Exhibit 4b
SUPPLEMENTARY AGREEMENT
5
This Supplementary Agreement dated October 2, 1996 ("Supplementary
Agreement") is made by Seneca Foods Corporation ("Seneca"), The Pillsbury
Company ("Pillsbury") and Grand Metropolitan Incorporated ("GMI").
RECITALS
This Supplementary Agreement relates to the First Amended and
Restated Alliance Agreement, dated December 8, 1994, as amended February 10,
1995, by and among the parties hereto (the "Alliance Agreement"). Unless
otherwise indicated, each term or phrase in this Supplementary Agreement
designated by initial capital letters has the same meaning as in the Alliance
Agreement.
The parties desire to set forth in this Supplementary
Agreement their intentions with respect to a proposal by Seneca to sell its 1996
asparagus pack which constitutes Acceptable Cases of Asparagus Product under the
Alliance Agreement and which is described by each Product classification set
forth in Exhibit A attached hereto and made a part hereof (collectively, the
"Asparagus"). Al Rajhi Banking & Investment Corp. (the "Bank") will purchase all
of the Asparagus pursuant to the terms of a Purchase and Sale and Warehousing
Agreement, dated the date hereof (the "Bank Purchase Agreement").
After the sale of the Asparagus to the Bank, the Bank will
have title and all risk of loss, with respect to the Asparagus, and the
Asparagus will be stored at Bank's request where it is now located at Seneca's
warehouse facilities in Dayton, Washington, Buhl, Idaho, and Geneva, New York
and Pillsbury's Clearfield, Utah warehouse, at a cost to be paid by the Bank.
Pillsbury will thereafter purchase all of the Asparagus from the Bank pursuant
to the terms of a purchase and sale agreement, dated the date hereof, between
Pillsbury, GMI and the Bank (the "Pillsbury Purchase Agreement").
AGREEMENT
The parties agree that the transaction will be conducted as follows:
On approximately October 4, 1996, Seneca will sell to
Bank all of the Asparagus pursuant to the terms of the Bank Purchase Agreement
for an aggregate amount equal to $20,871,088.
The parties hereto recognize that, upon the sale of
the Asparagus from Seneca to the Bank pursuant to the terms of the Bank
Purchase Agreement, title to the Asparagus shall be held by the Bank,
and title shall remain with the Bank until the Asparagus is sold to
Pillsbury pursuant to the terms of the Pillsbury Purchase Agreement.
Pillsbury will thereafter purchase the Asparagus from
the Bank, at such times, and in accordance with the other terms, as are set
forth in the Pillsbury Purchase Agreement. With respect to each purchase of
Asparagus from the Bank made by Pillsbury pursuant
to the Pillsbury Purchase Agreement, Seneca, as agent for the Bank, will ship
the purchased Asparagus to Pillsbury in the same manner and on the same terms
(other than price, which is covered under the terms of the Pillsbury Purchase
Agreement) as would be applicable to a direct sale by Seneca to Pillsbury under
the terms of the Alliance Agreement. On behalf of the Bank, and with the Bank's
consent, Seneca will invoice Pillsbury monthly for Pillsbury's purchases of
Asparagus under the Pillsbury Purchase Agreement and Pillsbury will pay each
invoice to an account for the benefit of the Bank in accordance with the terms
set forth on Exhibit A to the Pillsbury Purchase Agreement.
The parties hereto recognize that Sections 3.6(b) and
(c) of the Alliance Agreement provide for
fees and other payments between Pillsbury and Seneca, including an annual
reconciliation procedure which is not necessarily Product specific but which
carries out the general purposes of the Alliance Agreement. The parties will use
this procedure as contemplated therein. The Transfer Price and warehousing and
handling fees and costs to be paid by Bank to Seneca with respect to the
Asparagus, are set forth in Exhibit B hereto.
Except as specifically modified by the procedures
specified in this Supplementary Agreement for
the intervening sale of the Asparagus to Bank and the subsequent sale of the
Asparagus to Pillsbury, the provisions of the Alliance Agreement shall govern
the respective obligations of the parties to the Alliance Agreement. Without
limiting the general effect of the first sentence of this paragraph 5, at all
times while the Asparagus is in Seneca's possession, whether as owner or as
warehousing agent for Bank, Seneca shall comply, as instructed by the Bank,with
the provisions of the Alliance Agreement as to handling, storing, labelling and
other matters relating to Products prior to shipment to Pillsbury; and Seneca
will remain subject to the Quality Documents and have the obligations and
liabilities described in Articles X and XII of the Alliance Agreement with
respect to the Asparagus, including without limitation the warranties and
indemnities given by Seneca in Article XII. The intervening sale to the Bank
contemplated by the Bank Purchase Agreement will not expand or reduce the
obligations and liabilities of Seneca to Pillsbury with respect to Product
quality and Product warranties regarding the Asparagus. Pillsbury hereby
consents to the location of a portion of the Asparagus at its Clearfield, Utah
plant.
Pillsbury waives the provisions of Section 6.5 of the
Alliance Agreement insofar as those
provisions would prevent Seneca from selling and transferring title to the
Asparagus to the Bank or entering into the Bank Purchase Agreement. The parties
agree that the Transactions with the Bank contemplated by this Supplementary
Agreement do not constitute an assignment by either Seneca or Pillsbury which
would be prohibited by Section 22.1 of the Alliance Agreement; and,
additionally, the parties waive any prohibition contained in the Alliance
Agreement which would bar the Transactions contemplated by this Supplementary
Agreement. Pursuant to the terms of the Pillsbury Purchase Agreement, Pillsbury
has furnished to the Bank a written commitment, in form and substance reasonably
satisfactory to Bank, that Pillsbury will purchase the Asparagus in accordance
with the terms of the Alliance Agreement as modified by this Supplementary
Agreement, and Bank has furnished to Pillsbury the Bank's written commitment
that it will not sell the Asparagus to any person or entity other than Pillsbury
and will not grant, permit or suffer any person or entity other than Pillsbury
to acquire a lien or other interest in the Asparagus adverse to Pillsbury.
If any issues arise with respect to the subject
matter of this Supplementary Agreement which are
not specifically covered by its provisions, the parties will endeavor in good
faith to resolve the issues consistent with the purposes of this Supplementary
Agreement and the Alliance Agreement, and, to the extent not otherwise resolved,
in accordance with the provisions of Article XVIII of the Alliance Agreement.
IN WITNESS WHEREOF, the parties have caused this Supplementary
Agreement to be executed by their duly authorized officers or representatives.
THE PILLSBURY COMPANY SENECA FOODS CORPORATION
By: /s/Xxx Xxxxxxx By: /s/Xxxxx X. Xxxxxx
-------------- ------------------
GRAND METROPOLITAN INCORPORATED
By: /s/Xxxxx Xxxxxx
---------------
230073
EXHIBIT B
(Paragraph 4 of Supplementary Agreement)
Transfer Price and Warehousing and Handling Costs and Fees with respect to
Asparagus to be paid by Bank to Seneca:
Costs:
Actual goods - specific $12.4500
Estimated post production
(Insurance, storage and handling) .94
Pre-tolling fee fixed unit cost $13.3900
Tolling Fee (categorized as follows)
4a. Relating to Production Costs .08
4b. Relating to Warehousing Functions .02
Post-tolling fee fixed unit cost &
warehousing fee $13.4900
Additional warehousing fee computed as follows:
6a. Capstone Arrangement Fee .0675
6b. Surety Bond .0049
Warehousing Fee (items 2, 4b, 6a, and 6b) (1.0324)
------------
Unit Price 12.53
Number of Units 1,538,893
Unit Price x Number of Units $19,282,329
Warehousing Fee to be earned over term $ 1,588,759
-----------
Total of above costs $20,871,088
