Exhibit 10
AGREEMENT TO AMEND
FIRST AMENDED AND RESTATED ALLIANCE AGREEMENT
This Agreement is entered into as of May 23, 2002, by and among The
Pillsbury Company, a Delaware corporation ("Pillsbury"), Seneca Foods
Corporation, a New York corporation ("Seneca"), General Xxxxx Operations, Inc.,
a Delaware corporation ("GMOI"), and General Xxxxx, Inc., a Delaware corporation
("General Xxxxx").
Preliminary Statements
X. Xxxxxxxxx and Seneca are parties to a First Amended and Restated
Alliance Agreement, entered into December 8, 1994, as amended February 10, 1995
(the "Original Agreement"), as amended by Amendment No. 1 thereto dated February
25, 1997 and Amendment No. 2 thereto dated July 1, 1998 (such Amendments,
together with the Original Agreement, referred to herein as the "Alliance
Agreement"). Diageo PLC ("Diageo"), a United Kindom limited company and
successor by merger to Grand Metropolitan PLC ("GrandMet"), also a United
Kingdom limited company, currently is a party to the Alliance Agreement solely
for the purposes set forth in Section 23.8 thereof.
B. Seneca, Pillsbury, RBDB, L.L.C. ("RBDB"), a Delaware limited liability
company, and Diageo are parties to that certain letter agreement dated October
10, 1997, as amended by an Amendment dated as of October 1, 2001 (as so amended,
the "Financing Letter"), pursuant to which Seneca assigned to RBDB certain of
Seneca's rights under the Alliance Agreement. In connection with the Financing
Letter, Seneca and RBDB entered into a Sale Agreement, dated as of October 10,
1997 (the "Sale Agreement"), and a Storage and Handling Agreement, dated as of
October 10, 1997 (the "Storage Agreement"). Collectively, the Financing Letter,
the Sale Agreement and the Storage Agreement established a financing arrangement
for product inventory produced by Seneca pursuant to the Alliance Agreement.
X. Xxxxxxxxx, which was formerly an indirect, wholly-owned subsidiary of
Diageo, has become an indirect, wholly-owned subsidiary of General Xxxxx
pursuant to a merger transaction which became effective October 31, 2001.
Following its acquisition by General Xxxxx, Xxxxxxxxx transferred and assigned
its assets and operations involved in the manufacturing of certain shelf-stable
and frozen vegetable products to GMOI, which is itself an indirect, wholly-owned
subsidiary of General Xxxxx.
D. In conjunction with the termination of the Financing Letter, the Sale
Agreement and the Storage Agreement, the parties hereto wish to approve
Pillsbury's assignment of its rights and obligations under the Alliance
Agreement to GMOI, to amend the Alliance Agreement in various respects,
including the substitution of General Xxxxx for Diageo as a party to the
Alliance Agreement for purposes of guaranteeing the payment obligations of
Pillsbury and GMOI (as successor to Pillsbury) under the Alliance Agreement, and
to release Diageo and GrandMet from their obligations under the Alliance
Agreement.
Therefore, the parties hereto agree as follows:
I. Assignment by Pillsbury
Effective May 23, 2002, and without any further action on the part of any
person, Pillsbury assigns all of its rights and obligations under the Alliance
Agreement to GMOI, and GMOI assumes such rights and obligations, and shall
thereafter to be bound by all the terms and conditions of such Alliance
Agreement applicable to Pillsbury. Seneca and General Xxxxx hereby consent to
such assignment.
II. Amendment No. 3 to Alliance Agreement
Effective as of May 23, 2002, and without any further action on the part of
any person, the Alliance Agreement shall be amended as follows:
1. The following "Whereas" clause is inserted between the ninth and tenth
"Whereas" clauses in the preamble to the Alliance Agreement:
"WHEREAS, Pillsbury has assigned all of its rights and obligations under
this Agreement to GMOI, GMOI has agreed to assume such rights and obligations
and to be bound by all the terms and conditions of this Agreement applicable to
Pillsbury, and Seneca and General Xxxxx have consented to such assignment; and"
2. All references to "Pillsbury" in the operative provisions of the
Alliance Agreement shall be replaced by references to "GMOI" unless the context
clearly indicates otherwise.
3. The following definitions are deleted, in alphabetical placement, from
the part of the Alliance Agreement designated "DEFINITIONS":
(a) "GMI" means Grand Metropolitan Incorporated, a Delaware corporation.
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(b) "GrandMet" means Grand Metropolitan Public Limited Company, a United
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Kingdom limited company.
4. The following definitions are added, in alphabetical placement, to the
part of the Alliance Agreement designated "DEFINITIONS":
(a) "Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions are required or authorized to close in New York
City.
(b) "General Xxxxx" means General Xxxxx, Inc., a Delaware corporation.
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(c) "GMOI" means General Xxxxx Operations, Inc., a Delaware corporation.
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(d) "Purchase Date" means, with respect to any Product (identified by SKU)
in each Fiscal Year, the date on which GMOI will purchase all Acceptable Cases
of such Product, which date will be the second Business Day after the conditions
precedent to any such purchase, as specified in Section 3.6(a), are satisfied,
or such later date as the parties may specify. The parties intend that the
Purchase Date for all Acceptable Cases of each Product shall occur as soon as
possible after the completion of the Pack for that Product, and that such
Purchase Date is expected to occur on or about the date corresponding to that
Product as specified in Exhibit O attached hereto.
(e) "Storage Facilities" means Seneca's storage facilities situated at the
locations listed on Exhibit P attached hereto, as such locations may be changed
from time to time by Seneca in accordance with the terms hereof.
5. The following definition in the part of the Alliance Agreement
designated "DEFINITIONS" is amended to read as follows:
"Freight Charge" means the cost to Seneca of shipping Product from any
Storage Facility or Alliance Plant to the destination designated by GMOI. The
Freight Charge shall apply only to Product with respect to which GMOI requests
Seneca to arrange shipping.
6. The last sentence of Section 3.5(b) is amended by inserting the words
"or the Storage Facilities" after the words "Alliance Plants".
7. The last sentence of Section 3.5(c) is amended to read as follows:
"Title and risk of loss with respect to any Acceptable Cases of Product
will be transferred from Seneca to GMOI and vest in GMOI upon the earlier of (i)
the Purchase Date with respect to such Acceptable Cases of Product, or (ii) the
date such Acceptable Cases of Product are shipped from the applicable Alliance
Plant or Storage Facility to GMOI."
8. Section 3.6(a) is amended to read as follows:
"(a) Product Purchases. On the Purchase Date with respect to each Product
(identified by SKU), and subject to the satisfaction of the conditions set forth
below, GMOI will purchase GMOI's Annual Commitment of such Product for the
current Fiscal Year. The purchase price to be paid by GMOI shall be equal to
100% of the Transfer Price of all Acceptable Cases of such Product to be
purchased from Seneca on such date. Payment shall be made on the Purchase Date
by wire transfer of immediately available funds to an account designated by
Seneca. Not less than two Business Days prior to each Purchase Date, Seneca
shall invoice GMOI for all Acceptable Cases to be sold to GMOI on such Purchase
Date. The invoice will identify item code and product name, number of Acceptable
Cases, Transfer Prices, the total amount due and wiring instructions with
respect to such purchase. The parties' obligations to conclude any sale on a
Purchase Date shall be subject to the satisfaction of the condition that, on or
prior to such Purchase Date, such Acceptable Cases be identified in the manner
contemplated by Section 6.2(d) as subject to this Agreement.
The parties acknowledge that although the Transfer Prices utilized on any
Purchase Date include the costs of labeling Products, such Products may be in an
unlabeled form on such Purchase Date. Seneca agrees to take all necessary
actions to cause the labeling of such Products to occur in a manner and at such
times as are consistent with Seneca's obligations to provide finished, labeled
Products under Article V hereof.
If Acceptable Cases of finished Product are available for shipment prior to
a Purchase Date, GMOI may elect to purchase such Acceptable Cases at the
applicable Transfer Price prior to the Purchase Date for shipment directly from
the applicable Alliance Plant to the destination designated by GMOI. If this
option is elected, Seneca shall invoice GMOI at the time of shipment of such
Acceptable Cases, such invoice to contain the information described above. Terms
of payment shall be the earlier of (i) the applicable Purchase Date or (ii) net
15 days from the date of invoice, and payment shall be made in the manner
described above. Any Product so purchased prior to the applicable Purchase Date
shall be considered part of GMOI's Annual Purchase Commitment for such Fiscal
Year.
Invoices that are not paid when due shall accrue interest at the rate of
one percent (1%) per month.
In connection with each sale by Seneca of Acceptable Cases pursuant to this
Section 3.6(a), Seneca represents and warrants, on and as of the date of sale of
such Acceptable Cases, as follows:
(i) Seneca has good and marketable title to such Acceptable Cases, free and
clear of any liens, security interests, charges or other encumbrances, except
statutory liens relating to amounts owed by Seneca to farmers and other
producers of vegetables and other raw products included in such Acceptable
Cases; and
(ii) Seneca has paid in full all amounts, including amounts required under
the Perishable Agricultural Commodities Act ("PACA"), then due to farmers and
other producers of vegetables and other raw products included in any such
Acceptable Cases, and will pay when due all amounts, including amounts required
under PACA, thereafter due to farmers and other producers of vegetables and
other raw products included in any such Acceptable Cases."
9. Section 6.2 of the Alliance Agreement is amended to read as follows:
"6.2 Warehousing Requirements.
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(a) Except as otherwise set forth in Section 6.1 above, title and risk of
loss to any Product Inventory shall pass to GMOI upon the purchase by GMOI of
such Product Inventory on the applicable Purchase Date (or at such earlier time
as provided in Section 3.5(c)). Until shipment of Product Inventory from a
Storage Facility or an Alliance Plant to a destination designated by GMOI,
Seneca shall store and handle all Product Inventory in conformity with the terms
of this Section 6.2 and the Quality Documents. The warehousing cost charged
hereunder for each Product in the Pack to occur in each Fiscal Year shall be
included in the Standard Cost for such Product for such Fiscal Year.
(b) Seneca will maintain the Storage Facilities and Alliance Plants in the
condition needed to protect the Product Inventory in accordance with customary
and prudent industry standards for vegetable products.
(c) Seneca agrees that Acceptable Cases made available for shipment from
the Storage Facilities shall be in the same condition as such Acceptable Cases
existed on the applicable Purchase Date, except that such Acceptable Cases shall
have been labeled by Seneca in accordance with the requirements of this
Agreement.
(d) Seneca shall identify the Acceptable Cases by a method that clearly
distinguishes the Acceptable Cases from other vegetable products or other
property held at any Storage Facility or Alliance Plant and identifies the
Acceptable Cases as owned by GMOI. Seneca shall segregate by row the Acceptable
Cases from any other vegetable product or other property held by Seneca at any
Storage Facility or Alliance Plant at any time.
(e) Seneca shall provide monthly inventory reports indicating the quantity
and location of all the Acceptable Cases held by Seneca. Such monthly reports
shall also indicate the total amount of Acceptable Cases added to inventory and
the total amount of Acceptable Cases removed during such month.
(f) Within 5 days of its completion, Seneca shall provide to GMOI a copy of
its annual physical audit report relating to all Product Inventory held at each
Storage Facility and Alliance Plant.
(g) Seneca shall be entitled to change from time to time the locations of
the Storage Facilities, provided that it makes available to GMOI at all times
Seneca's on-line inventory management system current information identifying all
such locations.
(h) The value of any lost or damaged Acceptable Case at any time shall
equal the applicable Transfer Price paid by GMOI to acquire such Acceptable
Case. Seneca shall reimburse GMOI for the full value of any lost or damaged
Acceptable Cases within 30 days of detecting such loss or damage if the loss or
damage is due to Seneca's failure to comply with the requirements of Section
9.2(d)."
10. The first two sentences of Section 6.4 are amended to read as follows:
"In general, GMOI intends to arrange for the shipment of Product Inventory
from the applicable Storage Facility or Alliance Plant. As and when requested by
GMOI, however, Seneca shall ship designated Product from the identified Storage
Facility or Alliance Plant to the destination designated by GMOI in strict
compliance with GMOI's notice."
11. Section 9.1 is amended to read as follows:
"9.1 Title; Risk of Loss. Seneca shall have title and risk of loss as to
all ingredients, Supplies and work-in-progress, and shall have title and risk of
loss as to finished Product until the Acceptable Cases that constitute such
finished Product are purchased by GMOI on the applicable Purchase Date (or such
earlier date as may provided in Section 3.5(c)). The costs of the insurance
deductible payable by Seneca for lost Product and all other casualty losses
shall, to the extent properly allocable to the Central Division, be included in
the Fully Allocated Cost of Products produced at the Central Division Plants."
12. Section 9.2 is amended by adding the following paragraph (d) thereto:
"(d) Storage Activities. Notwithstanding the foregoing, so long as Seneca
is providing storage and handling of Product after its purchase by GMOI
hereunder, Seneca will maintain in full force and effect "all risk" casualty
insurance, including flood and earthquake, with insurers reasonably acceptable
to GMOI covering the Product Inventory and naming GMOI as owner and primary loss
payee. With respect to any Acceptable Case, the amount of required casualty
insurance shall equal 100% of the Transfer Price of such Acceptable Case ,
subject to deductibles that are in accordance with customary and prudent
industry practice for canned and frozen vegetable products. The insurance
described herein may be effected under insurance policies covering generally the
properties of Seneca and other properties in the possession or control of
Seneca. On May 23, 2002 and annually thereafter, Seneca shall furnish GMOI with
an insurance certificate or certificates showing Seneca's compliance with the
requirements of Section 9.2(d)."
13. Section 10.2 is amended by inserting the words "and Storage Facilities"
after the words "Alliance Plants" in the second line thereof; by inserting the
words "and Storage Facility" after the words "Alliance Plant" in the fifth line
thereof; and by inserting the words "or Storage Facility" after the word "Plant"
each time it appears in paragraphs (a), (b) and (c) in Section 10.2.
14. Section 12.3(a) is amended by deleting the word "delivery" from the
last line thereof and substituting therefor the words "shipment from the
applicable Storage Facility or Alliance Plant".
15. Section 12.3(b) is amended by deleting the words "delivery of" from the
last line thereof, and inserting the words "is shipped from the applicable
Storage Facility or Alliance Plant".
16. Section 19.2(a) is amended by adding the following subparagraph (vii):
"(vii) GMOI shall provide Seneca with instructions regarding the shipment
of Product Inventory purchased by GMOI prior to such effective date, and Seneca
shall ship such Product Inventory in accordance with the requirements of Section
6.4."
17. Section 23.2 is amended by deleting the words "Grand Metropolitan plc"
and substituting therefor the words "General Xxxxx".
18. Section 23.8 is amended to read as follows:
"23.8 General Xxxxx Obligations. General Xxxxx, the ultimate parent company
of GMOI and Pillsbury, hereby agrees, during the term of this Agreement, to be
obligated, to the same degree and in the same manner as GMOI and Pillsbury, to
make all payments due to Seneca under Sections 3.6, 4.3, 6.2, 6.3, 7.4, 8.1 and
19.2 of this Agreement, and to be entitled to the same rights as GMOI and
Pillsbury under such Sections."
19. Section 23.10(a) is amended by adding the following to the list of
Exhibits:
"Exhibit O - Target Purchase Dates (DEFINITIONS)
Exhibit P - Storage Facilities (DEFINITIONS)"
20. All other provisions of the Alliance Agreement are hereby affirmed.
III. Release of Diageo and GrandMet
Effective as of May 23, 2002, and without any further action on the part of
any person, Seneca, acting for itself, its insurers, its successors and assigns,
does hereby release and forever discharge Diageo and GrandMet and their
stockholders, directors, officers, employees, agents, successors and assigns
from any and all obligations, liabilities, claims, demands and causes of action,
either in law or in equity, known or unknown, liquidated or unliquidated, which
have arisen or may arise out of or are in any way connected with the Alliance
Agreement on account of any act, omission, event, occurrence, representation,
warranty, failure, default or breach, actual or asserted, of any party hereto or
its directors, officers, employees or agents on or prior to May 23, 2002.
IV. General Provisions
1. This Agreement shall be construed in accordance with and governed by the
laws of the state of Minnesota, without giving effect to the conflicts of laws
principles thereof.
2. This Agreement 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. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually signed counterpart of this Agreement.
3. Notwithstanding anything to the contrary herein, this Agreement shall
become effective only upon and concurrently with the effectiveness of an Omnibus
Agreement, dated as of May 23, 2002, among RBDB, Seneca, Pillsbury, RBDJT, Inc.,
Rabobank Nederland, New York Branch, and the Lenders referred to therein.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the
first date written above.
SENECA FOODS CORPORATION
By: /s/Xxxxxx X. Xxxxx
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Name:_Philip X. Xxxxx
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Title:Chief Financial Officer
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THE PILLSBURY COMPANY
By: /s/Xxxxx XxxXxxXxxxxxx
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Name: Xxxxx XxxXxxXxxxxxx
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Title: Vice President, Treasurer
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GENERAL XXXXX OPERATIONS, INC.
By: /s/Xxxxx XxxXxxXxxxxxx
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Name: Xxxxx XxxXxxXxxxxxx
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Title: Treasurer
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GENERAL XXXXX, INC.
By: /s/Xxxxx XxxXxxXxxxxxx
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Name: Xxxxx XxxXxxXxxxxxx
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Title: Vice President, Treasurer
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Accepted and acknowledged this 23rd day of May, 2002.
DIAGEO PLC GRAND METROPOLITAN PLC
By:____________________________ By:_____________________________
Name:_________________________ Name:___________________________
Title:__________________________ Title:____________________________
