least pari passu with all other unsecured,
unsubordinated Current Indebtedness and Funded Indebtedness of the Company.
SECTION 3. CONDITIONS OF THE LOANS.
Your obligation to make your loan, as provided in Section 1.2, on the
Closing Date shall be subject to the performance by the Company of all its
agreements theretofore to be performed hereunder, to the accuracy of its
representations and warranties herein contained and to the satisfaction, prior
thereto or concurrently therewith, of the following further conditions:
Section 3.1. Opinion of Company Counsel. You shall have received on the
Closing Date from Maun & Simon, PLC, special counsel for the Company (who may
rely on (i) the opinion of local counsel as to matters of state laws other than
the laws of the State of Minnesota, and the general business corporation laws
of the State of Delaware and (ii) the opinion of O'Connor, Morss &
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O'Connor as to matters concerning the Papetti Companies), a favorable opinion,
dated the Closing Date and in form and substance satisfactory to you,
substantially to the effect that:
(i) the Company is a duly incorporated and validly existing
corporation in good standing under the laws of the State of Delaware and
has the corporate power and authority to own its property and assets and
to carry on its business as presently conducted and to enter into the
Agreements and perform its obligations as contemplated thereby;
(ii) each of the Company's Subsidiaries set forth in Exhibit C
hereto and each of the Papetti Companies which is organized as a
corporation is a duly incorporated and validly existing corporation in
good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority to own its property and assets and
to carry on its business as presently conducted;
(iii) the Agreements have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms
(except as enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
principles of equity and except that no opinion need be expressed as to
the availability to the holders of the Notes of equitable remedies); and
that no consent of shareholders is required for the execution and
delivery of the Agreements or the Notes;
(iv) the Notes delivered by the Company on the Closing Date have
been duly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms (except as enforceability may
be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and by general principles of equity and
except that no opinion need be expressed as to
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the availability to the holders of the Notes of equitable remedies);
(v) it is not necessary, in connection with the offering, issuance
and delivery of the Notes under the circumstances contemplated by the
Agreements, to register the Notes under the Securities Act of 1933, as
presently in effect, or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as presently in effect;
(vi) no action of, or filing with, any governmental or public body
or authority is required to authorize, or is otherwise required in
connection with, the execution, delivery and (except for such filings as
may be required in connection with the acquisition of the Papetti
Companies) performance of the Agreements or the Notes by the Company;
(vii) the Company, each of its Subsidiaries, and each of the Papetti
Companies which is organized as a corporation is, to the best of such
counsel's knowledge, duly qualified and in good standing as a foreign
corporation in each jurisdiction wherein the nature of the property owned
or leased by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure so to qualify would not
have a material and adverse effect on the business, operations,
properties, prospects, assets or condition, financial or other, of the
Company, its Subsidiaries and the Papetti Companies, taken as a whole;
(viii) all of the outstanding shares of capital stock of all classes
of the Subsidiaries listed in Exhibit C hereto as owned by the Company or
a Subsidiary are so owned free of any Liens, and all such shares are
validly issued;
(ix) there are, to the best knowledge of such counsel (having made
inquiry of management with respect thereto) and except as set forth in
Exhibit D hereto, no actions, suits or proceedings (whether or not
purportedly on behalf of the Company, any of its Subsidiaries or any of
the Papetti
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Companies) pending or threatened against or affecting the Company, any
of its Subsidiaries, or any of the Papetti Companies at law or in equity
or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, which involve
any of the transactions contemplated by the Agreements or the likelihood
of any material and adverse change in the business, operations,
properties, prospects, assets or condition, financial or other, of the
Company, its Subsidiaries and the Papetti Companies, taken as a whole;
and, to the best knowledge of such counsel (having made inquiry of
management with respect thereto), neither the Company, nor any
Subsidiary, nor any of the Papetti Companies is in default or violation
of any law or any judgment, order, writ, injunction, decree or award or
in violation of any statute, rule or regulation of any court, arbitrator
or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, which default or violation involves the likelihood of any
material and adverse change in the business, operations, properties,
prospects, assets or condition, financial or other, of the Company, its
Subsidiaries and the Papetti Companies, taken as a whole; and
(x) neither the execution and delivery of the Agreements by the
Company, the performance by the Company of its obligations thereunder nor
compliance by the Company with the terms, conditions and provisions
thereof will violate any order, injunction or decree of any court or
other governmental body to which the Company is a party or by which it is
bound, or conflict with or result in a breach of any of the terms,
conditions or provisions of the corporate charter or by-laws of the
Company or any agreement or instrument, known to such counsel, to which
the Company is a party or by which the Company is bound, or constitute a
default thereunder, or result in the creation or imposition of any Lien
of any nature whatsoever upon any of the properties or assets of the
Company;
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and as to such other matters incident to the transactions contemplated by this
Agreement as you may reasonably request.
Section 3.2. Opinion of Lenders' Special Counsel. You shall have received
on the Closing Date from Chapman and Cutler, special counsel to the Lenders, a
favorable opinion, dated the Closing Date and in form and substance
satisfactory to you, substantially to the effect that:
(i) The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware, has the corporate power
and the corporate authority to execute and deliver the Agreements and to
issue the Notes.
(ii) The Agreements have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
contracts of the Company enforceable in accordance with their terms
(except that no opinion need be expressed as to the availability to the
holders of the Notes of equitable remedies), subject to bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law).
(iii) The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms (except that no opinion need
be expressed as to the availability to the holders of the Notes of
equitable remedies), subject to bankruptcy, insolvency or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
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(iv) The issuance and delivery of the Notes under the circumstances
contemplated by the Agreements does not, under existing law, require the
registration of the Notes under the Securities Act of 1933, as amended,
or the qualification of an indenture under the Trust Indenture Act of
1939, as amended;
and as to such other matters incident to the transactions contemplated by this
Agreement as you may reasonably request.
The opinion of Chapman and Cutler shall also state that the opinion of
Maun & Simon, PLC is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Lenders are justified in relying thereon.
In rendering the opinion set forth in paragraph (i) above, Chapman and
Cutler may rely solely upon an examination of the Certificate of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Delaware, the By-laws of the Company and the
general business corporation law of the State of Delaware. With respect to
matters of fact upon which such opinion is based, Chapman and Cutler may rely
on appropriate certificates of public officials and officers of the Company and
upon representatives of the Company and the Lenders delivered in connection
with the issuance and delivery of the Notes. With respect to matters of
Minnesota law covered by such opinion, Chapman and Cutler may rely upon the
opinion of Maun & Simon, PLC described in Section 3.1 hereof.
Section 3.3. Closing Certificate. On the Closing Date you shall have
received a certificate dated the Closing Date, signed by the President or a
Vice President of the Company, the truth and accuracy of which shall be a
condition to your obligation to purchase the Notes proposed to be sold to you
and to the effect that (i) the representations and warranties of the Company
set forth in Section 2 hereof are true and correct on and with respect to the
Closing Date, (ii) all of the filings and other conditions precedent (other
than the payment of the purchase price and any filings which, in accordance
with standard practice, are to be made subsequent to the closing of such
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transaction) to the completion of the acquisition, by the Company or a
Subsidiary, of the Papetti Companies have been satisfied, (iii) the Company has
performed all of its obligations hereunder which are to be performed on or
prior to the Closing Date, and (iv) no Event of Default or event which, with
the passage of time or the giving of notice, or both, would constitute an Event
of Default has occurred and is continuing.
Section 3.4. Legality. On the Closing Date you shall have satisfied
yourself that your acquisition of Notes shall be permitted by the laws and
regulations of each jurisdiction to which you are subject, (without resort to
any provision, such as Section 1405(a)(8) of the New York Insurance Law,
permitting limited investments by you without restriction as to the character
of the particular investment) and such acquisition shall not subject you to any
penalty or other onerous condition under or pursuant to any applicable law or
governmental regulation. If requested by you, you shall have received from the
Company such information as you may reasonably specify in order to enable you
to determine whether such acquisition is so permitted.
Section 3.5. Related Transactions. The Company shall have concurrently
consummated all of the loans scheduled to be made on the Closing Date pursuant
to the Agreements.
Section 3.6. Payment of Lenders' Special Counsel Fees. To the extent
reflected in a statement of the Lenders' special counsel rendered at least one
Business Day prior to the Closing Date, the Company shall have paid the
reasonable fees and disbursements of such special counsel incurred in
connection with the negotiation of this Agreement and the closing of the
transactions contemplated hereby.
Section 3.7. Proceedings. All proceedings to be taken in connection with
the transactions contemplated by the Agreements, and all documents incidental
thereto, shall be satisfactory in form and substance to you and your special
counsel; and you and your special counsel shall have received copies of all
documents which you may reasonably request in connection with said
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transactions and copies of the records of all corporate proceedings in
connection therewith, all in form and substance satisfactory to you and such
special counsel.
SECTION 4. REPRESENTATIONS OF LENDERS.
Section 4.1. You represent, and in entering into this Agreement the
Company understands, that you are acquiring the Notes for the purpose of
investment and not with a view to, or in connection with, the distribution
thereof (as such term is used in Section 2(11) of the Securities Act); it being
understood, however, that the disposition of your property shall at all times
be and remain within your control.
Section 4.2. You further represent that at least one of the following
statements concerning each source of funds to be used by you to provide your
loan to the Company (a "Source") is accurate on and as of the Closing Date:
(1) the Source is an "insurance company general account," as such
term is defined in the Department of Labor Prohibited Transaction Class
Exemption 95-60 (issued July 12, 1995) ("PTCE 95-60") and as of the date
of this Agreement there is no "employee benefit plan" established or
maintained by the Company (and affiliates thereof as defined in Section
V(a)(1) of PTCE 95-60) with respect to which the aggregate amount of such
general account's reserves and liabilities for the contracts held by or
on behalf of such plan exceeds 10% of the total reserves and liabilities
of such general account (as determined under PTCE 95-60) (exclusive of
separate account liabilities)) plus surplus as set forth in the National
Association of Insurance Commissioners Annual Statement filed with your
state of domicile; or
(2) the Source is either (i) an insurance company pooled separate
account, within the meaning of Department of Labor Prohibited
Transactions Exemptions ("PTE") 90-1 (issued January 29, 1990), or (ii) a
bank collective investment fund, within the meaning of the PTE 91-38
(issued
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July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (2), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(3) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part l(c) and (g) of the QPAM Exemption are
satisfied, and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this paragraph
(3); or
(4) the Source is a governmental plan; or
(5) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (5); or
(6) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA; or
(7) the Source is an insurance company pooled separate account that
is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to an employee
benefit plan and to any participant or beneficiary of such plan
(including any
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annuitant) are not affected in any manner by the investment performance
of the separate account.
If any Lender indicates that such Lender is relying on any representation
contained in paragraph (2), (3) or (5) above, the Company shall deliver a
certificate on the date of the Closing, which certificate shall state whether
(i) with respect to any plan identified pursuant to paragraph (2) or (5) above,
it is a "party in interest" (as defined in Title I, Section 3(14) of ERISA) or
a "disqualified person" (as defined in Section 4975(e)(2) of the Code), or (ii)
with respect to any plan identified pursuant to paragraph (3) above, it or any
"affiliate" (as defined in Section V(c) of the QPAM Exemption) has at such
time, and during the immediately preceding one year, exercised the authority to
appoint or terminate said QPAM as manager of the assets of any plan identified
in writing pursuant to paragraph (3) above or to negotiate the terms of said
QPAM's management agreement on behalf of any such identified plans.
As used in this Section 4.2 the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 5. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES; ADDITIONAL
INFORMATION; INSPECTION.
Section 5.1. Financial Statements and Reports. From and after the date
hereof the Company will deliver to each Institutional Holder, in duplicate:
(a) as soon as practicable, and in any event within 60 days after
the end of each quarterly period (other than the last quarterly period)
in each fiscal year of the Company, the consolidated statement of income
of the Company and its Subsidiaries for such period and for that part of
the fiscal year ended with such quarterly period, the consolidated
statement of cash flows of the Company and its Subsidiaries for that part
of the fiscal year ended with such quarterly period and the consolidated
balance sheet of the Company and
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its Subsidiaries as at the end of such period, setting forth in each case
in comparative form the corresponding figures as of the end of and for
the corresponding quarterly period of the preceding fiscal year (or, in
the case of the consolidated balance sheet, as of the end of and for the
then most recent fiscal year), all in reasonable detail, prepared in
conformity with generally accepted accounting principles applied on a
basis consistent with that of previous years (except as otherwise stated
therein or in the notes thereto and except that footnotes shall not be
required) and certified by the chief financial officer of the Company as
presenting fairly the financial condition and results of operations of
the Company and its Subsidiaries as at the end of and for the fiscal
periods to which they relate, subject to the Company's year end
adjustments;
(b) as soon as practicable, and in any event within 90 days after
the end of each fiscal year of the Company, the consolidated balance
sheet and related consolidated statements of income, stockholders' equity
and cash flows of the Company and its Subsidiaries as at the end of and
for such year, setting forth in each case in comparative form the
corresponding figures as at the end of and for the previous fiscal year,
all in reasonable detail, prepared in conformity with generally accepted
accounting principles applied on a basis consistent with that of previous
years (except as otherwise stated therein or in the notes thereto) and
certified by the chief financial officer of the Company as presenting
fairly the financial condition, results of operations and cash flows of
the Company and its Subsidiaries as at the end of and for the fiscal year
to which such financial statements relate, and accompanied by a report or
opinion of independent certified public accountants of recognized
national standing selected by the Company stating that such financial
statements present fairly the consolidated financial condition, results
of operations and cash flows of the Company and its Subsidiaries in
accordance with generally accepted accounting principles consistently
applied (except for changes with which such accountants concur) and that
the
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examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards;
(c) concurrently with the financial statements delivered pursuant to
Section 5.1(b), the written statement of said accountants that in making
the examination necessary for their report or opinion on said financial
statements they have obtained no knowledge of any Event of Default or any
event which, with notice or lapse of time or both, would constitute such
an Event of Default, or, if such accountants shall have obtained
knowledge of any such Event of Default or event, they shall disclose in
such statement the Event of Default or event and the nature and status
thereof;
(d) concurrently with the financial statements delivered pursuant to
Sections 5.1(a) and 5.1(b), a certificate of the chief financial officer
of the Company (1) stating that a review of the activities of the Company
and its Subsidiaries during such fiscal period has been made under such
officer's supervision to determine whether the Company has fulfilled all
of its obligations under this Agreement and the Notes, (2) setting forth,
where applicable, the figures and computations demonstrating the
compliance by the Company with the requirements of Section 4 of the Notes
as at the end of such fiscal period; provided, that, as at the end of
each of the first three quarterly fiscal periods, the Company need only
demonstrate compliance with Sections 4.03 and 4.04, and (3) stating that,
to the best of such officer's knowledge, there exists no Event of Default
under this Agreement or under the Notes or event which, with notice or
lapse of time or both, would constitute such an Event of Default, or, if
any such Event of Default or event exists, specifying such Event of
Default or event and the nature and status thereof;
(e) as soon as practicable, copies of all financial statements,
proxy statements and reports as the Company shall send or make available
generally to its security holders and all registration statements and
regular periodic
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reports, if any, which it or any of its Subsidiaries may file with the
Securities and Exchange Commission or any governmental agency or agencies
substituted therefor or with any national securities exchange;
(f) as soon as practicable, and in any event within three days after
a responsible officer of the Company becomes aware of the existence of an
Event of Default under the Notes or any other evidence of Indebtedness of
the Company or any of its Subsidiaries, or an event which, with notice or
lapse of time or both, would constitute such an Event of Default, written
notice specifying the nature and period of existence thereof and what
action the Company or such Subsidiary, as the case may be, is taking or
proposes to take with respect thereto;
(g) as soon as practicable, and in any event within thirty days
after the Company or any of its ERISA Affiliates knows or reasonably
should know that any of the events or conditions specified below with
respect to any Plan, as defined in Section 2.13 hereof, or Multiemployer
Plan, as defined in Section 4001(a)(3) of ERISA (as defined in Section
2.13 hereof), has occurred or exists, a statement, signed by a financial
officer of the company setting forth details respecting such event or
condition, and the action, if any, that the Company or its ERISA
Affiliate proposes to take with respect thereto and a copy of any report
or notice required to be filed with or given to the PBGC, as defined in
Section 2.13 hereof, by the Company or its ERISA Affiliate with respect
to such event or condition;
(i) any "Reportable Event," as defined in Section 4043 (b) of
ERISA with respect to a Plan or Multiemployer Plan, as to which the
PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event; provided, however, that the failure to
meet the minimum funding standard of Section 412 of the Code, as
defined in Section 2.13 hereof, or Section 302 of ERISA shall be a
Reportable Event
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regardless of the issuance of any waivers in accordance with
Section 303 of ERISA or Section 412(d) of the Code;
(ii) the filing under Section 4041(b) or 4041(c) of ERISA by
the Company or any of its ERISA Affiliates of a notice of intent to
terminate any Plan or the termination of any Plan or the treatment
of a Plan amendment as a Plan termination under Section 4041(e) of
ERISA;
(iii) the institution by the PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or
any of its ERISA Affiliates of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal by the Company or any
of its ERISA Affiliates under Section 4203 or 4205 of ERISA from a
Multiemployer Plan, or the receipt by the Company or any of its
ERISA Affiliates of notice from a Multiemployer Plan that such
Multiemployer Plan is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or
has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any of its ERISA
Affiliates to enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days;
(vi) any event or series of events has occurred or exists
which could reasonably be expected to result in liability to the
Company or any of its ERISA Affiliates under Title IV of ERISA
pursuant to Section 4069(a) or 4212(c) of ERISA; and
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(vii) any statutory lien, under the Code or ERISA, shall have
been placed upon the assets of the Company or any of its ERISA
Affiliates in respect to any Plan or Multiemployer Plan;
(h) as soon as practicable, and in any event within thirty days of
receipt thereof, copies of any notice to the Company or any Subsidiary
from any Federal or state governmental authority relating to any order,
ruling, statute or other law or regulation which involves the likelihood
of any material and adverse change in the business, operations,
properties, prospects, assets or condition, financial or other, of the
Company and its Subsidiaries, taken as a whole; and
(i) such other information as to the business and properties of the
Company and of its Subsidiaries, consolidated financial statements of the
Company and its Subsidiaries and financial statements and other reports
filed by the Company or any of its Subsidiaries with any governmental
department, bureau, commission or agency, as any Institutional Holder may
from time to time reasonably request.
Section 5.2. Right to Inspect Properties, Books, Etc. From and after the
date hereof each Institutional Holder (or such Persons as such Institutional
Holder may designate) shall have the right to visit and inspect any of the
properties of the Company and its Subsidiaries, to examine the books of account
and records of the Company and its Subsidiaries, to make copies and extracts
therefrom of financial records of the Company and its Subsidiaries, to discuss
the affairs, finances, accounts and condition of the Company and its
Subsidiaries with, and to be advised as to the same by, their respective
officers, employees and independent accountants, all at such reasonable times
and intervals as such Institutional Holder may desire. The Company shall be
required to pay or reimburse any Institutional Holder for all reasonable
expenses which it may incur in connection with any such visitation or
inspection if an Event of Default shall have occurred and be continuing at the
time thereof.
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SECTION 6. MISCELLANEOUS.
Section 6.1. Expenses. Whether or not the transactions herein
contemplated shall be consummated, the Company agrees to pay all reasonable
costs and expenses (including stamp and other taxes, if any, payable in
connection with the execution and delivery of the Agreements or the Notes and
reasonable attorney's fees of a special counsel) reasonably incurred by each
Lender in connection with such transactions and incurred by any holder of a
Note in connection with the Pending Reorganization and any amendments, waivers
or consents under or in respect of the Agreements or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending any
rights under the Agreements or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
the Agreements or the Notes, or by reason of being a holder of any Note, and
(b) the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary
or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company shall not, in connection
with any of the matters described in this Section 6.1, be liable for the costs
and expenses of more than one separate legal firm, unless a holder of a Note
reasonably determines that its interests as a holder of Notes differs from the
interests of other holders so as to require separate legal advice. The Company
also agrees to pay, and save each holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than any retained by a Lender). The obligations of the Company under this
Section 6.1 shall survive the transfer of any Note or portion thereof or
interest therein by any holder and the payment or prepayment of any Note.
Section 6.2. Stamp Taxes, etc. The Company will pay, and save you and any
subsequent holder of the Notes harmless against, any and all liability
(including any interest or penalty for non-payment or delay in payment) with
respect to stamp taxes (other than any such stamp taxes incurred upon a
transfer of the Notes
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by you or any other holder of the Notes), if any, which may be payable or
determined to be payable in connection with the transactions contemplated by
the Agreements, including, without limitation, the issue and delivery of the
Notes, the acquisition thereof or any modification, amendment or alteration
thereof made at the request of the Company. The obligations of the Company
under this Section 6.2 shall survive the transfer of any Note or portion
thereof or interest therein by any holder and the payment or prepayment of any
Note.
Section 6.3. Successors and Assigns. All covenants, agreements,
representations and warranties made herein or in certificates delivered in
connection herewith by or on behalf of the Company shall survive the issue and
delivery of the Notes to you, the making of the loan by you as provided in
Section 1.2 and payment therefor, and shall bind the successors and assigns of
the Company, whether so expressed or not, and all such covenants, agreements,
representations and warranties shall inure to the benefit of your successors
and assigns, including any subsequent holder of any of the Notes.
Section 6.4. Direct Payment. Notwithstanding anything to the contrary
contained in the Agreements or the Notes, in the case of any Note owned by any
holder that is a Lender or owned by any other Institutional Holder which has
given written notice to the Company requesting that the provisions of this
Section 6.4 shall apply, the Company will punctually pay when due and payable
the principal amount thereof then to be prepaid, interest thereon and premium,
if any, due with respect to said principal, without any presentment thereof,
directly to such holder at its address set forth in Schedule I hereto or such
other address as such holder may from time to time designate in writing to the
Company or, if a bank account with a United States bank is set forth in
Schedule I hereto or so designated, the Company will make such payments in
immediately available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account in any bank in the
United States as such holder may from time to time direct in writing. With
respect to any Notes to which this Section 6.4 applies, the Company shall be
entitled to presume conclusively that any Lender or any
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35
Institutional Holder which has requested the provisions of this Section 6.4 to
apply to its Notes remains the holder of such Notes until such Notes shall have
been presented to the Company as evidence of the transfer thereof. Prior to
any sale or other disposition of any Note to which this Section 6.4 applies,
the holder thereof shall make a notation thereon of the aggregate amount of all
payments of principal, if any, theretofore made and of the date to which
interest has been paid. If requested by the Company, the holder of any Note
which has been paid in full shall promptly return such Note to the Company for
cancellation.
Section 6.5. Notices. All communications provided for hereunder shall be
in writing and, if to a holder of a Note, delivered by overnight air courier,
or by facsimile communication confirmed by overnight air courier, in each case
addressed to such holder at its address set forth on Schedule I hereto or such
other address as any holder may designate to the Company in writing, and, if to
the Company, delivered by overnight air courier, or by facsimile communication
confirmed by overnight air courier, to the Company at 324 Park National Bank
Building 5353 Wayzata Blvd., Minneapolis, Minnesota 55416, Attention: Vice
President-Finance, or to such other address as the Company may in writing
designate to the holders.
Section 6.6. Defined Terms. The terms used herein and in certificates
delivered pursuant hereto shall have the meanings assigned thereto in Exhibit A
hereto, unless otherwise defined herein.
Section 6.7. Pending Reorganization. By your acceptance hereof you shall
be deemed to have agreed to enter into an agreement substantially in the form
of the Novation and Assumption Agreement (the "Assumption Agreement") attached
hereto as Exhibit E; provided that such Assumption Agreement shall become
effective only upon the receipt by you of a favorable opinion of Maun & Simon,
PLC, dated the Effective Date of the Michael Reorganization (as such terms are
used in the Assumption Agreement) and in form and substance satisfactory to you
substantially to the effect that:
-35-
36
(i) New Michael (as defined in the Assumption Agreement) is a duly
incorporated and validly existing corporation in good standing under the
laws of the State of Minnesota and has the corporate power and authority
to own its property and assets and to carry on its business as presently
conducted and to enter into the Assumption Agreement and perform its
obligations as contemplated therein;
(ii) the Assumption Agreement has been duly authorized, executed and
delivered by New Michael and constitutes the legal, valid and binding
obligation of New Michael enforceable in accordance with its terms
(except as enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
principles of equity); and that no consent of shareholders is required
for the execution and delivery of the Assumption Agreements;
(iii) no action of, or filing with, any governmental or public body
or authority is required to authorize, or is otherwise required in
connection with, the execution, delivery and (except for such filings as
may be required in connection with the Pending Reorganization)
performance of the Assumption Agreement by New Michael;
(iv) New Michael is, to the best of such counsel's knowledge, duly
qualified and in good standing as a foreign corporation in each
jurisdiction wherein the nature of the property owned or leased by it or
the nature of the business transacted by it makes such qualification
necessary, except where the failure so to qualify would not have a
material and adverse effect on the business, operations, properties,
prospects, assets or condition, financial or other, of New Michael and
its Subsidiaries taken as a whole;
(v) neither the execution and delivery of the Assumption Agreement
by New Michael, the performance by New Michael of its obligations
thereunder nor compliance by New Michael with the terms, conditions and
provisions thereof
-36-
37
will violate any order, injunction or decree of any court or other
governmental body to which New Michael is a party or by which it is
bound, or conflict with or result in a breach of any of the terms,
conditions or provisions of the corporate charter or by-laws of New
Michael or any agreement or instrument, known to such counsel, to which
New Michael is a party or by which New Michael is bound, or constitute a
default thereunder, or result in the creation or imposition of any Lien
of any nature whatsoever upon any of the properties or assets of New
Michael;
and as to such other matters incident to the transactions contemplated by the
Pending Reorganization as you may reasonably request.
Section 6.8. Confidential Information. For the purposes of this Section
6.8, "Confidential Information" means information delivered to you by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise adequately
identified in writing when received by you as being confidential information of
the Company or such Subsidiary, provided that such term does not include
information that (a) was publicly known or otherwise known to you prior to the
time of such disclosure, (b) subsequently becomes publicly known through no act
or omission by you or any person acting on your behalf, (c) otherwise becomes
known to you other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to you under Section 5.1 hereof
that are otherwise publicly available. You will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by you
in good faith to protect confidential information of third parties delivered to
you, provided that you may deliver or disclose Confidential Information to (i)
your directors, trustees, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the
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38
Confidential Information substantially in accordance with the terms of this
Section 6.8, (iii) any other holder of any Note, (iv) any institutional
investor to which you sell or offer to sell such Note or any part thereof or
any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 6.8), (v) any Person from which you offer to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 6.8),
(vi) any Federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about your investment portfolio or (viii) any other Person to
which such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 6.8 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions
of this Section 6.8.
Section 6.9. Law Governing. This Agreement shall be construed in
accordance with and governed by laws of the State of Minnesota.
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39
Section 6.10. Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
Section 6.11. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
-39-
40
If the foregoing is satisfactory to you, please sign the form of
acceptance on the enclosed counterpart of this letter agreement and forward the
same to the Company, whereupon this letter agreement will become a binding
agreement between you and the Company as of the date first above written.
Yours very truly,
MICHAEL FOODS, INC.
By
Its
The foregoing agreement is
hereby accepted as of the
date first above written.
[VARIATION]
By___________________________________
Its
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
METROPOLITAN LIFE INSURANCE COMPANY $20,000,000
P.O. Box 633
334 Madison Avenue
Convent Station, New Jersey 07961-0633
Attention: Private Placement Unit
Telecopier Number: (201) 254-3050
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
The Chase Manhattan Bank
(ABA #021000021)
Metropolitan Branch
33 East 23rd Street
New York, New York 10010
for credit to: Metropolitan Life
Insurance Company--Corporate
Investments
Account Number 002-2-410591
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above
with duplicate notice to:
SCHEDULE I
(to Loan Agreement)
42
Metropolitan Life Insurance Company
Fixed Income Investments
334 Madison Avenue, P.O. Box 633
Convent Station, New Jersey
07961-0633
Attention: Private Placement Unit
Telecopier Number: (201) 254-3050
Name of Nominee in which Notes are to be issued:
None
Taxpayer I.D. Number: 13-5581829
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
THE LINCOLN NATIONAL LIFE $3,125,000 (UNA)
INSURANCE COMPANY $3,125,000 (IAL)
c/o Lincoln Investment Management, Inc. $2,125,000 (REO)
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021001033
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: The Lincoln
National Life Insurance Company (UNA)
Custody Account Number 98437
for the account of: The Lincoln
National Life Insurance Company (IAL)
Custody Account Number 98194
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44
for the account of: The Lincoln
National Life Insurance Company (REO)
Custody Account Number 98149
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above
with duplicate notices with respect to
payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 35-0472300
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
LINCOLN LIFE & ANNUITY COMPANY $375,000
OF NEW YORK
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021001033
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: Lincoln Life &
Annuity Company of New York
Custody Account Number 98269
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed
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46
as first provided above
with duplicate notices with respect to
payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 16-1505436
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
SECURITY-CONNECTICUT LIFE $625,000
INSURANCE COMPANY
c/o Lincoln Investment Management, Inc.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attention: Investments--Private Placements
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
New York, NY
ABA Routing #021-000-021
Beneficiary A/C: 544755102
Further Credit: Sec.-Conn. Life Ins.
Co.
A/C #02500084010
Notices
All notices of payment on or in respect of
the Notes and written confirmation of each
such payment to:
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Security-Connecticut Life Insurance
Company
20 Security Drive
Avon, CT 06001
Attention: Jodi Dean
and
Sigler & Co
c/o Chase Manhattan Bank
Dept. #3492
P.O. Box 50000
Newark, NJ 07101-8006
All notices and communications other than
those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued:
SIGLER & CO
Taxpayer I.D. Number: 35-1468921
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
FEDERAL WARRANTY SERVICE CORPORATION $625,000
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
New York, NY
ABA #021 000 021
Attn: Investment Dept.
for the account of: Federal Warranty
Service Corp.
A/C #N7631139
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above
with duplicate notices with respect to
payments to:
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American Bankers Insurance Group
for A/C: Federal Warranty Service
Corporation
11222 Quail Roost Drive
Miami, FL 33157
Attn: Investment Department
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 36-3596362
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
THE NORTHWESTERN MUTUAL LIFE $10,000,000
INSURANCE COMPANY
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Securities Department
Telecopier Number: (414) 299-7124
Payments
All Payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company (ABA #0210-01033)
16 Wall Street
Insurance Unit, 4th Floor
New York, New York 10005
for credit to: The Northwestern Mutual
Life Insurance Company
Account Number 00-000-027
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments and
written confirmation of each such payment
to be addressed,
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52
Attention: Public Markets
Department, Investment Operations,
FAX: (414) 299-5714.
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 39-0509570
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
SUNAMERICA LIFE INSURANCE COMPANY $5,000,000
c/o SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
Attention: Investment Accounting 36-05
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021-001-033
New York, New York
Account Number 99-911-145
FFC: A/C 099530
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above.
Name of Nominee in which Notes are to be
issued: OKGBD & CO.
Taxpayer I.D. Number for SunAamerica: 52-0502540
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54
Taxpayer I.D. Number for OKGBD & CO.: 22-2933761
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
ANCHOR NATIONAL LIFE INSURANCE COMPANY $3,000,000
c/o SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
Attention: Investment Accounting 36-05
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021-001-033
New York, New York
Account Number 99-911-145
FFC: A/C 099527
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above.
Name of Nominee in which Notes are to be
issued: OKGBD & CO.
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56
Taxpayer I.D. Number for Anchor National: 86-0198983
Taxpayer I.D. Number for OKGBD & CO.: 13-3020293
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
CAL FARM LIFE INSURANCE COMPANY $1,000,000
c/o SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
Attention: Investment Accounting 36-05
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021-001-033
New York, New York
Account Number 99-911-145
FFC: A/C 099545
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above.
Name of Nominee in which notes are to be
issued: OKGBD & CO.
Taxpayer I.D. Number for Cal Farm: 94-1190655
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58
Taxpayer I.D. Number for OKGBD & Co.: 22-2933761
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59
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
FIRST SUNAMERICA LIFE INSURANCE COMPANY $1,000,000
c/o SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
Attention: Investment Accounting 36-05
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
ABA #021-001-033
New York, New York
Account Number 99-911-145
FFC: A/C 099537
Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above.
Name of Nominee in which Notes are to be
issued: OKGBD & Co.
Taxpayer I.D. Number for First SunAamerica: 06-0992729
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Taxpayer I.D. Number for OKGBD & Co.: 22-2933761
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
USAA CASUALTY INSURANCE COMPANY $10,000,000
USAA IMCO
USAA Building BKD04N
9800 Fredericksburg Road
San Antonio, Texas 78288
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael Foods,
Inc., 7.58% Senior Notes due February 26,
2009, PPN 594074 B* 6, principal or
interest") to:
Bankers Trust Company/USAA
(ABA #021001033)
Private Placement Processing
AC #99 911 145
for credit to: USAA Casualty
Insurance Company
Account Number 99731
Notices
All notices with respect to payments and
written confirmation of each such payment,
to be addressed to:
USAA Casualty Insurance Company
c/o Asset Accounting
USAA Building, B1W
9800 Fredericksburg Road
San Antonio, Texas 78288
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62
All other communications:
Insurance Company Portfolios
USAA IMCO
USAA Building BKD04N
9800 Fredericksburg Road
San Antonio, Texas 78288
Name of Nominee in which Notes are to be
issued: SALKELD & CO.
Taxpayer I.D. Number 59-3019540
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63
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY $7,500,000
c/o American General Corporation
P. O. Box 3247
Houston, Texas 77253-3247
Attention: Investment Research Department, A37-01
Facsimile Number: (713) 831-1366
Overnight Mailing Address:
2929 Allen Parkway
Houston, Texas 77019-2155
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest or premium, if any")
to:
State Street Bank and Trust Company
ABA #011000028
Boston, Massachusetts 02101
Re: The Variable Annuity Life
Insurance Company
AC-0125-821-9
OBI=PPN Number and description
of payment
Fund Number PA 54
Notices
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64
All notices of payment on or in respect of
the notes and written confirmation of each
such payment to:
The Variable Annuity Life
Insurance Company and PA 54
c/o State Street Bank and Trust
Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, Massachusetts 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other
correspondences to be addressed as first
provided above.
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 74-1625348
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65
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
JOHN HANCOCK MUTUAL LIFE $4,500,000
INSURANCE COMPANY $3,000,000
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
The First National Bank of
Boston (ABA #011000390)
Boston, Massachusetts 02110
For the account of: John Hancock Mutual
Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: [Name of Issuer and PPN Number]
Notices
Contemporaneous with the above wire
transfer, advice setting forth (1) the full
name, interest rate and maturity date of
the notes or other
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66
obligations; (2) allocation of payment
between principal and interest and any
special payment; and (3) name and address
of bank (or trustee) from which wire transfer
was sent, shall be delivered or mailed to:
John Hancock Mutual Life
Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting
Division T-10
All notices with respect to prepayments,
both scheduled and unscheduled, whether
partial or in full, and notice of maturity
shall be delivered or mailed to:
John Hancock Mutual Life
Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting
Division T-10
All other communications which shall
include, but not be limited to, financial
statements and certificates of compliance
with financial covenants, shall be
delivered or mailed to:
John Hancock Mutual Life
Insurance Company
John Hancock Place
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67
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate
Finance Department, T-57
Name of Nominee in which Notes are to be
issued: John Hancock Mutual Life Insurance
Company
Taxpayer I.D. Number: 04-1414660
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
MASSACHUSETTS MUTUAL LIFE INSURANCE $5,000,000
COMPANY
1295 State Street
Springfield, Massachusetts 01111
Attention: Ms. Kathleen Lynch
Securities Investment Division
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA #021000089
For MassMutual Long Term Pool
Account No. 4067-3488
Re: Description of security,
principal and interest split
with telephone advice to the Securities
Custody and Collection Department of
Massachusetts Mutual Life Insurance Company
at (413) 744-3878.
Notices
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69
All notices and communications to be
addressed as first provided above, except
notices with respect to payments, to be
addressed to attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 04-1590850
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
MASSACHUSETTS MUTUAL LIFE INSURANCE $2,500,000
COMPANY
1295 State Street
Springfield, Massachusetts 01111
Attention: Ms. Kathleen Lynch
Securities Investment Division
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
4 Chase MetroTech Center
New York, New York 10081
ABA #021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Description of security, principal
and interest split
with telephone advice to the Securities
Custody and Collection Department of
Massachusetts Mutual Life Insurance Company
at (413) 744-3878.
Notices
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All notices and communications to be
addressed as first provided above, except
notices with respect to payments, to be
addressed attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which Notes are to be
issued: None
TAXPAYER I.D. NUMBER: 04-1590850
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY $5,000,000
c/o American Express Financial Corporation
3000 IDS Tower
Minneapolis, Minnesota 55440
Attention: Director - Senior Securities Research, Research Department
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Norwest Bank Minneapolis, N.A.
(ABA #091 000 019)
7th and Marquette Avenue
Minneapolis, Minnesota 55480
for credit to: American Express
Trust Co.
Account Number 00-38-500 for the
benefit of: WRAP TWO & CO.
Notices
All notices of payment, on or in respect of
the notes and written confirmation of each
such payment to:
WRAP TWO & CO.
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c/o American Express Trust Co. NW-9744
P.O. Box 1450
Minneapolis, Minnesota 55485
All notices and communications other than
those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be
issued: WRAP TWO & CO.
Taxpayer I.D. Number: 94-2786905
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
LUTHERAN BROTHERHOOD $5,000,000
625 Fourth Avenue South, 10th Floor
Minneapolis, Minnesota 55415
Attention: Investment Division/Trading Administrator
Payments
All payments on or in respect of the notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes Due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Norwest Bank Minnesota
ABA: 091000019
Trust Clearing Account #08-40-245
Attention: Income Collection
For credit to: Lutheran Brotherhood
Account Number 12651300
All income payments must include the
following information:
A/C Lutheran Brotherhood
Account No.: 12561300
Security Description
PPN 594074 B* 6
Reference Purpose of Payment
Interest and/or Principal Breakdown
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Notices
All notices and communications, including
notices with respect to payments and
written confirmation of each such payment,
to be addressed as first provided above.
Name of Nominee in which notes are to be
issued: None
Taxpayer I.D. Number: 41-0385700
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
THE LUTHERAN CHURCH-MISSOURI
SYNOD FOUNDATION $5,000,000
1333 S. Kirkwood Road
St. Louis, Missouri 63122-7295
Telephone Number: 314-965-9917 x-1456
Facsimile Number: 314-965-2656
Attention: Mr. Fred Sticht
Vice President, Treasury & Investments
Payments
All payments on or in respect OF the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bankers Trust Company
New York, New York
ABA #021001033
for credit to: Boatmen's Trust Company
Account #92558
Ref: A/C #55587-000
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments and
written confirmation of such payment, to be
addressed:
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The LCMS Foundation
Attn: Mary Boyer, Trust & Investments
1333 South Kirkwood Road
St. Louis, MO 63122-7295
Name of Nominee in which Notes are to be
issued: AUER & Co.
Taxpayer I.D. Number for LCMS Foundation: 43-6034481
Taxpayer I.D. Number for Auer & Co.: 13-6064419
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
EMPLOYERS LIFE INSURANCE COMPANY $3,000,000
OF WAUSAU
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Employers Life Custody
A/C #267827
Attention: P&I Department
Notices
All notices on or in respect of the notes
and written confirmation of each such
payment to:
Ms. Cindy Peterson
Employers Life Insurance
Company of Wausau
2000 Westwood Drive
Wausau, Wisconsin 54401
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All notices and communications other than
those in respect to payments to be addressed
to:
Employers Life Insurance Company of Wausau
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed--Income Securities
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 39-1049873
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
NATIONWIDE LIFE INSURANCE COMPANY $1,000,000
SEPARATE ACCOUNT OH
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, INC., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life Insurance
Co. - S/A OH
Attention: P&I Department
Notices
All notices of payment on or in respect of
the notes and written confirmation of each
such payment to:
Nationwide Life Insurance Company-S/A OH
c/o The Bank of New York
P. O. Box 19266
Attention: P&I Department
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Newark, New Jersey 07195
With a copy to:
Nationwide Life Insurance Company-S/A OH
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Attention: Investment Accounting
All notices and communications other than
those in respect to payments to be
addressed:
Nationwide Life Insurance Company Separate Account OH
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be
issued: NONE
Taxpayer I.D. Number: 31-4156830
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
NATIONWIDE LIFE INSURANCE COMPANY $1,000,000
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attention: P&I Department
Notices
All notices of payment on or in respect of
the Notes and written confirmation of each
such payment to:
Nationwide Life Insurance Company
c/o The Bank of New York
P. O. Box 19266
Attention: P&I Department
Newark, New Jersey 07195
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With a copy to:
Nationwide Life Insurance Company
Attention: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
All notices and communications other than
those in respect to payments to be
addressed:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
PACIFIC MUTUAL LIFE INSURANCE $5,000,000
COMPANY
700 Newport Center Drive
Newport Beach, California 92658-9000
Attention: Fixed Income Securities Department
Telephone: (714) 640-3379; Facsimile: (714) 640-3199
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
The Chase Manhattan Bank
ABA #021-000-021
A/C = 900-9-002206
BNF = Funds Pending - DNI/ABS
BBK = Chase Manhattan Bank/SSTO
A/C Name: General Account
A/C Number: 47363300
Regarding: Security Description and PPN
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments and
written confirmation of each such payment,
to be addressed:
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Pacific Mutual Life Insurance Company
Attention: Securities Administration
P.O. Box 9000
Newport Beach, California 92658-9000
With a copy to:
The Chase Manhattan Bank
P.O. Box 456, Wall Street Station
New York, New York 10005
Name of Nominee in which Notes are to be issued: ATWELL & CO
General Taxpayer I.D. Number: 95-4229487
Private Placement Taxpayer I.D.
Number: 13-6065575
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
PHOENIX HOME LIFE MUTUAL $5,000,000
INSURANCE COMPANY
One American Row
Hartford, Connecticut 06115
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
Principal or Interest") to:
ABA #021 000 021
Chase Manhattan Bank
New York, New York
Account Number: 900 9000 200
Account Name: Income Processing
Reference: Phoenix Home Life
Account #G05143
OBI=[Name of Issuer],
PPN=________, RATE=___%,
DUE=________ (include principal
and interest breakdown and premium, if any)
Notices
All notices and communications, including
notices with respect to
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payments and written confirmation of
each such payment, to be addressed:
Phoenix Home Life Mutual Insurance Company
c/o Phoenix Duff & Phelps, Inc.
56 Prospect Street
P. O. Box 150480
Hartford, Connecticut 06115-0480
Attention: Private Placements Division
Telecopier Number: (860) 403-5451
Name of Nominee in which Notes are to be
issued: None
Taxpayer I.D. Number: 06-0493340
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
UNITED FARM FAMILY LIFE $4,500,000
INSURANCE COMPANY
225 South East Street
Indianapolis, Indiana 46202
Attention: Steven B. Ratliff
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael Foods,
INC., 7.58% Senior Notes due February 26,
2009, PPN 594074 B* 6, principal or
interest") to:
Northern CHGO/Trust
ABA #071-0001-52
Credit wire acct. #5186041000
Ref ELL and Co
Acct. #26-30866
Notices
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be
issued: Ell and Co
Taxpayer I.D. Number 35-1097117
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
THE CANADA LIFE ASSURANCE COMPANY $2,250,000
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: U.S. Private Placements
Brian Lynch
Associate Treasurer
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
ABA #021-000-021
Account #544-755-102
For benefit of F/A/O AR78-63909
Attn: Mr. Richard Boxer
Include account no.
for: The Canada Life Assurance Company
(CLA) POC: CTL (Replaces Morgan #41233)
Trust Account No. AR78-63909
Notices
All notices and communications to be
addressed as first provided above, except
notice with respect to
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payment, and written confirmation of each
such payment, to be addressed:
Chase Manhattan Bank
Institutional Client Services
4 New York Plaza - 4th Floor
New York, NY 10004-2477
Attn: Mr. Richard Boxer
with a copy to:
The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attention: Supervisor,
Securities Accounting
Name of Nominee in which Notes are to be
issued: CUMMINGS & Co.
Taxpayer I.D. Number: 38-0397420
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
CANADA LIFE INSURANCE COMPANY OF NEW YORK $750,000
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: U.S. Private Placements
Brian Lynch
Associate Treasurer
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
ABA #021-000-021
Account #544-755-102
For benefit of F/A/O MR-76-37266
Attn: Mr. Richard Boxer
Include account no.
for: Canada Life Insurance
Company of New York (CLNY) POC:
CNY (Replaces Morgan #33370)
Custody Account No. MR-76-37266
Notices
All notices and communications to be
addressed as first provided above, except
notice with respect to
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payment, and written confirmation of
each such payment, to be addressed:
Chase Manhattan Bank
Institutional Client Services
4 New York Plaza - 4th Floor
New York, NY 10004-2477
Attn: Mr. Richard Boxer
with a copy to:
The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attention: Supervisor, Securities
Accounting
Name of Nominee in which Notes are to be
issued: Cummings & Co.
Taxpayer I.D. Number: 13-2690792
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
CUNA MUTUAL INSURANCE SOCIETY $3,000,000
c/o CUNA Mutual Group
Securities Management Department
5910 Mineral Point Road
Madison, Wisconsin 53705
Attention: Private Placements
Telecopier Number: (608) 238-2316
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
Chase Manhattan Bank
ABA #021000021
A/C: 900-9-002206
A/C: 473-63300
BNF = Funds Pending DNI/ABS
BBK = Chase Manhattan Bank/SSTO
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments and
written confirmation of each such payment,
to be addressed as follows:
CUNA Mutual Group
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Attention: Investment
Accounting, GG-12
P. O. Box 391
Madison, Wisconsin 53701
Name of Nominee in which Notes are to be
issued: Atwell & Co.
Taxpayer I.D. Number for Atwell:
13-6065575
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PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES
OF LENDER TO BE ACQUIRED
PROVIDENT MUTUAL LIFE $2,000,000
INSURANCE COMPANY
P.O. Box 1717
Valley Forge, Pennsylvania 19482-1717
Attention: Securities Investment Department
Telefacsimile: (610) 407-1322
Payments
All payments on or in respect of the Notes
to be by bank wire transfer of Federal or
other immediately available funds
(identifying each payment as "Michael
Foods, Inc., 7.58% Senior Notes due
February 26, 2009, PPN 594074 B* 6,
principal or interest") to:
PNC Bank (ABA #031-000-053)
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
for credit to: Provident Mutual Life
Insurance Company
Account Number 85-4084-2176
Notices
All notices and communications requiring
overnight express delivery service should
be addressed to:
1205 Westlakes Drive
Berwyn, PA 19312-2405
Attention: Treasurer
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Name of Nominee in which Notes are to be
issued: none
Taxpayer I.D. Number: 23-0990450
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MICHAEL FOODS, INC.
7.58% Senior Note
Due February 26, 2009
PPN 594074 B* 6
No. R- Minneapolis, Minnesota
$ ___________, ____
MICHAEL FOODS, INC., a corporation duly organized and existing under the
laws of the State of Delaware (hereinafter called the "Company"), for value
received, hereby promises to pay to _____________________, or registered
assigns, on February 26, 2009 the principal amount of ____________________
Dollars (or so much thereof as shall not have been prepaid) in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for public and private debts, at the principal office of the
Company in Minnesota, and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) at said office, in like coin or currency, on the
unpaid portion of said principal amount from the date hereof, semi-annually on
the twenty-sixth day of February and August in each year, commencing on the
first such day after the date hereof, at the rate of 7.58% until such unpaid
portion of such principal amount shall have become due and payable and at the
Overdue Interest Rate thereafter and, so far as may be lawful, on any unpaid
premium or any overdue installment of interest at the Overdue Interest Rate.
SECTION 1. THE NOTES; TRANSFERS, EXCHANGE, ETC.
Section 1.01. The Notes. This Note is one of an authorized issue of senior
notes (hereinafter called the "Notes") made by the Company in an aggregate
principal amount of $125,000,000, maturing on February 26, 2009, bearing
interest payable at the
EXHIBIT A
(to Loan Agreement)
98
same rate and on the same dates as the interest on the principal amount of
this Note and issued pursuant to the Agreements.
Section 1.02. Registration, Transfer or Exchange of Notes. The Notes are
issuable only as registered Notes. The Company will keep at its office or
agency maintained as provided in Section 3.01 a register in which the Company
shall provide for the registration and registration of transfer of the Notes.
The holder of this Note may, at its option and either in person or by duly
authorized attorney, surrender the same at said office or agency for
registration of transfer or exchange, accompanied if surrendered for transfer by
a written instrument of transfer duly executed by such holder or attorney. In
case such holder shall so request a transfer or exchange of this Note, the
Company shall deliver to or upon such holder's order one or more Notes in the
same aggregate unpaid principal amount as this Note, each dated as of the date
of, or, if later, the date to which interest has been paid on, this Note, in the
principal amount of $1,000,000 or a multiple of $100,000 in excess thereof,
(provided that one such new Note so issued to any holder may be issued in any
amount), as requested by such holder (provided that if such aggregate unpaid
principal amount is less than $1,000,000, the Company will deliver one Note in
exchange for the Note), and registered in such name or names as shall be
specified by such holder. The reasonable and customary expenses of such
exchange shall be borne by the requesting holder. Every new Note so made and
delivered upon transfer or in exchange for this Note shall be in the form of
Exhibit A to the Agreements.
Prior to due presentation for registration of transfer of this Note, the
Company may deem and treat the registered holder hereof as the absolute owner of
this Note for the purpose of receiving payment of or on account of the principal
of and premium, if any, and interest on this Note, and for the purpose of any
notice, waiver or consent hereunder, and payment of this Note shall be made only
to or upon the order in writing of such holder.
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Section 1.03. Loss, Theft, Destruction or Mutilation of Notes. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of a bond of indemnity reasonably satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of this Note, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Note, a new Note of like tenor and unpaid principal
amount and dated the date of, or, if later, the date to which interest has been
paid on, the lost, stolen, destroyed or mutilated Note. In the case of an
Institutional Holder of the Notes, its own unsecured agreement of indemnity
shall be deemed satisfactory to the Company.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.01. Mandatory Prepayments. On February 26 in each year, commencing
February 26, 2005 and ending February 26, 2008, both inclusive, the Company will
pay and apply and there shall become due and payable on the principal
Indebtedness evidenced by the Notes an amount equal to the lesser of (x)
$25,000,000 or (y) the principal amount of the Notes then outstanding; provided,
that upon any partial prepayment of the Notes pursuant to Section 2.02 or
Section 2.03 or any partial prepayment, redemption, retirement, purchase or
other acquisition of the Notes pursuant to clause (d) of Section 4.11, the
principal amount of each required prepayment of the Notes becoming due under
this Section 2.01 on and after the date of such prepayment, redemption,
retirement, purchase or other acquisition shall be reduced in the same
proportion as the aggregate principal amount of the Notes is reduced as a result
of such prepayment, redemption, retirement, purchase or other acquisition.
Section 2.02. Optional Prepayments. In addition to the prepayments required
by Section 2.01 and Section 2.03:
A. Unconditional Optional Prepayments. The Company may at its
option, from time to time on any Business Day, prepay the Notes then
outstanding as a whole at any time, or in part in a minimum amount of
$5,000,000 or in $1,000,000
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multiples in excess thereof from time to time, by giving each holder
thereof written notice, not less than 30 days nor more than 60 days prior
to the date fixed therein for such prepayment (an "Optional Prepayment
Date"), which notice shall also specify the principal amount of the Notes
held by such holder so to be prepaid.
B. Optional Prepayments on Failure of Holders to Grant Certain
Consents. In the event the Company shall request the holders of the Notes
in writing (with such request making specific reference to the optional
prepayment provisions set forth in this Section 2.02(B)) to consent to a
merger or consolidation of the Company not permitted pursuant to the
provisions of Section 4.07 hereof and the holder or holders of 50% or more
in aggregate principal amount of the then outstanding Notes shall have
failed or refused for a period of 30 days following the receipt of such
request, to consent in writing to such merger or consolidation, then the
Company may, on a Business Day (the "Optional Prepayment Date") selected by
the Company and occurring within 65 days after the expiration of such 30
day period, and upon not less than 30 nor more than 60 days prior written
notice, prepay all Notes held by each holder which has failed or refused to
consent to such merger or consolidation. Any request by the Company made
pursuant to this Section 2.02B shall set forth such financial and other
information as is, in the best judgment of the Company, necessary for each
holder to make an informed decision with respect to such requested consent.
C. Prepayment Out of Proceeds of Asset Disposition. In the event
that the Company shall elect to apply all or any portion of the proceeds of
sales, transfers or other dispositions of assets or property to the
repayment or prepayment of unsubordinated Funded Indebtedness of the
Company or a Subsidiary as contemplated in Section 4.06, the Company will
give written notice ("Company Notice") of such election to all holders of
the Notes. The Company Notice shall (i) describe the facts and
circumstances of such sales, transfers or other dispositions in reasonable
detail,
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(ii) set forth the aggregate principal amount of such proceeds (the
"Designated Proceeds") which it intends to apply to the prepayment or
repayment of unsubordinated Funded Indebtedness, (iii) contain an offer by
the Company to prepay on a stated date (the "Optional Prepayment Date"),
which shall be a Business Day not more than 60 days and not less than 30
days after such Company Notice, the principal amount of Notes held by each
holder which bears the same relationship to the aggregate amount of such
Designated Proceeds as the aggregate principal amount of all Notes held by
such holder bears to the aggregate principal amount of all then outstanding
Funded Indebtedness (including the Notes) with respect to which a portion
of such Designated Proceeds is to be applied, and (iv) request each holder
to notify the Company in writing by a stated date, which date shall be not
less than 15 days after such holder's receipt of the Company Notice, of its
acceptance or rejection of such prepayment offer. If a holder does not
notify the Company as provided in subclause (iv) above, then such holder
shall be deemed to have accepted such offer.
For purposes of any prepayment pursuant to the provisions of subsection A
or subsection B or subsection C of this Section 2.02, the Computing Holder, as
defined in Section 2.03 herein, shall give written notice to the Company, on the
fifth Business Day prior to any Optional Prepayment Date determined pursuant to
subsection A or subsection B or subsection C above, of the amount of the
Prepayment Price, as defined in Section 2.03 herein, of the principal amount of
the Notes held by such Computing Holder so to be prepaid, which notice shall set
forth in reasonable detail the computation thereof.
The Company shall deliver to each holder then to be prepaid, at least two
Business Days before such Optional Prepayment Date, a certificate signed by a
principal financial officer of the Company setting forth the Prepayment Price of
the principal amount of the Notes held by such holder so to be prepaid,
accompanied by a copy of the written notice by the Computing Holder referred to
above (which sets forth the computation of the Prepayment Price of the Notes
held by the Computing Holder).
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Thereupon, the Company covenants and agrees that it will on such Optional
Prepayment Date prepay the principal amount of the Notes held by such holder so
to be prepaid by payment to such holder of the Prepayment Price of such
principal amount, together with interest accrued on such principal amount to
such Optional Prepayment Date. No prepayment of less than all of the Notes
pursuant to this Section 2.02 shall be credited to or relieve the Company to any
extent from its obligation to make any prepayments required by Section 2.01.
Section 2.03. Prepayment Upon Event Risk Occurrence. The Company covenants
and agrees to, promptly after the occurrence of an Event Risk Occurrence,
but in any event within 10 days thereafter, give written notice to each holder
of a Note. Such notice shall (a) describe in reasonable detail the facts and
circumstances giving rise to such Event Risk Occurrence and the effect thereof
on the Company, (b) offer to prepay, on a date (the "Event Risk Occurrence
Prepayment Date") which shall be not less than 30 days nor more than 60 days
after the date of such notice, all of the Notes held by such holder, (c)
request such holder to notify the Company in writing, not less than 10 days
prior to the Event Risk Occurrence Prepayment Date, of its acceptance or
rejection of such offer and (d) inform such holder that, upon its receipt of
such notice from the Company, failure to reject such offer in writing on or
before the 10th day prior to the Event Risk Occurrence Prepayment Date shall be
deemed acceptance of such offer. The notice to the Computing Holder shall also
set forth the respective names and addresses of, and the principal amounts of
the Notes held by, the other holders.
The Computing Holder shall give written notice to the Company and the other
holders, on the fifth Business Day prior to the Event Risk Occurrence Prepayment
Date, of the amount of the Prepayment Price of the Notes held by it and such
other holders, which notice shall set forth in reasonable detail the computation
thereof. Such notice in itself shall constitute neither an acceptance nor a
rejection by the Computing Holder of such prepayment offer.
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Thereupon, the Company covenants and agrees that it will on the Event Risk
Occurrence Prepayment Date prepay all of the Notes held by each holder who has
accepted the prepayment offer in accordance with this Section, by payment of the
Prepayment Price of such Notes, together with interest accrued on the unpaid
principal amount of such Notes to the Event Risk Occurrence Prepayment Date. No
prepayment of less than all of the Notes pursuant to this Section 2.03 shall be
credited to or relieve the Company to any extent from its obligation to make any
prepayments required by Section 2.01.
The following terms shall have the following definitions:
"Business Day" means any day on which banks are required to be open to
carry on their normal business in the States of Minnesota and New York.
"Change of Control" means any Acquisition subsequent to February 26, 1997
by any Person, or related Persons constituting a "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, of (a) the power to elect, appoint
or cause the election or appointment of at least a majority of the members of
the Board of Directors of the Company, through beneficial ownership of the
capital stock of the Company or otherwise, or (b) all or substantially all of
the properties and assets of the Company; provided, however, that a Change of
Control shall not be deemed to have occurred as a result of the consummation of
the Pending Reorganization or if (x) the Acquisition of such power or properties
and assets is pursuant to a transaction in compliance with the provisions of
Section 4.07 hereof and (y) no Person, or related Persons constituting a "group"
for purposes of Section 13(d) of the Securities Exchange Act of 1934, shall have
the power to elect, appoint or cause the election or appointment of at least a
majority of the members of the Board of Directors of such successor or
transferee. For the purposes of this definition, "Acquisition" of the power or
properties and assets stated in the preceding sentence means the earlier of (i)
the actual possession thereof and (ii) the consummation of any transaction or
series of related transactions which, with the
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passage of time, will give such Person or Persons the actual possession thereof.
"Computing Holder" means, as of the date of notice, the holder who holds
Notes with an aggregate principal amount outstanding higher than that of Notes
held by any other holder; provided , however, that for purposes of any
prepayment made pursuant to the provisions of this Section 2.03 or Section
2.02B, "Computing Holder" means the holder who holds Notes then to be prepaid
pursuant to this Section 2.03 or Section 2.02B with an aggregate amount
outstanding higher than that of Notes held by any other holder then to be
prepaid. For purposes determining the Computing Holder, the Notes then held by
affiliated holders shall be aggregated.
"Designated Event" means any of the following:
(a) the majority of the members of the Company's Board of Directors at
any time being different from the majority of the members of its Board of
Directors at any other time within the immediately preceding two calendar
years; provided that for purposes of this clause (a), a member of the
Company's Board of Directors shall not be deemed to be "different" if such
board member is a member or designee of either the Michael Family or the
Papetti Family and has replaced another member or designee of the same
family, or
(b) the authorization by the Company's Board of Directors of
(i) a consolidation or merger of the Company (other than the
Pending Reorganization) or a sale of all or substantially all of its
properties and assets,
(ii) a dividend or other distribution by the Company to its
shareholders, in one transaction or a series of related transactions,
of cash, property or securities (other than a dividend or other
distribution payable solely in capital stock of the Company that is
not convertible into or exchangeable for any securities
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that are not capital stock of the Company) having an aggregate fair
market value at the time of distribution that is 30% or more of the
fair market value of the common stock of the Company outstanding
immediately prior to such distribution (both such fair market values
as determined by its Board of Directors) or
(iii) an acquisition by the Company for cash, property or
securities (other than capital stock of the Company that is not
convertible into or exchangeable for any securities that are not
capital stock of the Company), in one transaction or a series of
related transactions, of more than 30% of common stock of the Company
outstanding immediately prior to the commencement of such acquisition;
provided that any event described above in this clause (b) shall be a
designated event only if at any time within 12 months of the occurrence of
such event, the company's consolidated net worth as of such time shall be
less than 50% of its consolidated net worth as of the fiscal year-end
immediately preceding the earlier of such event and such time.
"Event Risk Occurrence" means (a) a Change of Control or (b) a Designated
Event or (c) the failure of the Company to pay the purchase price and otherwise
effect the acquisition of the Papetti Companies on the Closing Date (except for
any filings which, in accordance with standard practice, are to be made
subsequent to the closing of such transaction) all substantially as contemplated
in the Memorandum and, within five business days thereafter, to provide to each
holder of a Note an opinion of Maun & Simon PLC to such effect (in form and
substance reasonably satisfactory to the holders of the Notes).
"Michael Family" means and includes (i) James H. Michael, (ii) any Person
who is a lineal descendent of James H. Michael, (iii) the spouse, children or
grandchildren of any such Person, (iv) any trust of which any of such Persons
are the sole
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beneficiaries and (v) the estate, executor, administrator or legal guardian of
any such Person.
"Papetti Family" means and includes (i) Arthur M. Papetti and Anthony
Papetti, (ii) any Person who is a lineal descendent of Arthur M. Papetti or
Anthony Papetti, (iii) the spouse, children or grandchildren of any such Person,
(iv) any trust of which any of such Persons are the sole beneficiaries and (v)
the estate, executor, administrator or legal guardian of any such Person.
"Prepayment Price" means, for purposes of calculations required by this
Section and Section 2.02 hereof, the higher of (1) the unpaid principal amount
of the Notes to be prepaid on the Event Risk Occurrence Prepayment Date or
Optional Prepayment Date, as the case may be, and (2) the sum of the respective
Payment Values of each prospective interest payment, prospective mandatory
prepayment and the principal payment at maturity in respect of such Notes (the
amount of each such payment being herein referred to as a "Payment"). The
"Payment Value" of each Payment shall be determined by discounting such Payment
at the Adjusted Reinvestment Rate, for the period from the scheduled date of
such Payment to the Event Risk Occurrence Prepayment Date or Optional Prepayment
Date, as the case may be. The "Adjusted Reinvestment Rate" is the sum of (a) 50
basis points and (b) the yield which shall be imputed from the yields (as
reported on the Telerate Access Service (Page 500-offer side) or such other
display as may replace Page 500) of those actively traded United States Treasury
securities having maturities as close as practicable to the Weighted Average
Life to Final Maturity of the Notes so to be prepaid. The yields of such United
States Treasury securities shall be determined as of 10 A.M. Eastern Time on the
fifth Business Day prior to the Event Risk Occurrence Prepayment Date or
Optional Prepayment Date, as the case may be.
"Weighted Average Life to Final Maturity" of the Notes as of the time of
determination thereof means the number of years (rounded to the nearest
one-twelfth) obtained by dividing the then Remaining Dollar-Years of the Notes
by the then outstanding principal amount of the Notes. For the purposes of
this
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definition, "Remaining Dollar-Years" means the sum of the amounts obtained by
multiplying the amount of each then remaining required prepayment, including
prepayment at final maturity, by the number of years (calculated to the nearest
one-twelfth) which will elapse between the time of such determination and the
date of such prepayment.
Section 2.04. Interest After Date Fixed for Prepayment. This Note or any
portion hereof to be prepaid shall cease to bear interest on and after the date
fixed for such prepayment unless the Company shall fail to pay this Note or such
portion, as the case may be, on the date fixed for such prepayment, in which
event this Note or such portion, as the case may be, shall bear interest at the
Overdue Interest Rate from and after such date until paid and, so far as may be
lawful, any unpaid premium and overdue installment of interest shall bear
interest at said rate.
Section 2.05. Allocation of Prepayments. In the event of any prepayment of
less than all of the outstanding Notes (other than any prepayment pursuant to
Section 2.02B or Section 2.03) the Company will allocate the principal amount so
to be prepaid (but only in units of $1,000) among the registered holders of
Notes in proportion, as nearly as may be, to the respective principal amounts of
such Notes, not theretofore called for prepayment, of which they shall be
registered holders.
Section 2.06. Surrender of Notes; Notation Thereon. Upon any prepayment of a
portion of the principal amount of this Note, the registered holder hereof, at
its option, may require the Company to execute and deliver, upon surrender of
this Note, a new Note registered in the name of such person or persons as may be
designated by such holder for the principal amount of this Note then remaining
unpaid, dated as of the date to which interest has been paid on the principal
amount of this Note then remaining unpaid, or may present this Note to the
Company for notation hereon of the payment of the portion of the principal
amount of this Note so prepaid. The reasonable and customary expenses of such
exchange or notation shall be borne by the requesting holder. Every new Note
made and delivered pursuant to the
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provisions of this Section 2.06 shall in all other respects be in the same form
and have the same terms as this Note.
SECTION 3. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that so long as this Note shall be
outstanding:
Section 3.01. Maintenance of Company Office. The Company will maintain an
office or agency at 324 Park National Bank Building, 5353 Wayzata Boulevard,
Minneapolis, Minnesota 55416 (or such other place in the United States of
America as the Company may designate in writing to the holder hereof), where
notices, presentations and demands to or upon the Company in respect of the
Notes may be given or made.
Section 3.02. To Keep Books. The Company will, and will cause each of its
Subsidiaries to, at all times keep proper books of record and account in which
full, true and correct entries will be made of its transactions in accordance
with generally accepted accounting principles.
Section 3.03. Payment of Taxes; Corporate Existence; Maintenance of
Properties. The Company will, and will cause each of its Subsidiaries to,
A. pay and discharge promptly all taxes, assessments and other
governmental charges or levies imposed upon it or upon its income or upon
any of its property, real, personal or mixed or upon any part thereof, as
well as all claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Company nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in
good faith by appropriate proceedings and if the Company or any such
Subsidiary, as the case may be, shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting
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principles) deemed by it to be adequate with respect thereto;
B. do all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises; provided, however,
that nothing in this Section 3.03B shall prevent the abandonment or
termination of the corporate existence, rights and franchises of any
Subsidiary if, in the opinion of the Company, such abandonment or
termination would not have a material and adverse effect on the business,
operations, properties, prospects, assets or condition, financial or other,
of the Company and its Subsidiaries, taken as a whole;
C. maintain and keep its properties, in good repair, working order and
condition and from time to time make all needful and proper repairs,
renewals and replacements, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
Section 3.04. Insurance. The Company will, and will cause each Subsidiary to,
keep adequately insured, by financially sound and reputable insurers, all
property of a character usually insured by corporations engaged in the same or a
similar business similarly situated against loss or damage of the kinds
customarily insured against by such corporations, and carry such other insurance
as is usually carried by corporations engaged in the same or a similar business
similarly situated; provided that the Company and its Subsidiaries may maintain
a system or systems of self-insurance which, in the opinion of the chief
financial officer of the Company, will accord with sound practices of
corporations maintaining such systems engaged in the same or a similar business
similarly situated and under which the Company or such Subsidiaries shall
maintain adequate reserves in accordance with sound actuarial and insurance
principles and practice.
Section 3.05. Payment of Indebtedness. The Company will, and will cause each
Subsidiary (but only to the extent that such Subsidiary's assets shall be
sufficient for the purpose) to,
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A. pay or cause to be paid the principal of and the interest on all
Indebtedness heretofore or hereafter incurred or assumed by it when and as
the same shall become due and payable, unless such Indebtedness shall be
renewed, extended or refunded in accordance with the provisions of Sections
4.01 and 4.02, and
B. faithfully perform, observe and discharge all the covenants,
conditions and obligations which are imposed on it by any and all
indentures and other agreements securing or evidencing such Indebtedness or
pursuant to which such Indebtedness is issued, and not permit the
occurrence of any act or omission which is or may be declared to be a
default thereunder;
provided, however, that neither the company nor any such subsidiary shall be
required to make any payment or to take any other action by reason of this
section 3.05 at any time while it shall be contesting in good faith by
appropriate proceedings its obligations to do so, if it shall set aside on its
books reserves (segregated to the extent required by generally accepted
accounting principles) deemed by it to be adequate with respect thereto.
Section 3.06. Compliance with Laws. The Company and each of its Subsidiaries
will use their best efforts to comply in all respects with all applicable
statutes, rules, regulations and orders of all governmental authorities with
respect to the conduct of their businesses and the ownership of properties
(including, without limitation, all applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls), except to the
extent that any of the foregoing are contested in good faith by appropriate
proceedings.
SECTION 4. RESTRICTIVE COVENANTS.
The Company covenants and agrees that so long as this Note shall be
outstanding:
Section 4.01. Limitation on Indebtedness.
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A. Incurrence of Funded Indebtedness. The Company will not, and will
not permit any Subsidiary to, create, assume, incur or otherwise become
liable, in each case contingently or otherwise, in respect of any Funded
Indebtedness, whether secured or unsecured other than:
(i) the Notes;
(ii) Funded Indebtedness of the Company or a Subsidiary,
provided that, at the time of the creation, assumption, incurrence or
otherwise becoming liable in respect thereof and after giving effect
thereto and to the application of the proceeds thereof, (x)
Consolidated Funded Indebtedness does not exceed 55% of Total
Capitalization and (y) no Event of Default or event which with the
passage of time or the giving of notice, or both, would constitute an
Event of Default has occurred and is continuing; and
(iii) Funded Indebtedness of the Company or a Subsidiary
which has been extended, renewed or refunded so long as (x) the
principal amount of such Indebtedness is not increased, and (y) no
Event of Default or event which with the passage of time or the giving
of notice, or both, would constitute an Event of Default has occurred
and is continuing.
Any corporation which becomes a Subsidiary after the date hereof shall, for
all purposes of this Section 4.01A, be deemed to have created, assumed or
incurred, at the time it becomes a Subsidiary, all Indebtedness of such
corporation existing immediately after it becomes a Subsidiary.
B. Current Indebtedness and Funded Indebtedness. The Company will not
and will not permit any Subsidiary to, at any time be liable with respect
to any Funded Indebtedness or Current Indebtedness unless, on each of 45
consecutive days within the period of the 12 consecutive months immediately
preceding the date of any determination hereunder, the aggregate unpaid
principal amount of
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Consolidated Funded Indebtedness and Consolidated Current Indebtedness does
not exceed an amount equal to 55% of the sum of Total Capitalization and
Consolidated Current Indebtedness.
C. Priority Indebtedness. The Company will not at any time permit any
Subsidiary to create, assume, incur or otherwise become liable in respect
of any Priority Indebtedness unless, at the time of such creation,
assumption or incurrence and immediately after giving effect thereto and to
the application of the proceeds thereof, (x) the then outstanding principal
amount of Priority Indebtedness shall not exceed 25% of Consolidated Net
Worth as of the end of the immediately preceding fiscal year of the
Company, and (y) the Company could incur at least $1 of additional Funded
Indebtedness in compliance with Section 4.01A.
Section 4.02. Limitation on Liens. The Company will not, and will not permit
any Subsidiary to, (i) create, assume, incur or suffer to exist any Lien upon
(or, whether by transfer to any Subsidiary or Affiliate or otherwise, subject,
or permit any Subsidiary or Affiliate to subject, to the prior payment of any
Indebtedness other than that represented by the Notes) any property or assets
(real or personal, tangible or intangible) of the Company or any Subsidiary,
whether now owned or hereafter acquired, or any income or profits therefrom, or
(ii) own or acquire or agree to acquire any property or assets (real or
personal, tangible or intangible) subject to or upon any Lien; provided,
however, that the foregoing restrictions shall not prevent the Company or any
Subsidiary from:
A. (1) making pledges or deposits under workmen's compensation laws,
unemployment insurance laws or similar legislation or good faith deposits
in connection with bids, tenders, contracts (other than for the repayment
of money borrowed) or under leases to which the Company or such Subsidiary
is a party, (2) making deposits to secure public or statutory obligations
of the Company or such Subsidiary or deposits of cash or obligations of the
United States of
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America to secure surety and appeal bonds to which the Company or such
Subsidiary is a party or deposits in lieu of such bonds, (3) incurring
Liens or priorities imposed by law, such as employees', carriers',
warehousemen's, labor mechanics', materialmen's and vendors' liens or
priorities, and Liens arising out of judgments or awards against the
Company or such Subsidiary with respect to which the Company or such
Subsidiary at the time shall be prosecuting an appeal or proceedings for
review and with respect to which it shall have secured a stay of execution
pending such appeal or proceedings for review or (4) entering into leases
and from incurring landlords' liens on fixtures and movable property
located on premises leased in the ordinary course of business so long as
the rent secured thereby is not in default and any applicable grace period
has not expired; or
B. creating, incurring or suffering to exist (1) Liens for taxes or
import duties not yet subject to penalties for nonpayment or the nonpayment
of which shall be permitted by the proviso to Section 3.03A or (2) minor
survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions
as to the use of real properties, which Liens, exceptions, encumbrances,
easements, reservations, rights and restrictions do not, in the opinion of
the Company, in the aggregate materially detract from the value of such
properties or materially impair their use in the operation of the business
of the Company or such Subsidiary; or
C. suffering to exist the Liens existing on the date hereof securing
Indebtedness in an aggregate principal amount outstanding on the date
hereof not in excess of $3,000,000, and extensions, renewals or
replacements of any such Lien upon the same property theretofore subject
thereto without increase in the principal amount of the Indebtedness then
secured or evidenced thereby; or
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D. in the case of a Subsidiary, creating, incurring, assuming or
suffering to exist any Lien solely to secure Indebtedness owing to the
Company or a Wholly-owned Subsidiary; or
E. creating, incurring, assuming or suffering to exist Liens not
otherwise permitted by the foregoing clauses A through D, inclusive, of
this Section 4.02; provided, however, that at the time of the creation,
incurrence or assumption thereof, and immediately after giving effect to
the Indebtedness secured or evidenced by any such Lien, (1) the then
outstanding aggregate principal amount of Priority Indebtedness shall not
exceed 25% of Consolidated Net Worth as of the end of the immediately
preceding fiscal year of the Company, and (2) the Company could incur at
least $1 of additional Funded Indebtedness in compliance with Section
4.01A.
Section 4.03. Maintenance of Net Worth. The Company will at all times
maintain Consolidated Net Worth at an amount not less than the sum of
(i) $140,000,000 plus (ii) 50% of positive Consolidated Net Income for each
fiscal year of the Company ending on or after December 31, 1997 and prior to
the date of determination thereof, computed on a cumulative basis for said
entire period. If Consolidated Net Income is a deficit figure for any fiscal
year of the Company, such deficit shall not reduce the amount of Consolidated
Net Worth required to be maintained pursuant to this Section 4.03.
Section 4.04. Maintenance of Interest Expense Coverage. The Company will
maintain the ratio of Consolidated Net Earnings Available for Fixed Charges to
Fixed Charges determined for the immediately preceding four fiscal quarters of
the Company at not less than 1.75 to 1.
Section 4.05. Restricted Payments. The Company will not, directly or
indirectly (i) declare or pay any dividend or make any other distribution
(whether by reduction of capital or otherwise) on any shares of any class of its
capital stock (other than a dividend or distribution payable in shares of common
stock
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of the Company), (ii) purchase, redeem, retire or otherwise acquire, or cause or
permit any Subsidiary or Affiliate to purchase, redeem, retire, otherwise
acquire or make any payment in respect of, any such shares, or (iii) pay, repay,
redeem, retire, repurchase or otherwise acquire the principal of any
Subordinated Debt (or any installment thereof) prior to the regularly scheduled
maturity dates thereof (as in effect on the date such Subordinated Debt was
originally incurred) unless, immediately after giving effect to such action,
A. Consolidated Net Worth is not less than the level established
pursuant to the provisions of Section 4.03;
B. the Company shall not be in default in the performance or
observance of any other term, covenant, provision or condition contained in
the Notes; and
C. the Company could incur at least $1 of additional Funded
Indebtedness in compliance with the provisions of Section 4.01A;
provided that the provisions of this Section 4.05 shall not preclude the
prepayment of the presently outstanding subordinated debentures of NSU in
connection with the Pending Reorganization by the application of up to
$21,250,000 aggregate principal amount of the proceeds from the issuance of the
Notes together with a cash contribution from NSU.
Section 4.06. Limitation on Disposition of Assets. Subject to Section 4.07,
the Company will not at any time sell, transfer or otherwise dispose of, other
than in the ordinary course of business, all or any part of its assets and
properties if, immediately after giving effect thereto, the aggregate value of
all such properties and assets so disposed of (valued at the book value thereof)
during the immediately preceding 365 days exceeds 20% of Total Capitalization as
of the end of the then most recently ended fiscal year of the Company.
Computations under this Section 4.06 shall not include, sales, transfers, or
other dispositions for fair market value (as determined in good faith by the
Company), to the extent that all or a portion of the net
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after-tax proceeds of such transaction is applied, within 12 months after the
date of such transaction, to
(i) the purchase, acquisition or construction of assets or properties
which are to be used in the business of the Company or a Subsidiary; or
(ii) the repayment or prepayment of unsubordinated Funded Indebtedness
of the Company or a Subsidiary; provided that the Company has, on or prior
to the application of any such proceeds to the repayment or prepayment of
any other unsubordinated Funded Indebtedness pursuant to this subclause
(ii), offered to prepay the Notes, pro rata with all other unsubordinated
Funded Indebtedness then being repaid or prepaid (which prepayment of the
Notes shall be made in accordance with the terms of Section 2.02C hereof).
Section 4.07. Merger, Consolidation, Sale or Lease. Except for the Pending
Reorganization, the Company will not consolidate with or merge into any Person,
or permit any Person to merge into it, or sell, transfer or otherwise dispose of
all or substantially all of its properties and assets, unless;
(1) the Company shall be the surviving corporation; and
(2) immediately after giving effect to such transaction, (i) the
Company shall not be in default in the performance or observance of any of
the terms, covenants, provisions or conditions contained in the Notes or
the Agreements and (ii) the Company could incur at least $1 of additional
Funded Indebtedness in compliance with the provisions of Section 4.01A.
Section 4.08. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (except (i) the Pending Reorganization and (ii)
other transactions or arrangements existing on the date hereof, including any
renewals or extensions thereof under terms and
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provisions which are no more adverse to the Company or such Subsidiary than the
terms and provisions under the transactions and arrangements so renewed or
extended) including, without limitation, the purchase of property from, sale of
property to or exchange of property with, the rendering of any service by or
for, or the making of any loan or advance to, any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would exist in a comparable arm's-length
transaction with a person other than an Affiliate.
Section 4.09. Restrictions on Subsidiaries. A. The Company will not cause,
suffer or permit any Subsidiary to
(1) issue or dispose of any shares of such Subsidiary's capital stock
to any Person other than the Company or a Wholly-owned Subsidiary, except
to the extent that any such shares are required to qualify directors under
any applicable law or required to be issued to other stockholders of such
Subsidiary by virtue of their exercise of preemptive rights or as their pro
rata share of any stock dividend; or
(2) sell, assign, pledge, transfer, dispose of, or in any way part
with control of, any shares of capital stock of another Subsidiary, or any
Indebtedness owing to such Subsidiary from another Subsidiary, to any
Person other than the Company or a Wholly-owned Subsidiary, except in
connection with a transaction which complies with Section 4.09B; and, in
the case of shares of capital stock, to the extent, if any, required to
qualify directors of such other Subsidiary under any applicable law; or
(3) sell, assign, lease, pledge, transfer or otherwise dispose of any
substantial part of such Subsidiary's properties and assets to any Person
or consolidate with or merge into any other Person or permit any other
Person to merge into it; provided, however, that
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(a) any Subsidiary may sell all or substantially all of its
properties and assets for cash in an amount not less than their fair
market value (as determined in good faith by the Company) if (i) such
Subsidiary does not own any capital stock or any Indebtedness of the
Company or any other Subsidiary not simultaneously being disposed of,
(ii) such sale is not prohibited by the provisions of Section 4.06,
and (iii) at the time of such transaction and immediately after giving
effect thereto, (x) the Company shall not be in default in the
performance or observance of any of the terms, covenants, provisions
or conditions contained in the Notes, and (y) the Company could incur
at least $1 of additional Funded Indebtedness in compliance with
Section 4.01A; and
(b) any Subsidiary may sell, lease, transfer or otherwise dispose
of all or any part of its properties and assets to, or consolidate
with or merge into, the Company (subject to the provisions of Section
4.07) or a Wholly-owned Subsidiary.
B. The Company will not sell, assign, pledge, transfer, dispose of, or in
any way part with control of, any shares of capital stock of any Subsidiary or
any Indebtedness owing from any Subsidiary to the Company, except, in the case
of shares of capital stock, to the extent, if any, required to qualify directors
of such Subsidiary under any applicable law; provided, however, that all shares
of capital stock of all classes, together with all Indebtedness, of any
Subsidiary owned by the Company and/or one or more Subsidiaries may be sold if
such sale, if deemed a sale of properties and assets by such Subsidiary, would
not be prohibited by the provisions of Section 4.09A(3)(a).
C. The Company will not, and will not cause, suffer or permit any
Subsidiary to, acquire, directly or indirectly, any stock of any other
corporation which immediately after such acquisition would become a Subsidiary,
unless immediately after giving effect to such acquisition:
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(1) the Company shall not be in default in the fulfillment of any of
the terms, covenants, provisions or conditions of the Notes; and
(2) the Company could incur at least $1 of additional Indebtedness
secured or evidenced by Liens in compliance with the provisions of Section
4.02E.
Section 4.10. Restrictions on Investments. The Company will not and will not
permit any Subsidiary to, make any Restricted Investment if, after giving effect
thereto, the Aggregate Amount of all Restricted Investments of the Company and
its Subsidiaries exceeds 30% of Consolidated Net Worth as of the end of the
Company's then most recently completed fiscal year, provided, however, that the
Aggregate Amount of all Restricted Investments of the Company and its
Subsidiaries in businesses not related to the food industry shall not exceed 5%
of Consolidated Net Worth as of the end of the Company's then most recently
completed fiscal year.
Section 4.11. Acquisition of Notes; No Reissuance. The Company will not, and
will not permit any Subsidiary or Affiliate to directly or indirectly, prepay,
redeem, retire, purchase or otherwise acquire any Note, except pursuant to (a)
Section 2.01, (b) Section 2.02, (c) Section 2.03 or (d) an offer to all holders
of the Notes to prepay, redeem, retire, purchase or otherwise acquire the Notes,
pro rata, from all such holders at the same time and on the same terms and
conditions. Any Note prepaid in full pursuant to Sections 2.01, 2.02, 2.03 or
clause (d) of this Section, shall be surrendered to the Company for cancellation
and shall not be reissued and no Note shall be issued in lieu of any principal
amount of any Note so prepaid.
SECTION 5. CONSENTS, WAIVERS AND AMENDMENTS.
Any term, covenant, agreement or condition of the Notes may, with the
consent of the Company, be amended or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by one or more written instruments signed by the holder or
holders of not
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less than a majority in aggregate principal amount of the Notes at the time
outstanding; provided, however, that
A. no such amendment or waiver shall, without the consent of the
holders of all outstanding Notes,
(1) change the maturity of the principal of, or any installment
of interest on, any of the Notes, or reduce the principal amount
thereof or the interest or premium thereon, or subordinate or
otherwise modify the terms of, or rights to, payment of the principal
thereof or interest or premium thereon including, without limitation,
extend the time for any such payment or modify any of the provisions
of Section 2, or
(2) give to any Note any preference over any other Note, or
(3) reduce the percentage of holders of Notes required to approve
any such amendment or effectuate any such waiver; and
B. no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
Any amendment or waiver pursuant to this Section 5 shall apply equally to
all the holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon the Company, whether or not a notation of such
amendment or waiver shall have been made on such Notes. In the case of an
amendment or waiver of the character described in Section 5A, the holder of this
Note agrees to make a notation on this Note to indicate that such amendment or
waiver has been effected. In the case of any other amendment or waiver, no
notation need be made on the Notes at the time outstanding, but any Note
executed and delivered thereafter may, at the option of the Company, bear a
notation referring to any such amendment or waiver then in effect. For purposes
of determining whether the holders of
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outstanding Notes of the requisite aggregate principal amount at any time have
agreed or consented to any amendment or waiver pursuant to the provisions of
this Section 5, any Notes owned by the Company, any Subsidiary or any Affiliate
shall be disregarded and deemed not to be outstanding.
So long as there are any Notes outstanding, the Company will not solicit,
request or negotiate for or with respect to any proposed waiver or amendment of
any of the provisions of the Notes unless each holder of Notes (irrespective of
the amount of Notes then owned by it) shall be informed thereof by the Company
and shall be afforded the opportunity of considering the same and shall be
supplied by the Company with sufficient information to enable it to make an
informed decision with respect thereto. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any holder of Notes as
consideration for or as an inducement to entering into by any holder of Notes of
any waiver or amendment of any of the terms and provisions of this Agreement or
the Notes unless such remuneration is concurrently offered, on the same terms,
ratably to the holders of all Notes then outstanding.
SECTION 6. DEFINITIONS.
For all purposes of this Note, except as otherwise expressly provided or
unless the context otherwise requires:
"Acceleration Calculation Date" has the meaning specified in Section 7.01
hereof.
"Affiliate" means any Person (other than the Company or any Subsidiary)
which, directly or indirectly, (A) controls or is controlled by or is under
common control with the Company or any Subsidiary, or (B) beneficially owns or
holds or has the power to direct the voting power of 5% or more of any class of
voting stock of the Company or any Subsidiary or (C) has 5% or more of its
voting stock (or in the case of a Person which is not a corporation, 5% or more
of its equity interest) beneficially owned or held, directly or indirectly, by
the Company or any
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Subsidiary or (D) is a director or officer of the Company or any Subsidiary.
For purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Amount," when used with respect to any Investment of any Person
as of the date of determination thereof, means an amount (which may be a
positive or negative figure, as the case may be) equal to (i) the greater of the
amount carried on the books of such Person as at such date with respect to such
Investment and the cost of such Investment to such Person, minus (ii) the net
proceeds (after the deduction of income taxes applicable thereto) realized from
the sale or liquidation of such Investment or any part thereof, or otherwise.
"Agreements" means the Loan Agreements, each dated as of February 26, 1997,
between the Company and each of the Lenders (as therein defined) entered into in
connection with the issuance of the Notes.
"Assumption Agreement" has the meaning specified in Section 6.7 of the
Agreements.
"Board of Directors" means either the board of directors of the Company
(or, when so specified or the context so indicates, a Subsidiary) or, if duly
authorized to exercise the power of the Board of Directors, any duly authorized
committee thereof.
"Business Day" has the meaning specified in Section 2.03 hereof.
"Capital Lease" means and includes at any time any lease of property, real
or personal, which in accordance with GAAP would at such time be required to be
capitalized on a balance sheet of the lessee.
"Capital Lease Obligation" means at any time the capitalized amount of the
rental commitment under a Capital Lease which in
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accordance with GAAP would at such time be required to be shown on a balance
sheet of the lessee.
"Change of Control" has the meaning specified in Section 2.03 hereof.
"Closing" and "Closing Date" have the respective meanings specified in
Section 1.2 of the Agreements.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computing Holder" has the meaning specified in Section 2.03 hereof.
"Consolidated Current Indebtedness," "Consolidated Funded Indebtedness,"
"Consolidated Net Income" and "Consolidated Net Worth," means the Current
Indebtedness, Funded Indebtedness, Net Income and Net Worth, as the case may be,
of the Company and its Subsidiaries, after eliminating intercompany items, all
as consolidated and determined in accordance with GAAP.
"Consolidated Net Earnings Available for Fixed Charges" means, for the
period of determination, Consolidated Net Income of the Company and its
Subsidiaries, plus cash dividends received from Unconsolidated Subsidiaries,
plus income taxes, plus extraordinary items of expense or minus extraordinary
items of income which are included in the determination of Net Income, plus any
loss from discontinued operations or minus any gain from discontinued operations
which is included in the determination of Net Income, plus any charge or minus
any credit which results from the cumulative effect of a change in accounting
principle which is included in the determination of Net Income, plus all Fixed
Charges. Prior to January 1, 1999, in any determination of "Consolidated Net
Earnings Available for Fixed Charges" there shall be an addition for any loss
(and a deduction for any gain) on "disposal of a product line" (or
"restructuring charges" relating to such disposal) which are included in
determination of Net Income. For purposes hereof, the terms "disposal of a
product line" and "restructuring charges" shall have such meanings as are viewed
as acceptable to the Securities and
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Exchange Commission when such terms are used for financial reporting.
"Current Indebtedness" means all Indebtedness other than Funded
Indebtedness.
"Designated Event" has the meaning specified in Section 2.03 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Company or is under common control (within the meaning of Section 414(e) of the
Code) with the Company.
"Events of Default" has the meaning specified in Section 7.01 hereof.
"Event Risk Occurrence" has the meaning specified in Section 2.03 hereof.
"Event Risk Occurrence Prepayment Date" has the meaning specified in
Section 2.03 hereof.
"Fixed Charges" means, for any period of calculation, the sum of (i) all
interest on Indebtedness incurred by the Company and its Subsidiaries, including
interest payments partially or entirely contingent on earnings and the portion
of rents payable under Capital Leases allocable to interest, and (ii) all debt
discount or premium amortized or required to be amortized during such period by
the Company or any of its Subsidiaries.
"Funded Indebtedness" means, without duplication, all Indebtedness which
would, in accordance with GAAP, constitute long-term debt, including (i) all
Indebtedness which by its terms matures more than one year from the date as of
which any determination of Funded Indebtedness is made, (ii) any
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Indebtedness maturing within one year from such date which is renewable at the
option of the obligor beyond one year from such date, including any Indebtedness
renewable or extendible (whether or not theretofore renewed or extended) under,
or payable from the proceeds of other Indebtedness which may be incurred
pursuant to the provisions of, any revolving credit agreement or other similar
agreement and (iii) Capital Lease Obligations in excess of one year.
"GAAP" means generally accepted accounting principles at the time in the
United States.
"Indebtedness" means and includes, without duplication, (i) all
indebtedness or obligations for money borrowed (and any notes payable and drafts
accepted representing extensions of credit, whether or not representing
indebtedness or obligations for money borrowed), (ii) indebtedness or
obligations owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (iii) indebtedness or obligations secured or evidenced by any Lien
existing on property owned by the corporation whose Indebtedness is being
determined, whether or not the indebtedness or obligations secured or evidenced
thereby shall have been assumed, (iv) Capital Lease Obligations, (v) guarantees
and endorsements of (other than endorsements for purposes of collection in the
ordinary course of business), and obligations to purchase goods or services for
the purpose of supplying funds for the purchase or payment of, or measured by,
indebtedness, liabilities or obligations of others (whether or not representing
money borrowed) and other contingent obligations in respect of, or to purchase
or otherwise acquire or service, indebtedness, liabilities or obligations of
others (whether or not representing money borrowed) and (vi) all indebtedness,
liabilities or obligations (whether or not representing money borrowed) in
effect guaranteed by an agreement, contingent or otherwise, to make a loan,
advance or capital contribution to or other investment in the debtor for the
purpose of assuring or maintaining a minimum equity, asset base,
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working capital or other balance sheet condition for any date, or to provide
funds for the payment of any liability, dividend or stock liquidation payment,
or otherwise to supply funds to or in any manner invest in the debtor for such
purpose. The guarantees, endorsements, obligations and agreements referred to
in clauses (v) and (vi) of the preceding sentence shall constitute (a) Current
Indebtedness to the extent the indebtedness, liabilities or obligations of
another Person to which they relate are Current Indebtedness of such other
Person and (b) Funded Indebtedness to the extent such related indebtedness,
liabilities or obligations of such other Person are Funded Indebtedness of such
other Person.
"Institutional Holder" means any insurance company, bank, savings and loan
association, trust company, investment company, charitable foundation, employee
benefit plan (as defined in ERISA) or other institutional investor or financial
institution which, in any case is, at the time of determination, the holder of a
Note.
"Investment" of any Person means any investment made by such Person in any
other Person by acquisition of stock or indebtedness, loan, advance, transfer or
purchase of property, capital contribution or otherwise (other than a direct or
indirect guarantee of such other Person's indebtedness or any agreement to pay,
purchase or service such other Person's indebtedness).
"Lenders" has the meaning specified in Section 1.1 of the Agreements.
"Lien" means any mortgage, lien, pledge, security interest, encumbrance or
charge of any kind, any conditional sale or other title retention agreement or
any Capital Lease.
"Memorandum" means the Private Placement Memorandum dated January 1997 and
relating to the Notes which was prepared by Prudential Securities Incorporated.
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"Michael Family" has the meaning specified in Section 2.03 hereof.
"NSU" has the meaning specified in Section 2.15 of the Agreements.
"Net Income" means, with respect to any Person for any period, the net
income (or the net deficit, if expenses and charges exceed revenues and other
proper income credits) of such Person for such period determined in accordance
with GAAP as in effect from time to time, provided, however, that the Net Income
of the Company or any Subsidiary shall not include (i) extraordinary items, (ii)
any equity interest of the Company on unremitted earnings of any Unconsolidated
Subsidiary, and (iii) the Net Income of any Subsidiary prior to the date it
becomes a Subsidiary.
"Net Worth" means, with respect to any Person as of the date of
determination, the sum of redeemable preferred stock and common stockholders'
equity accounts of such Person as of such date, as determined in accordance with
GAAP.
"Optional Prepayment Date" has the meaning specified in Section 2.02
hereof.
"Overdue Interest Rate" means the greater (determined on a daily basis) of
8.58% per annum or the rate per annum which The Chase Manhattan Bank (or its
successor) announces publicly from time to time as its corporate base rate of
interest.
"PBGC" has the meaning specified in Section 2.13 of the Agreements.
"Papetti Companies" means Papetti's Hygrade Egg Products, Inc., Papetti
Foods, Inc., Quaker State Farms, Inc., Papetti's of Iowa Food Products, Inc.,
Monark Egg Corporation, Casa Trucking Limited Partnership, Egg Specialties,
Inc., Papetti Transport Leasing Limited Partnership and Papetti Equipment
Leasing Limited Partnership.
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"Papetti Family" has the meaning specified in Section 2.03 hereof.
"Pending Reorganization" means the several transactions among the Company
and North Star Universal, Inc., a Minnesota corporation, and its affiliates, all
substantially as described in the Memorandum.
"Person" includes an individual, a corporation, a partnership, a joint
venture, a trust, an unincorporated organization or a government or any agency
or political subdivision thereof.
"Plan" has the meaning specified in Section 2.13 of the Agreements.
"Prepayment Price" has the meaning set forth in Section 2.03 hereof.
"Priority Indebtedness" means the sum (without duplication) of the amounts
described in the following clauses (i), (ii) and (iii) and outstanding at the
time of computation: (i) the aggregate principal amount of all Indebtedness of
the Company and its Subsidiaries secured or evidenced by Liens permitted by
Section 4.02E outstanding at such time, (ii) the aggregate principal amount of
unsecured Indebtedness of all Subsidiaries, other than Indebtedness owned by the
Company or a Subsidiary, and (iii) the Aggregate Amount of all outstanding
capital stock of any Subsidiary acquired pursuant to Section 4.09C not owned by
the Company or any Subsidiary having preference as to dividends or upon
liquidation, and all rights, options and warrants to acquire any such preference
stock.
"Restricted Investment" means any Investment by the Company or any
Subsidiary in any other Person other than:
(i) marketable obligations issued or guaranteed by the United States
of America or by any agency of the United States of America, and maturing
not later than twelve months from the date of acquisition thereof,
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(ii) commercial paper which has the highest credit rating by Standard
& Poor's Rating Group, a division of McGraw-Hill, Inc. or Moody's Investors
Service, Inc., and maturing not later than 270 days from the date of
acquisition thereof,
(iii) negotiable certificates of deposit or bankers' acceptances which
have at least an A rating by Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc. or Moody's Investors Service, Inc., are issued by or
drawn on a United States commercial bank or trust company which has capital
and surplus of at least $150,000,000, and which mature not later than
twelve months from the date of acquisition thereof,
(iv) any Investment in any Subsidiary or in any corporation which by
reason thereof will become a Subsidiary, and
(v) variable rate demand municipal securities rated AAA by Standard &
Poor's Rating Group, a division of McGraw-Hill, Inc. or Aaa by Moody's
Investors Service, Inc., provided however, that such securities must be
redeemable at par upon 30 days or less notice.
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
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"Subordinated Debt" means any Indebtedness that is in any manner
subordinated in right of payment or security in respect to the Indebtedness
evidenced by the Notes.
"Total Capitalization" means, as of any particular time, the sum of (i)
Consolidated Net Worth and (ii) Consolidated Funded Indebtedness.
"Unconsolidated Subsidiary" means any corporation less than a majority of
whose outstanding stock having ordinary voting power for the election of the
members of the board of directors (or other governing body) of such corporation
(other than stock having such power only by reason of the happening of a
contingency) shall at the time be owned by the Company and/or one or more
Subsidiaries of the Company.
"Weighted Average Life to Final Maturity" has the meaning specified in
Section 2.03 hereof.
"Wholly-owned" when used in connection with any Subsidiary means a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) shall be owned by the Company
and/or one or more of its Wholly-owned Subsidiaries.
"Yield Maintenance Price" has the meaning set forth in Section 7.01 hereof.
All accounting terms used herein and not expressly defined in this Note
shall have the meanings respectively given to them in accordance with GAAP as
they exist at the date of applicability thereof.
SECTION 7. DEFAULTS AND REMEDIES.
Section 7.0l. Events of Default. If one or more of the following events
(herein called "Events of Default") shall happen for any reason whatsoever and
whether such happening shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any
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judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body and be continuing:
A. Default shall be made in the payment of principal of (or premium,
if any, on) any Note when and as the same shall become due and payable,
whether at maturity or at a date fixed for prepayment (including, without
limitation, a prepayment as provided in Section 2.01, 2.02 or 2.03), or by
acceleration or otherwise; or
B. Default shall be made in the payment of any interest on any Note
when such interest becomes due and payable and such default shall continue
for more than 5 days; or
C. Default shall be made in the due observance or performance of any
covenant, condition or agreement contained in Sections 4.01 to Section 4.11
and such default shall continue for more than 10 days; or
D. Default shall be made in the due observance or performance of any
other covenant, condition or agreement contained in this Note or in the
Agreement, and such default shall continue for 30 days after the earlier of
(1) written notice thereof, specifying such default and requesting that the
same be remedied, shall have been given to the Company by the holder of any
Note, and (2) a responsible officer of the Company's obtaining knowledge of
the occurrence of such default; or
E. The Company or any Subsidiary shall be adjudicated a bankrupt or
insolvent, or shall consent to the appointment of a receiver, trustee,
custodian or liquidator of itself or of any part of its property, or shall
admit in writing its inability, or shall fail, to pay its debts generally
as they come due, or shall make a general assignment for the benefit of
creditors, or shall file a voluntary petition in reorganization or
arrangement in a proceeding under any bankruptcy law (as now or hereafter
in effect) or an answer
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admitting the material allegations of a petition filed against the Company
or any Subsidiary in any such proceeding, or shall, by voluntary petition,
answer or consent, seek relief under the provisions of any other now
existing or future bankruptcy or other similar law providing for the
reorganization or winding up of corporations, or the Company or any
Subsidiary or its directors or majority stockholders shall take action
looking to the dissolution or liquidation of the Company or such Subsidiary
(other than as contemplated by Section 4.09); or
F. An order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Company or
any Subsidiary, a receiver, trustee, custodian or liquidator of the Company
or such Subsidiary or of any part of its property, and such receiver,
trustee, custodian or liquidator shall not have been removed or discharged
within 30 days thereafter, or any part of the property of the Company or
any Subsidiary shall, in any judicial proceeding, be sequestered and shall
not be returned to the possession of the Company or such Subsidiary within
30 days thereafter; or
G. A petition against the Company or any Subsidiary in a proceeding
under any bankruptcy law (as now or hereafter in effect) shall be filed and
shall not be dismissed within 30 days after such filing, or, in case the
approval of such petition by a court of competent jurisdiction is required,
shall be filed and approved by such a court as properly filed and such
approval shall not be withdrawn or the proceeding dismissed within 30 days
thereafter, or if, under the provisions of any other similar law providing
for reorganization or winding up of corporations and which may apply to the
Company or any Subsidiary, any court of competent jurisdiction shall assume
jurisdiction, custody or control of the Company or such Subsidiary or of
any part of its property and such jurisdiction, custody or control shall
not be relinquished or terminated within 30 days thereafter; or
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H. The Company or any Subsidiary shall default in the payment of
principal or interest on any evidence of Indebtedness for money borrowed
in excess of $2,500,000 or shall default in the performance or observance
of any other term, condition or agreement contained in any such evidence
of Indebtedness (other than the Notes) or in any agreement relating
thereto, the effect of which is to cause or permit any holder of such
Indebtedness or a trustee to cause the same to become or be declared due
prior to its stated maturity; or
I. Final judgment for the payment of money in excess of $250,000
shall be rendered against the Company or any Subsidiary and the same
shall remain undischarged for a period of 30 days during which execution
shall not be effectively stayed; or
J. An event or condition specified in Section 5.1(g) of the
Agreements shall occur or exist with respect to any Plan or Multiemployer
Plan, as defined therein, and, as a result of such event or condition,
together with all other such events or conditions, the Company or any of
its ERISA Affiliates shall incur or shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan, the Internal Revenue Service
or the Pension Benefit Guaranty Corporation (or any combination of the
foregoing) that is material in relation to the financial condition of the
Company and its Subsidiaries, taken as a whole; or
K. Any representation or warranty made by the Company in the
Agreement or in any writing furnished in connection with the transactions
contemplated hereby shall prove to have been false or incorrect in a
material respect as of the date made;
then (i) upon the occurrence of any event of default described in items e, f or
g of this section (each a "bankruptcy default"), all of the notes shall
automatically become immediately due and payable, (ii) upon the occurrence of
any event of default described in items a or b of this section, the holder of
this
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Note may at any time during its continuance, by written notice to the
company, declare this note to be due and payable, whereupon this note shall
forthwith mature and become due and payable or (iii) upon the occurrence of any
event of default other than a bankruptcy default, the holder or holders of at
least 66-2/3% in principal amount of the notes then outstanding (exclusive of
any notes held by the company, any subsidiary or any affiliate) may at any time
during its continuance, by written notice to the company, declare all of the
notes to be due and payable, whereupon in each case all of the notes shall
forthwith mature and become due and payable.
The amount payable upon the occurrence of a Bankruptcy Default shall be the
entire unpaid principal amount of the Notes, together with interest accrued
thereon to the date of the occurrence of such Bankruptcy Default, and such
amount shall be payable without presentment, demand, protest or other
requirement of any kind, all of which are expressly waived by the Company. The
amount payable upon an acceleration based on any other Event of Default shall
be, to the extent permitted by law, the Yield Maintenance Price, as defined
below, of the Notes so accelerated, together with interest accrued on the
unpaid principal amount of the Notes so accelerated to the date of
acceleration, and such amount shall be payable without presentment, demand,
protest or further notice, all of which are expressly waived by the Company.
On the Acceleration Calculation Date, as defined below, the Computing
Holder shall give written notice to the Company and all other holders of the
amount of the Yield Maintenance Price of the Notes so accelerated, which notice
shall set forth in reasonable detail the computation thereof.
For purposes of this Section 7.01, the following terms shall have the
following definitions.
"Acceleration Calculation Date" means the date on which the Yield
Maintenance Price of the Notes accelerated pursuant to this Section is
determined. The Acceleration Calculation Date shall be the date of the notice
given by the requisite holders of Notes
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to the Company declaring all of the Notes due and payable pursuant to this
Section.
"Yield Maintenance Price" means the higher of (1) the entire unpaid
principal amount of the Notes so accelerated, or (2) the sum of the respective
Payment Values of each prospective interest payment, prospective mandatory
prepayment and the principal payment at maturity in respect of such Notes (the
amount of each such payment being herein referred to as a "Payment"). The
Payment Value of each Payment shall be determined by discounting such Payment at
the Reinvestment Rate, for the period from the scheduled date of such Payment to
the applicable date of acceleration. The "Reinvestment Rate" is the yield (as
reported on the Telerate Access Service (Page 500-offer side) or such other
display as may replace Page 500) which shall be imputed from the yields of those
actively traded United States Treasury securities having maturities as close as
practicable to the Weighted Average Life to Final Maturity of the Notes so
accelerated. The yields of such United States Treasury securities shall be
determined as of 10 A.M. Eastern Time on the Acceleration Calculation Date.
The terms "Computing Holder," "Payment Values," "Payment" and "Weighted
Average Life to Final Maturity" shall have the meanings set forth in Section
2.03 hereof.
Section 7.02. Suits for Enforcement. In case an Event of Default shall occur
and be continuing, the holder of this Note may proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant contained in this Note or
in aid of the exercise of any power granted in this Note, or may proceed to
enforce the payment of this Note or to enforce any other legal or equitable
right of the holder of this Note. The Company agrees that its obligations under
Section 2.03 of the Note are of the essence of such Note, and upon application
to any court of equity having jurisdiction in the premises, the holder of the
Notes shall be entitled to a decree against the Company requiring specific
performance of such obligations. If any holder of a Note shall demand payment
thereof or take any other
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action in respect of an Event of Default, the Company will forthwith give
written notice, as provided in Section 8.02, to the other holders of Notes
specifying such action and the nature and status of the Event of Default.
Section 7.03. Remedies Not Exclusive, Etc. No remedy herein or in the
Agreement conferred upon or reserved to any holder of any of the Notes is
intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given under the Agreement or the Notes or now or hereafter existing at
law or in equity. No delay in exercising or omission to exercise any right or
power accruing upon any default, omission or failure of performance hereunder or
under the Agreement shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle any holder
of any of the Notes to exercise any remedy reserved to it in the Notes or in the
Agreement, it shall not be necessary to give any notice to any person. In the
event any provision contained in the Notes should be breached by the Company and
thereafter duly waived by the holders from time to time of the Notes in
compliance with Section 5, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder. No
waiver, amendment, release, termination or modification of the Notes shall be
established by conduct, custom or course of dealing but solely by an instrument
in writing in compliance with Section 5.
SECTION 8. MISCELLANEOUS.
Section 8.01. Costs and Expenses. Without limiting the provisions of Section
6.1 of the Agreements, if any Event of Default shall occur, the Company shall
pay to each holder of the Notes, to the extent permitted under applicable law,
all reasonable out-of-pocket expenses incurred by such holder in connection with
such Event of Default and such further amount as shall be sufficient to cover
the cost and expense of enforcement and collection, including reasonable
compensation to the
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attorneys and counsel of such holder for any services rendered in that
connection, upon the Notes, held by such holder.
Section 8.02. Notices. All notices to be given to any holder of this Note
shall be given by overnight air courier, or by facsimile communication confirmed
by overnight air courier to such holder at its address designated on the date of
such notice on the register or other record maintained by the Company.
Section 8.03. Covenants Bind Successors and Assigns. All covenants and
agreements in this Note by the Company shall bind its successors and assigns,
whether so expressed or not.
Section 8.04. Governing Law. This Note shall be construed in accordance with
and governed by the laws of the State of Minnesota.
Section 8.05. Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
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IN WITNESS WHEREOF, MICHAEL FOODS, INC. has caused this Note to be signed
in its corporate name by one of its officers thereunto duly authorized, and to
be dated as of the day and year first above written.
MICHAEL FOODS, INC.
By
Its
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MICHAEL FOODS, INC.
LIENS SECURING INDEBTEDNESS FOR MONEY BORROWED
OF THE COMPANY AND ITS SUBSIDIARIES
AS AT JANUARY 31, 1997 AND OF
THE PAPETTI COMPANIES ON THE DATE
OF THEIR ACQUISITION
A. Liens Securing Indebtedness for borrowed money of the Company and its
Subsidiaries as at January 31, 1997.
NATURE AMOUNT OF
OF INDEBTEDNESS
OBLIGOR OBLIGEE SECURITY SECURED
Kohler Mix City of White Bear Utility $ 14,220
Specialties, Inc. Lake Assessments
Northern Star Ryder Tractor/Trailers $ 67,149
Company
M. G. Waldbaum Company Erwin and Delores Real estate $ 54,164
Siebrandt
M. G. Waldbaum Company Bloomfield Community Real estate $ 211,362
Development
EXHIBIT B
(to Loan Agreement)
140
B. Liens Securing Indebtedness for borrowed money of the Papetti Companies to
be outstanding on the date of their acquisition.
NATURE AMOUNT OF
OF INDEBTEDNESS
OBLIGOR OBLIGEE SECURITY SECURED
Papetti's Hygrade GE Capital Fleet Tractor/Trailers $600,000
Egg Products, Inc. Services
Papetti's of Iowa City of Lenox, Jobs Training $350,000
Food Products, Inc. Iowa Agreement
CASA Trucking First Union Tractor/Trailers $677,000
Limited Partnership Commercial
(to be assumed by Corporation
Papetti's
Acquisition, Inc.)
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141
COMPANY SUBSIDIARIES AND CERTAIN PAPETTI COMPANIES
A. Subsidiaries
SUBSIDIARY NAME JURISDICTION CAPITALIZATION
Common stock ($0.01 PV) -
Crystal Farms Refrigerated 1,000 shares authorized,
Distribution Company Minnesota issued and outstanding
M. G. Waldbaum Company Nebraska Voting preferred stock
($0.10 PV) - 585,800
shares authorized, 468,640
shares issued and
outstanding;
Non-voting preferred stock
($0.10 PV) - 1,180, 866
shares authorized,
1,001,102 shares issued
and outstanding;
Voting common stock ($0.10
PV) - 12,000 shares
authorized, issued and
outstanding;
Non-voting common stock
($0.10 PV) - 1,000 shares
authorized, no shares
issued and outstanding
Including: Minnesota Common stock ($0.01 PV) -
Papetti's 1,000 shares authorized,
Acquisition, Inc. issued and outstanding
Casa Trucking, Inc. Minnesota Common stock ($0.01 PV)
1,000 shares authorized,
issued and outstanding
Farm Fresh Foods, Inc. California Common stock (No PV) -
2,500 shares authorized,
EXHIBIT C
(to Loan Agreement)
142
1,000 shares issued and
outstanding
Drallos Potato Co., Inc. Michigan Common stock ($1.00 PV) -
50,000 shares authorized,
issued and outstanding
Kohler Mix Specialties, Inc. Minnesota Common stock (No PV) -
2,500 shares authorized,
1,000 shares issued and
outstanding
Including Minnesota Common stock (No PV) -
Midwest Mix, Inc. 2,500 shares authorized,
1,000 shares issued and
outstanding
Northern Star Co. Minnesota Preferred stock ($100.00
PV) - 100,000 shares
authorized, no shares
issued and outstanding;
Common stock ($0.01 PV) -
25,000,000 shares
authorized, 200,000 shares
issued and outstanding
Including:
Minnesota Products, Minnesota Common stock ($1.00 PV) -
Inc. 25,000 shares authorized,
10,000 shares issued and
outstanding
B.C.K. Co. Minnesota Common stock ($25.00 PV) -
1,000 shares authorized,
300 shares issued and
outstanding
WFC, Inc. Wisconsin Common stock ($0.01 PV) -
10,000 shares authorized,
issued and outstanding
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143
Including: Wisconsin Common stock ($1,000 PV) -
Wisco Farm 200 shares authorized,
Cooperative issued and outstanding
MIKLFS Corporation Virgin Islands Common stock ($1.00 PV) -
1,000 shares authorized,
issued and outstanding
B. Papetti Companies which are organized as corporations.
NAME JURISDICTION
Papetti's Hygrade Egg Products, Inc. New Jersey
Quaker State Farms, Inc. Pennsylvania
Papetti's of Iowa Food Products, Inc. Iowa
Monark Egg Corporation Missouri
Egg Specialities, Inc. Pennsylvania
Papetti Foods, Inc. New Jersey
C. Papetti Companies which are organized as limited Partnerships.
NAME
CASA Trucking Limited Partnership
Papetti Transport Leasing Limited Partnership
Papetti Equipment Leasing Limited Partnership
Papetti's Hygrade Egg Products, Inc. will be merged into Michael Foods,
Inc. upon the acquisition of the Papetti Companies. Each of the other Papetti
Companies set forth in Section B above will be merged into Papetti's
Acquisition, Inc.,
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144
a wholly-owned subsidiary of M. G. Waldbaum Company upon the acquisition of the
Papetti Companies. Substantially all of the assets of each of the Papetti
Companies set forth in Section C above will be acquired by Papetti's
Acquisition, Inc. upon the acquisition of the Papetti Companies. Following the
acquisition of the Papetti Companies, Papetti's Acquisition, Inc. will change
its name to "Papetti's Hygrade Egg Products, Inc."
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LITIGATION
1. Michael Foods, Inc. and North Carolina State University vs. Papetti's
Hygrade Egg Products, Inc., U.S. District Court for the District of New Jersey,
File No. 89-4645. This action arises out of the alleged breach by the Defendant
of certain patents owned by North Carolina State University and licensed to the
Company. The Company obtained summary judgment affirming the validity of one of
the patents and finding the defendant to have infringed the patent. This
judgment was affirmed on appeal to the Federal Circuit Court of Appeals.
Discovery on the question of damages has been suspended pending a reexamination
of the patent in the Patent Office. As a condition precedent to the acquisition
of the Papetti Companies (including the Defendant herein), this litigation will
be dismissed.
2. NuLaid Foods, Inc. vs. Michael Foods, Inc. and North Carolina State
University, U.S. District Court for the Eastern District of California, Civil
Action No. CIV-S-93-1319 WBS JFM. This is an action commenced by NuLaid Foods,
Inc. seeking a declaratory judgment that the patents which are the subject of
the patent litigation described in No. 1 above are invalid. The Company and
North Carolina State University have counterclaimed for infringement of the
patent by the Plaintiff. Further proceedings in this litigation have been
stayed pending a reexamination of the patent in the Patent Office.
3. Schwan's Sales Enterprises, Inc. vs. Kohler Mix Specialties, Inc., et.
al., Lyon County District Court, 5th Judicial District, File No. C6-95-357. In
May, 1995 an action was commenced against the Company's subsidiary, Kohler Mix
Specialties, Inc. ("Kohler Mix") and certain other parties by Schwan's Sales
Enterprises, Inc. ("Schwan's") seeking recovery of damages arising out of
alleged salmonella contamination of Schwan's ice cream that had been distributed
to the public in the summer and fall of 1994. Following an investigation by
Schwan's and various government agencies, it was determined that Schwan's ice
cream product evidenced the presence of salmonella bacteria.
EXHIBIT D
(to Loan Agreement)
146
Schwan's operations were interrupted for a period of time and Schwan's has made
settlements with customers who claimed injury from consuming Schwan's ice cream.
Kohler Mix and others supplied ice cream mix to Schwan's in tanker trucks
operated by the same transporter during the time in question. The complaint
seeks to recover all or a portion of the loss sustained by Schwan's as a result
of the incident. Discovery is on-going. A mediation conference is scheduled
for April, 1997. The Company's and Kohler Mix's products liability carrier,
Liberty Mutual Insurance Company has undertaken defense of the litigation
without waiving coverage defenses. Underlying insurance and excess insurance
provides $55,000,000 in coverage.
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147
NOVATION AND ASSUMPTION AGREEMENT
THIS NOVATION AND ASSUMPTION AGREEMENT ("Agreement") made this 26th day of
February, 1997 by and between MICHAEL FOODS, INC., a Delaware corporation, whose
name will be changed to "Michael Foods of Delaware, Inc." upon the occurrence of
the Michael Reorganization ("Old Michael"), North Star Universal, Inc. a
Minnesota corporation, whose name will be changed to "Michael Foods, Inc." upon
the occurrence of the Michael Reorganization ("New Michael") and
_________________________ ("Holder").
WITNESSETH:
WHEREAS, pursuant to a certain Loan Agreement between Old Michael and
Holder dated as of February 26, 1997 (as said Loan Agreement may have been
amended from time to time, the "Loan Agreement"), Old Michael did issue to
Holder ____________ Dollars ($_____________) in aggregate principal amount of
Old Michael's 7.58% Senior Notes due February 26, 2009 (the "Notes"), all of
which are outstanding as of the date hereof; and
WHEREAS, pursuant to a certain Agreement and Plan of Reorganization between
Old Michael, New Michael and NSU Merger Co., a Delaware corporation and a
wholly-owned subsidiary of New Michael ("Merger Sub") dated December 21, 1995
(as said Agreement and Plan of Reorganization may have been amended from time to
time, the "Reorganization Agreement"), the parties thereto have agreed to enter
into a tax-free reorganization under the terms of which (i) Merger Sub will
merge with and into Old Michael, (ii) Old Michael will become a wholly-owned
subsidiary of New Michael, (iii) Old Michael will change its name to "Michael
Foods of Delaware, Inc.", and (iv) New Michael will change its name to "Michael
Foods, Inc." (hereinafter referred to as the "Michael Reorganization"); and
WHEREAS, the parties hereto have agreed that subject to the terms and
conditions hereinafter set forth, immediately upon the occurrence of the Michael
Reorganization in accordance with the
EXHIBIT E
(to Loan Agreement)
148
provisions of the Reorganization Agreement, New Michael will be substituted for,
and will assume all obligations of Old Michael under the Loan Agreement, Notes
and related documents and New Michael will be entitled to all of the benefits
thereof.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby agree as follows:
1. Recitals. The aforesaid recitals are hereby made a part of this
Agreement.
2. Definitions. Capitalized terms in this Agreement not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement and the
Reorganization Agreement.
3. Novation and Assumption. As of the Effective Time on the Effective Date
of the Michael Reorganization, (a) New Michael shall without further act or deed
of the parties hereto, be entitled to all of the benefits and rights of Old
Michael under the Loan Agreement, Notes and all documents executed and delivered
by Old Michael pursuant thereto (collectively, the "Loan Documents"), (b) New
Michael shall, and it hereby does without further act or deed of the parties
hereto unconditionally and expressly, (i) assume all liabilities and obligations
of Old Michael under the Loan Documents and (ii) agree to perform all
liabilities and obligations of Old Michael under said Loan Documents, as if said
Loan Documents were originally executed and delivered by New Michael, and (c)
all references in the Loan Documents to the "Company" shall refer to New Michael
except for references to the Company relating to its status prior to the
consummation of the Michael Reorganization.
4. Release of Old Michael. As of the Effective Time on the Effective Date
of the Michael Reorganization, Holder shall, and it hereby does without further
act or deed of the parties hereto other than the satisfaction of the conditions
precedent set forth in Section 6.7 of the Loan Agreement and the receipt from
New Michael of a certificate, dated as of the Effective Date, of the President
or any Vice President of New Michael
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149
stating that the Michael Reorganization has been effected and that the
representations and warranties set forth in paragraph 5(b) hereof are true and
correct on and with respect to such Effective Date, release Old Michael from all
liabilities and obligations under the Loan Documents.
5. Representations and Warranties. As of the Effective Time on the
Effective Date of the Michael Reorganization, New Michael shall, and it hereby
does without any further act or deed of the parties hereto, (a) accept and
assume all obligations and liabilities of Old Michael related to each
representation or warranty made by Old Michael in the Loan Agreement or any
other document, instrument or agreement executed and delivered or furnished in
connection therewith, and (b) further represent, warrant and affirm for the
benefit of the Holder that:
(i) Organization, Authority and Good Standing. New Michael is a duly
organized and validly existing corporation in good standing under the laws
of its jurisdiction of incorporation and has full power and authority to
own the properties and assets and to carry on the business which it now
owns and carries on. New Michael is duly qualified and in good standing as
a foreign corporation in each jurisdiction wherein the nature of the
property owned or leased by it or the nature of the business transacted by
it makes such qualification necessary, except where the failure to so
qualify would not have a material and adverse effect on the business,
operations, properties, prospects, assets or condition, financial or other,
of New Michael and its Subsidiaries taken as a whole.
(ii) Compliance with Other Instruments. Except as may have been
permanently waived in writing, neither New Michael nor any of its
Subsidiaries is in default in the performance, observance or fulfillment of
any of the material obligations, covenants or conditions contained in any
bond, debenture, note or other evidence of indebtedness of New Michael or
any such Subsidiary or contained in any instrument under or pursuant to
which any thereof has been issued or made and delivered the effect of which
would
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150
materially and adversely affect the business, operations, properties,
prospects, assets or condition, financial or other, of New Michael and its
Subsidiaries taken as a whole. Neither the execution and delivery of this
Agreement by New Michael, the consummation by New Michael of the
transactions herein contemplated nor compliance by New Michael with the
terms, conditions and provisions of the Loan Documents will violate any
provision of law or rule or regulation thereunder or any order, injunction
or decree of any court or other governmental body to which New Michael is a
party or by which New Michael is bound or conflict with or result in a
breach of any of the terms, conditions or provisions of the corporate
charter or by-laws of New Michael or of any agreement or instrument to
which New Michael is a party or by which New Michael is bound, or
constitute a default thereunder, or result in the creation or imposition of
any Lien of any nature whatsoever upon any of the properties or assets of
New Michael. No consent of the stockholders of New Michael is required for
the execution, delivery and performance of this Agreement by New Michael.
(iii) Foreign Asset Control Regulations. Neither this Agreement nor
any of the transactions contemplated hereby will result in a violation of
any of the foreign asset control regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any ruling
issued thereunder or any enabling legislation or Presidential Executive
Order in connection therewith.
(iv) Investment Company Act. New Michael is not an "investment
company," or a Person "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(v) Governmental Action. No action of, or filing with, any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with, the execution, delivery and (except
for such filings as may be required in connection with the
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Michael Reorganization) performance of this Agreement by New Michael.
(vi) Indebtedness. After giving effect to the Michael Reorganization,
New Michael and its Subsidiaries shall not be liable with respect to any
material amount of Indebtedness which was not outstanding with respect to
Old Michael, its Subsidiaries and the Papetti Companies at the Closing Date
under the Loan Agreement or disclosed in the Memorandum.
(vii) Events of Default. After giving effect to the Michael
Reorganization, no Event of Default or event which with the passage of time
or giving of notice, or both, would become an Event of Default, has
occurred and is continuing under the Loan Agreement and New Michael has the
capacity to incur at least $1 of additional Funded Indebtedness in
compliance with Section 4.01A of the Notes.
6. Further Assurances. At any time and from time to time, upon the request
of any holder of a Note and at the sole expense of New Michael, New Michael will
promptly execute and deliver any and all further instruments and documents and
will take such further action as such holder may reasonably deem necessary to
effect the purposes of this Agreement.
7. Continuing Effectiveness. Except only as provided in paragraphs 3 and 4
above, all of the terms, covenants and conditions of the Loan Documents shall
remain in full force and effect and are hereby ratified and confirmed.
8. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Agreement.
9. Termination of Agreement. Notwithstanding anything in this Agreement to
the contrary, in the event the Effective Time of the Effective Date of the
Michael Reorganization does not
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occur on or before 11:59 o'clock p.m., Minnesota time on May 31, 1997, this
Agreement shall, without further act or deed of the parties hereto, become null
and void and of no further force or effect.
10. Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of Old Michael, New Michael and Holder and their
respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
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153
"OLD MICHAEL"
MICHAEL FOODS, INC.
By: ___________________________
Its: _______________________
By: ___________________________
Its: _______________________
"NEW MICHAEL"
NORTH STAR UNIVERSAL, INC.
By: ___________________________
Its: ________________________
By: ___________________________
Its: ________________________
"HOLDER"
[VARIATION]
By: ___________________________
Its: ________________________
By: ___________________________
Its: ________________________
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ERISA AFFILIATES
Affiliates (other than employees):
Each of the Subsidiaries of Michael Foods, Inc. listed on Exhibit C to the
Loan Agreement;
The following directors of Michael Foods, Inc.:
Richard A. Coonrod
Miles E. Efron
Arvid C. Knudtson
Joseph D. Marshburn
James H. Michael
Jeffrey J. Michael
Maureen B. Bellantoni
Gregg A. Ostrander
Arthur J. Papetti - upon acquisition of Papetti
Companies
Stephen Papetti - upon acquisition of Papetti
Companies;
The following officers of Michael Foods, Inc. who are not also directors:
Jeffrey M. Shapiro
John D. Reedy
Mark D. Witmer
Employee Benefit Plans:
Michael Foods, Inc. Retirement Savings Plan;
Northern Star Company 401(K) Salary Reduction Plan;
Kohler Mix Specialties, Inc. Retirement Plan;
Michael Foods, Inc. Employee Health Benefit Plan (Health and Dental);
EXHIBIT F
(to Loan Agreement)
155
Michael Foods, Inc. Flexible Benefits Plan (Health Care Reimbursement
Plan and Dependent Care Assistance Plan);
Michael Foods, Inc. Long-Term Disability Plan;
Michael Foods, Inc. Health and Welfare Benefit Plan Survivor Benefits
(Life and Accidental Death and Dismemberment);
Michael Foods, Inc. Short Term Disability Plan
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