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HANOVER FOODS CORPORATION
SECOND AMENDMENT
Dated As Of July 1, 1996
To
NOTE AGREEMENT
Dated As Of December 1, 1991
Re: $25,000,000 8.74% Senior Notes,
Due March 15, 2007
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SECOND AMENDMENT TO NOTE AGREEMENT
THIS SECOND AMENDMENT to Note Agreement dated as of July 1, 1996 (the
or this "Second Amendment"), is entered into between Hanover Foods Corporation,
a Pennsylvania corporation (the "Company"), and Allstate Life Insurance Company
(the "Purchaser").
RECITALS:
A. The Company and the Purchaser have heretofore entered into the
Note Agreement dated as of December 1, 1991 and the First Amendment to Note
Agreement dated as of June 20, 1995 (as amended, the "Note Agreement").
B. The Company and the Purchaser now desire to amend certain of
the terms of the Note Agreement in order to reduce the level of financial
performance that the Company must achieve for the next year.
C. Capitalized terms used herein shall have the respective
meanings ascribed thereto in the Note Agreement unless herein defined or the
context shall otherwise require.
D. All requirements of law have been fully complied with and all
other acts and things necessary to make this Second Amendment a valid, legal
and binding instrument according to its terms for the purposes herein expressed
have been done or performed.
NOW, THEREFORE, the Company and the Purchaser, in consideration of good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENT.
Section 1.1. Section 5.8(a)(3) of the Note Agreement shall be and is
hereby amended in its entirety to read as follows:
"(3) additional Funded Debt of the Company; provided that at
the time of creation, issuance, assumption, guarantee, or incurrence
thereof and after giving effect thereto and to the application of the
proceeds thereof:
(i) Consolidated Funded Debt would not exceed an amount equal
to the relevant percentage of Consolidated Total Capitalization
(determined as of the end of the most recent quarter) hereinafter
specified during the applicable period set forth below:
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If Funded Debt Maximum Percentage
is Incurred of Consolidated
During the Period: Total Capitalization:
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Closing Date to and
including December 1, 1996 55%
December 2, 1996 to
March 2, 1997 52%
March 3, 1997 to
June 1, 1997 51%
June 2, 1997 and thereafter 50%
and
(ii) in the case of the incurrence of any Funded Debt of
the Company secured by Liens permitted by Section 5.10(g), the
aggregate amount of all Consolidated Funded Debt secured by Liens
permitted by Sections 5.10(f) and (g) would not exceed 15% of
Consolidated Tangible Net Worth;"
Section 1.2. Section 5.8(a)(4) of the Note Agreement shall be and is
hereby amended in its entirety to read as follows:
(4) Current Debt of the Company; provided that for
purposes of determining whether additional Funded Debt may be incurred
pursuant to Section 5.8(a)(3), if there shall not have been a period
of at least 60 consecutive days during the twelve-month period
immediately preceding the date of such determination during which no
Current Debt of the Company shall have been outstanding, then the
daily average outstanding balance of the Company's Current Debt during
any period of 60 consecutive days selected by the Company occurring
during such twelve-month period shall be deemed to constitute Funded
Debt for purposes of such determination; and
Section 1.3. Section 5.9 of the Note Agreement shall be and is hereby
amended in its entirety to read as follows:
"Section 5.9. Interest Charges Coverage Ratio. The Company
will keep and maintain the ratio of Net Income Available for Interest
Charges to Interest Charges for each period of four consecutive fiscal
quarters most recently ended at not less than: (a) 1.10 to 1.00 at all
times during the period from and including the Closing Date to, but
not including, December 1, 1996, (b) 1.15 to 1.00 at all times during
the period from and including December 1, 1996 to, but not including,
March 2, 1997, (c) 1.40 to 1.00 at all times during the period from
and including March 2, 1997 to, but not including, June 2, 1997, (d)
2.40 to 1.00 at all times during the period from
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and including June 2, 1997 to, but not including, August 31, 1997,
(e) 2.65 to 1.00 at all times during the period from and including
August 31, 1997 to, but not including, November 30, 1997 and (f)
2.75 to 1.00 at all times from and after November 30, 1997."
Section 1.4. A new Section 5.19 of the Note Agreement shall be added
as follows:
"Section 5.19. Maintenance of Bank Facilities. The Company
will, at all times, keep and maintain committed credit facilities from
one or more financial institutions aggregating at any one time not
less than $60,000,000, each in form and substance reasonably
satisfactory to the holders of the Notes."
Section 1.5. Section 6.1(d) of the Note Agreement shall be and is
hereby amended in its entirety to read as follows:
"(d) Default shall occur in the observance or performance of
any covenant or agreement contained in Section 5.6 through Section
5.13 or Section 5.19; or"
Section 1.6. Section 6.1(f) of the Note Agreement shall be and is
hereby amended in its entirety to read as follows:
"(f) Default shall be made in the payment when due (whether by
lapse of time, by declaration, by call for redemption or otherwise) of
the principal of or interest on any Funded Debt or Current Debt (other
than the Notes) of the Company or any Restricted Subsidiary in the
aggregate unpaid principal amount of $1,000,000 or more and such
default shall continue beyond the period of grace, if any, allowed
with respect thereto (whether or not any default resulting from such
failure shall have been waived by the holders of such Current Debt or
Funded Debt); or"
Section 1.7. Section 6.1(g) of the Note Agreement shall be and is
hereby amended in its entirety to read as follows:
"(g) Default or the happening of any event shall occur under
any indenture, agreement or other instrument under which any Funded
Debt or Current Debt of the Company or any Restricted Subsidiary in
the aggregate unpaid principal amount of $1,000,000 or more may be
issued and such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of any Funded
Debt or Current Debt of the Company or any Restricted Subsidiary
outstanding thereunder (whether or not any default resulting from such
failure shall have been waived by the holders of such Current Debt or
Funded Debt); or"
Section 1.8. From and after January 1, 1996 until November 30, 1997
interest on the Notes shall accrue at a rate per annum equal to the rate set
forth in the Notes or the Note Agreement, plus 0.50%.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 2.1. To induce the Purchaser to execute and deliver this
Second Amendment, the Company represents and warrants to the Purchaser (which
representations shall survive the execution and delivery of this Second
Amendment) that:
(a) this Second Amendment has been duly authorized,
executed and delivered by it and this Second Amendment constitutes the
legal, valid and binding obligation, contract and agreement of the
Company enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or
limiting creditors' rights generally;
(b) the Note Agreement, as amended by this Second
Amendment, constitutes the legal, valid and binding obligation,
contract and agreement of the Company enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights
generally;
(c) the execution, delivery and performance by the Company
of this Second Amendment (i) has been duly authorized by all requisite
corporate action and, if required, shareholder action, (ii) does not
require the consent or approval of any governmental or regulatory body
or agency, and (iii) will not (A) violate (1) any provision of law,
statute, rule or regulation or its certificate of incorporation or
bylaws, (2) any order of any court or any rule, regulation or order of
any other agency or government binding upon it, or (3) any provision
of any material indenture, agreement or other instrument to which it
is a party or by which its properties or assets are or may be bound,
or (B) result in a breach or constitute (alone or with due notice or
lapse of time or both) a default under any indenture, agreement or
other instrument referred to in clause (iii)(A)(3) of this Section
2.1(c); and
(d) as of the date hereof and after giving effect to this
Second Amendment, no Default or Event of Default has occurred which is
continuing.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF SECOND AMENDMENT.
Section 3.1. This Second Amendment shall not become effective
until, and shall become effective when, each and every one of the following
conditions shall have been satisfied:
(a) executed counterparts of this Second Amendment, duly
executed by the Company and the Purchaser, shall have been delivered
to the Purchaser;
(b) the Purchaser shall have received a fee equal to
$10,000;
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(c) the Purchaser shall have received a copy of the
resolutions of the Board of Directors of the Company authorizing the
execution, delivery and performance by the Company of this Second
Amendment, certified by its Secretary or an Assistant Secretary;
(d) the representations and warranties of the Company set
forth in Section 2 hereof shall be true and correct on and with
respect to the date hereof;
(e) the Purchaser shall have received the favorable opinion
of counsel to the Company as to the matters set forth in Sections
2.1(a), 2.1(b) and 2.1(c) hereof, which opinion shall be in form
and substance satisfactory to the Purchaser; and
(f) executed counterparts of Credit Agreements, duly
executed by the Company and the Banks, which Credit Agreements shall
be in form and substance satisfactory to the Purchaser, shall have
been delivered to the Purchaser.
Upon receipt of all of the foregoing, this Second Amendment shall become
effective.
SECTION 4. PAYMENT OF PURCHASER'S COUNSEL FEES AND EXPENSES.
Section 4.1. The Company agrees to pay upon demand, the reasonable
fees and expenses of Xxxxxxx and Xxxxxx, counsel to the Purchaser, in
connection with the negotiation, preparation, approval, execution and delivery
of this Second Amendment.
SECTION 5. MISCELLANEOUS.
Section 5.1. Except as modified and expressly amended by this Second
Amendment, the Note Agreement is in all respects ratified, confirmed and
approved and all of the terms, provisions and conditions thereof shall be and
remain in full force and effect.
Section 5.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Second Amendment may refer to the Note Agreement without making specific
reference to this Second Amendment but nevertheless all such references shall
include this Second Amendment unless the context otherwise requires.
Section 5.3. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of Pennsylvania.
Section 5.4. This Second Amendment may be executed and delivered in
any number of counterparts, each of such counterparts constituting an original,
but all together only one Second Amendment.
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IN WITNESS WHEREOF, the Company and the Purchaser have caused this
instrument to be executed, all as of the day and year first above written.
HANOVER FOODS CORPORATION
By /s/ XXXX X. XXXXXXX
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Its: Executive Vice President
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Accepted and Agreed to:
ALLSTATE LIFE INSURANCE COMPANY
By /s/ XXXXXXXX X. XXXXXX
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Authorized Officer
By /s/ XXXXXX X. XXXXXX
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Authorized Officer
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