Exhibit 4a
EXECUTION COUNTERPART
CONSENT UNDER NOTE AGREEMENT
This Consent, entered into as of October 2, 1996, by and among SENECA
FOODS CORPORATION (the "Company"), THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
("Prudential") and XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY ("Xxxxxxx";
Prudential and Xxxxxxx, collectively , the "Purchasers").
PRELIMINARY STATEMENTS
The parties hereto have executed and delivered that certain
Note Agreement dated as of February 23, 1995 (the "Note Agreement");
Prudential and Xxxxxxx are the holders of 100% of the Notes
issued under the Note Agreement;
As described in the Company's memorandum, dated August 6,
1996, a copy of which is attached hereto (the "Inventory Sale Proposal"), the
Company wishes to enter into a purchase and sale transaction (the "Transaction")
with Al Rajhi Banking & Investment Corp. (the "Investor"), whereby the Investor
will purchase the Company's 1996 asparagus pack inventory (the "Inventory") with
an estimated value of not more than $23,000,000 as of such date.
As a part of the Transaction, the Company will act as the
agent for the Investor, such that the Company will, on behalf of and as agent
for the Investor, warehouse the purchased inventory and distribute it to and
invoice Pillsbury for the Inventory, as agreed between Pillsbury and the
Investor. The Investor will assume all risks and rewards of ownership of the
Inventory and will assume and fully insure against all risk of loss with respect
to all Inventory purchased. The Company will not be required to repurchase any
of the Inventory, guaranty sales prices or provide price supports for the
Inventory or agree to cover any revenue shortfalls of the Investor.
The Company believes that entering into the Transaction will
improve its cash flow and strengthen its balance sheet by reducing its
short-term debt.
The Company plans to convey five acres of land (with a fair
market value of $15,000) (the "Land") to the City of Xxxxxxxxxx, Minnesota (the
"City"). The City will construct a 228,000 square foot warehouse adjacent to the
Company's Montgomery, Minnesota processing plant (collectively with the Land,
the "Project"). The Project will be financed through the City's XXX xxxxx in an
amount not to exceed $7,200,000, with the City being the sole obligor on the
bonds.
The Company and the City will enter into an operating lease
agreement with a 10 year term for the use of the Project by the Company. The
Company will have a buyout option at the end of such 10 year term for a purchase
price equal to the Project's fair market value at such time.
Pillsbury will provide the Company with a mortgage release
relating to the Land. The Project will represent a sale/leaseback of the Land
and require a modification to the mortgage on the Xxxxxxxxxx property to
Pillsbury.
To effect the Transaction, the Company must obtain a release
from certain restrictions with respect to the Inventory contained in the
Alliance Agreement as well as the consent of the Purchasers under the terms of
the Note Agreement.
In connection with the Project, the Company requests a
one-time waiver of paragraphs 6C(6) and 6E of the Note Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Note Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Consents. Provided that the conditions set forth in
Section 2 below are met no later than October 2, 1996, each Purchaser hereby
consents to:
the Transaction and agrees to (i) the sale of the Inventory
for purposes of paragraph 6C(5) of the Note Agreement; and (ii) Pillsbury's
waiver of the terms of the Alliance Agreement to the extent necessary to permit
the sale of the Inventory substantially in accordance with the terms outlined in
the Inventory Sale Proposal for purposes of paragraph 6E(ii)(C); and
the Project, as outlined above, to extent of the
sale-leaseback for purposes of paragraph 6(C)6 and to the modification of the
Pillsbury Security Documents with respect to the property located in Montgomery,
Minnesota for purposes of paragraph 6E(ii)(A).
Conditions of Effectiveness. This Consent shall become
effective when, and only when, Prudential and Xxxxxxx shall have received
counterparts of this Consent executed by each of the parties hereto and all of
the following documents, each (unless otherwise indicated) being dated the date
hereof, in form and substance satisfactory to Prudential and Xxxxxxx:
Copies of (A) all documents evidencing all requisite
corporate action of the Company (including any and all resolutions of the
Board of Directors of the Company) authorizing the execution, delivery and
performance of this Consent and the matters contemplated hereby and
thereby, and (B) all documents evidencing all governmental approvals,
if any, with respect to this Consent and the matters contemplated hereby and
thereby.
A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true signatures of the
officers authorized to sign this Consent on behalf of the Company and any other
documents to be delivered by the Company hereunder.
All consents or waivers that are required, under the
Pillsbury Agreements, the Bank Facility and any other agreement to which the
Company is a party, in order to permit the Transaction, shall have been
obtained.
Each of the Purchasers shall have received, in
each case immediately upon their becoming
effective, a copy of the definitive documents (A) between and among the other
parties involved in the Transaction, including but not limited to: (x) all
agreements between or among the Company and/or Pillsbury and/or the Investor;
and (y) any amendments to or consents required under the Pillsbury Agreements,
the Bank Facility and any other agreement under which consent is required for
the Transaction and (B) with respect to the Project, including the modifications
to the Pillsbury Security Documents.
Such other documents, instruments, approvals or
opinions as Prudential or Xxxxxxx may reasonably request.
The representations and warranties contained herein shall be
true on and as of the date hereof, there shall exist on the date hereof, no
Event of Default or Default; there shall exist no material adverse change in the
financial condition, business operation or prospects of the Company or its
Subsidiaries since March 31, 1996; and the Company shall have delivered to
Prudential and Xxxxxxx an Officer's Certificate to such effect.
Representations and Warranties.
The Company hereby repeats and confirms each of the
representations and warranties made by it in the Note Agreement, as amended
hereby, as though made on and as of the date hereof, with each reference therein
to "this Agreement", "hereof", "hereunder", "thereof", "thereunder" and words of
like import being deemed to be a reference to the Note Agreement as amended
hereby.
The Company further represents and warrants as follows:
The execution, delivery and performance by the
Company of this Consent is within its corporate
powers, have been duly authorized by all necessary corporate action and do not
contravene (C) its charter or by-laws, (D) law or (E) any legal or contractual
restriction binding on or affecting the Company; and such execution, delivery
and performance do not or will not result in or require the creation of any Lien
upon or with respect to any of its properties.
No governmental approval is required for the due
execution, delivery and performance by the
Company of this Consent, except for such governmental approvals as have been
duly obtained or made and which are in full force and effect on the date hereof
and not subject to appeal.
This Consent constitutes the legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with its terms.
There are no pending or threatened actions, suits or
proceedings affecting the Company or any of
its Subsidiaries or the properties of the Company or any of its Subsidiaries
before any court, governmental agency or arbitrator, that may, if adversely
determined, materially adversely affect the financial condition, properties,
business, operations or prospects of the Company and it Subsidiaries, considered
as a whole, or affect the legality, validity or enforceability of the Note
Agreement.
The Inventory Sale Proposal does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading.
The Transaction will not result in the creation of
either Debt or any contingent liability of the Company, or a Lien against the
Company or any of the Company's assets.
The Transaction will be structured and consummated
substantially as outlined in the Inventory Sale Proposal; it will constitute a
true sale of the Inventory to the Investor; all risk of loss will pass to the
Investor upon the closing of the Transaction; and the Investor will have
adequately insured against any risk of loss with respect to the Inventory.
Further, the Transaction will not require of the Company any greater
warranty obligations with respect to the Inventory than those contained in
the Alliance Agreement, nor will it create or provide for any rights or recourse
against the Company if Pillsbury or another buyer does not take or pay for the
Inventory from the Investor except for Pillsbury's rejection of product
because of failure to comply with quality requirements or
specifications under the Alliance Agreement.
Miscellaneous.
Reference to and Effect on the Note Agreement. Except as
specifically consented to above, the Note Agreement and the Notes, and all other
related documents, are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed by the Company.
The execution, delivery and effectiveness of this Consent
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any holder of a Note under the Note Agreement or the
Notes, nor constitute a waiver of any provision of any of the foregoing.
Costs and Expenses. The Company agrees to pay on demand all
costs and expenses incurred by any holder of a Note in connection with the
preparation, execution and delivery of this Consent, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel. The
Company further agrees to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses of
counsel), incurred by any holder of a Note in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Consent,
including, without limitation, counsel fees and expenses in connection with the
enforcement of rights under this paragraph 4B.
Execution in Counterparts. This Consent may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.
Governing Law. This Consent shall be governed by, and
construed in accordance with, the laws of the State of New York.
[Signatures on Next Page.]
IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SENECA FOODS CORPORATION
By__/s/Xxxxx X. Kayser___________
Title: President & Chief Executive Officer
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By_/s/Xxxxx X. Kraska______________
Title: Vice President
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By_/s/Xxxxx X. McFetridge__________
Title: Investment Officer