LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 29th day of June,
2000, by and between PINNACLE FOODS, INC., a Pennsylvania corporation
("Borrower"), and XXXXXX X. XXXXXXXX (the "Lender").
WITNESSETH THAT:
WHEREAS, Borrower has requested that the Lender agree to make an unsecured
loan to the Borrower in the original face amount of $300,000 and Lender is
willing to do so on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. As used herein, and in the schedules and exhibits attached
hereto, the following terms shall have the following meanings:
"Borrower" shall mean Pinnacle Foods, Inc., and its successors and
permitted assigns.
"Borrower Documents" shall mean Borrower's articles of incorporation
and by-laws and all amendments thereto, and all consents, certificates and
agreements issued or entered into in respect thereto.
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business in Philadelphia, Pennsylvania.
"Event of Default" or "Events of Default" shall have the meaning
assigned to those terms in Section 8.1 hereof.
"GAAP" shall mean generally accepted accounting principles as are in
effect from time to time, applied on a consistent basis both as to
classification of items and amounts.
"Indebtedness" shall mean all obligations, liabilities and
indebtedness of Borrower to Lender, his heirs, personal representatives,
successors and assigns, evidenced by, arising under or relating to the Loan
Documents, whether as principal, guarantor, surety or otherwise, direct or
indirect, secured or unsecured, joint and/or several, absolute or contingent,
due or not due, matured and unmatured, original, renewed, extended, refinanced
or replaced, now existing or hereafter incurred or created, consensual or
created by law, and including principal, interest, premiums, fees, expenses
(including collection expenses), taxes, charges, commissions and attorneys'
fees, including indemnification obligations of Borrower with respect to any
claims that may be made against Lender (whether arising before or after payment
or assignment of any other Indebtedness), and including all obligations,
liabilities and indebtedness of Borrower to Lender incurred or arising after the
commencement of any case by or against Borrower under the U.S. Bankruptcy Code,
specifically including any post-petition interest or advances.
"Interest Payment Date" shall mean each date specified for the payment
of interest in Section 3.6 hereof.
"Loan" shall mean the loan to be made by Lender pursuant to this
Agreement.
"Loan Documents" shall mean this Agreement, the Note and all other
documents, instruments, certificates and agreements executed in connection with
the Loan, if any, as the same may be amended, replaced or supplemented from time
to time.
"Maturity Date" shall have the meaning assigned to it in Section 2.4
hereof.
"Note" shall mean that certain Promissory Note made by Borrower to the
order of Lender pursuant to the terms hereof in a face amount equal to the Loan,
as amended, renewed, replaced or supplemented from time to time.
"Pledge Agreement" shall have the meaning assigned to it in Section
2.3 hereof.
"Solvent" shall mean, with respect to a particular date, that on such
date (i) the fair value of the property of such party is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such party, (ii) the present fair market value of the assets of such party is
not less than the amount that will be required to pay the probable liability of
such party on its debts as they become absolute and matured, (iii) such party is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, and (iv) such party does not intend to, and does not believe that
it will, incur debts or liabilities beyond such party's ability to pay such
debts and liabilities as they mature.
1.2 Accounting Principles. Except as otherwise provided in this Agreement,
all accounting or financial terms used in this Agreement shall have the
respective meanings given to such terms by GAAP.
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ARTICLE II
AGREEMENT TO LEND
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2.1 Agreement to Lend. Subject to and conditioned upon the terms,
provisions and conditions contained in this Agreement and the other Loan
Documents and in reliance upon the representations and warranties set forth
herein, the Lender agrees to advance the Loan to Borrower in one lump sum on the
date hereof.
2.2 The Note. The Loan shall be evidenced by the Note, and the Loan shall
bear interest calculated and payable as provided in Article III below.
2.3 Pledge of Shares. The Company will cause shareholders of the Company to
execute and deliver to Lender a Stock Pledge Agreement substantially in the form
of Exhibit A attached hereto (the "Pledge Agreement").
2.4 Maturity. Borrower shall pay the outstanding principal of the Loan and
all unpaid interest accrued on the Loan in full on December 31, 2000 (the
"Maturity Date").
ARTICLE III
LOAN INTEREST, PAYMENTS AND FEES
--------------------------------
3.1 Interest; Interest Rate. Borrower shall pay interest in cash in respect
of the outstanding unpaid principal amount of the Loan at a per annum rate equal
to ten percent (10.00%).
3.2 Interest in Excess of Lawful Rate. If at any time the designated rate
applicable to any portion of the Loan made by Lender exceeds the highest lawful
rate, the rate of interest on the Loan shall be limited to the highest lawful
rate.
3.3 Additional Consideration Paid in Common Stock. As additional
consideration for the making of the Loan, Borrower shall pay interest in shares
of Common Stock, $0.01 par value per share (the "Common Stock"), of the Borrower
as follows:
(a) At the time of execution of the Note, Borrower shall issue to the
Lender one-quarter (1/4) of one (1) share of Common Stock for each dollar of
principal outstanding at such time under such Note.
(b) In addition to the Common Stock issuable pursuant to paragraph (a)
above, if Borrower does not fully repay all Indebtedness on or before September
30, 2000, Borrower shall issue to Lender on such date an aggregate of one-eighth
(1/8th) of one (1) share of Common Stock for each dollar of principal of the
Loan outstanding as of such date.
(c) In addition to the Common Stock issuable pursuant to paragraphs
(a) and (b) above, if Borrower does not fully repay all Indebtedness on or
before December 31, 2000,
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Borrower shall issue to Lender on such date an aggregate of one-eighth (1/8th)
of one (1) share of Common Stock for each dollar of principal of the Loan
outstanding as of such date.
(d) In addition to the Common Stock issuable pursuant to paragraphs
(a), (b), and (c) above, if Borrower does not fully repay the principal amount
of the Loan as of the last day of January, 2001 or any month thereafter to and
including June 30, 2001, Borrower shall issue to Lender eight one-hundredths
(8/100) of one (1) share of Common Stock for each dollar of principal of the
Loan outstanding as of each such date.
3.4 Payments. All payments and prepayments to be made in respect of
principal, interest and additional consideration due from Borrower hereunder
shall be due and payable without presentment, demand, protest or notice of any
kind except as otherwise required by the Loan Documents, all of which are hereby
expressly waived by Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue,
subject, nevertheless, to any grace and cure periods provided in this Agreement
and applicable thereto. Such payments shall be made to the Lender at his
principal office and, in the case of payments to be made in cash, in U.S.
Dollars and in immediately available funds and, in the case of payments in
shares of Common Stock, in the form of certificates representing the number
shares to which Lender is entitled as provided hereunder.
3.5 No Fractional Shares. No fractional shares of Common Stock shall be
issued under this Agreement. To the extent any issuance of Common Stock pursuant
to Section 3.3 of this Agreement would involve fractional shares, such
fractional shares shall be disregarded.
3.6 Interest Payment Dates. Interest on the Loan payable in cash shall be
due and payable in arrears on the last day of each month commencing on July 31,
2000, and also on the Maturity Date or any earlier date to which payment of the
Note has been accelerated.
3.7 Optional Prepayments. Borrower shall have the right at its option from
time to time to make permanent prepayments of the Loan in whole or part without
premium or penalty.
3.8 Application of Payments. All payments made by Borrower shall be applied
in the following order: first, to the payment of accrued and unpaid interest due
on the Loan and, second, to the principal amount of the Loan.
ARTICLE IV
AFFIRMATIVE COVENANTS
---------------------
Borrower hereby covenants and agrees that, from the date hereof and until
the Indebtedness has been paid in full and all other obligations hereunder shall
have been performed and discharged, it will comply with each of the following
covenants:
4.1 Keeping of Records and Books of Account. Borrower shall maintain and
keep proper books of record and account, which enable it to issue financial
statements and reports in accordance with Article V and in which full, true and
correct entries shall be made in all material respects of all of its dealings
and business and financial affairs.
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4.2 Visitation Rights. Borrower shall permit any of the officers or
authorized employees or representatives of Lender to, as often as Lender may
reasonably request, with reasonable notice, at Lender's expense and at such
reasonable times during business hours, to examine the plants and facilities of
Borrower.
4.3 Performance of Obligations. Borrower shall duly pay, perform and
discharge all of its obligations hereunder and under the other Loan Documents.
4.4 Further Assurances. Borrower agrees to execute and deliver all such
other instruments and take all such other action as Lender may reasonably
request from time to time, after the date hereof and without payment of further
consideration, in order to effectuate the transactions provided for herein.
4.5 Certificates. At any time or times, within ten (10) Business Days after
written demand by Lender therefor, Borrower shall deliver to Lender a
certificate duly executed and in form reasonably satisfactory to Lender, stating
and acknowledging the then unpaid principal balance of, and interest due and
unpaid under, the Loan, the fact that there are no defenses, off-sets or
counterclaims thereto (or, if such should not be the fact, then the facts and
circumstances relating to such defenses, off-sets or counterclaims) and such
other matters as Lender may reasonably require.
ARTICLE V
REPORTING REQUIREMENTS
----------------------
Although Borrower shall not be required to make periodic reports to the
Lender, until the Indebtedness is repaid in full, Borrower shall furnish or
cause to be furnished to Lender within a reasonable period after demand, such
information requested by Lender from time to time as reasonably deemed necessary
or appropriate by Lender to evaluate the financial condition of Borrower.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BORROWER
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Borrower hereby represents and warrants to Lender as follows:
6.1 Due Formation; Capacity. Borrower is a corporation duly formed and
validly existing under the laws of the Commonwealth of Pennsylvania, and has
full power and authority to conduct its affairs as now being conducted and as
proposed to be conducted.
6.2 Power and Authority. Borrower has full power and authority to enter
into, execute, deliver and carry out this Agreement and the other Loan Documents
to which it is a party, and to perform its respective obligations hereunder and
thereunder, and all such actions have been duly authorized by all necessary
proceedings on its part.
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6.3 No Conflict. Neither the execution and delivery of this Agreement or
the other Loan Documents nor the consummation of the transactions herein or
therein contemplated or compliance with the terms and provisions hereof or
thereof by them will conflict with or result in any breach of the terms and
conditions of the Borrower Documents.
6.4 Other Agreements. Borrower is not a party to any agreement or
instrument materially adversely affecting its present or proposed business,
properties or assets, operation or conditions, financial or otherwise and
Borrower has no actual knowledge that it is in default of the performance,
observance, or fulfillment of any material obligation, covenant or condition set
forth in any agreement or instrument to which it is a party.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF LENDER
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The Lender hereby represents and warrants to Borrower as follows:
7.1 In connection with the additional consideration to be delivered to the
Lender in the form of shares of Common Stock as provided for herein, including,
for the purposes of this Article VII, the shares of Common Stock covered by the
Pledge Agreement (the "Shares"), such Lender has relied solely on independent
investigations made by such Lender. Lender has had sufficient time to conduct
the due diligence he or she deems necessary to evaluate the potential benefits
and risks associated with making the Loan and the receipt of the Shares. In
deciding to make the Loan and enter into this Agreement, Lender has not relied
on any statements or other information provided about the Company other than
that provided by the Company in writing.
7.2 In connection with making the Loan and the receipt of the Shares,
Lender is not relying on any statements of directors, officers or employees of
the Borrower, pertaining to the Borrower's present or projected business,
financial condition or results of operations.
7.3 Lender understands that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under the securities laws of
any state and, therefore, cannot be sold or otherwise transferred unless they
are registered under the Act and applicable state securities laws or unless an
exemption from registration is available.
7.4 Lender understands that it has no right to require registration of the
Shares under the Act, and hereby agrees that he or she will not sell or
otherwise transfer the Shares until such time, if ever, that the Shares are
either registered or qualified under applicable law or the Borrower receives to
its satisfaction an opinion of counsel (unless waived by the Borrower) to the
effect that an exemption from registration and qualification is available.
7.5 Lender is acquiring the Shares for his or her own account for long-term
investment and not with a view toward resale, fractionalization, division, or
distribution.
7.6 Lender does not currently have any reason to anticipate any change in
his or her circumstances, financial or otherwise, or any particular occasion or
event which would necessitate or require his sale or distribution of the Shares.
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7.7 Lender has read the definition of "accredited investor" contained in
Rule 501 promulgated under the Act, and such Lender is an "accredited investor"
as set forth in such definition.
7.8 Lender recognizes that the making of the Loan and the taking of the
Shares pursuant hereto is an investment which involves special risks.
7.9 Lender (i) is able to bear the economic risk of this investment in the
Shares, (ii) is able to hold the Shares for an indefinite period of time, and
(iii) can afford a complete loss of his or her investment without any material
change in lifestyle, and has available other personal liquid assets to insure
that the investment will not cause any undue financial difficulties or affect
such Lender's ability to provide for his or her current needs and possible
personal financial contingencies.
7.10 Lender has been provided access to all information requested of the
Borrower in evaluating the making of the Loan and its acquisition of the Shares.
7.11 Lender has been given and has acted upon the opportunity to ask
questions of and to receive answers from the Borrower relating to the Borrower's
operations and to the contemplated receipt of the Shares as additional
consideration hereunder, and to obtain any additional information necessary to
verify the accuracy of the information made available to such Lender.
7.12 Lender is aware that the Borrower's largest customer is Pathmark
Stores, and Lender has seen the press release issued by Pathmark Stores, dated
June 2, 2000.
7.13 Lender acknowledges that the Borrower will be relying on the truth and
accuracy of the foregoing acknowledgments, representations, and warranties in
deciding whether to consummate this transaction, and that the Borrower could be
materially adversely affected if any of the forgoing acknowledgments,
representations or warranties of Lender is untrue or inaccurate.
7.14 Lender has received and reviewed the Company's financial statements at
December 31, 1999 and for the period from inception until such date as audited
by Larson, Allen, Weishair & Co., LLP and the internally prepared, unaudited
financial statements of the Company at May 31, 2000 and for the five months then
ended, which Lender acknowledges are subject to year-end adjustments and audit
adjustments.
ARTICLE VIII
DEFAULTS AND REMEDIES
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8.1 Events of Default. The following shall be deemed to be Events of
Default under this Agreement (whatever the reason therefor and whether
voluntary, involuntary or affected by operation of law):
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(a) Borrower shall (i) fail to pay the principal of the Loan at the
Maturity Date or (ii) fail to make any payment of interest or any other amount
owing hereunder or under the other Loan Documents for five (5) Business Days
after such payment became due and payable;
(b) Borrower shall fail to comply with any covenant contained in this
Agreement or any of the other Loan Documents, other than those defaults referred
to in the other subparagraphs of this Section 8.1, and shall not cure that
failure within the period of time specified for such cure or, if no such period
of time is specified, within thirty (30) days after written notice thereof is
given by Lender to Borrower, or, if such failure can not be cured using diligent
efforts in said thirty (30) day period, then such longer period of time as
Lender determines to be reasonable under the circumstances, but in no event
longer than ninety (90) days, provided Borrower is diligently pursuing such
cure; or
(c) Borrower shall cease to be Solvent or shall be unable to pay its
debts as the same shall mature or there shall be filed by or against (unless
dismissed within sixty (60) days after any involuntary filing) Borrower a
petition in bankruptcy or a petition seeking the appointment of a receiver,
trustee or conservator for Borrower or seeking reorganization or to effect a
plan or other arrangement with or for the benefit of creditors, or Borrower
shall consent to the appointment of a receiver, trustee or conservator.
8.2 Remedies. If an Event of Default shall occur and be continuing, and
without any notice to Borrower or any other act by Lender, at the election of
Lender, the Note shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Borrower, together with interest accruing on the principal amount thereof from
and after the date of such Event of Default (including following the entry of a
judgment).
ARTICLE IX
MISCELLANEOUS
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9.1 Modifications, Amendments or Waivers. This Agreement may be modified or
amended and any right set forth herein waived, only by an instrument in writing
signed by both Lender and Borrower.
9.2 No Implied Waivers; Cumulative Remedies; Writing Required. No course of
dealing and no delay or failure of Lender in exercising any right, power, remedy
or privilege under this Agreement or any other Loan Document shall affect any
other or future exercise thereof or operate as a waiver thereof; nor shall any
single or partial exercise thereof or any abandonment or discontinuance of steps
to enforce such a right, power, remedy or privilege preclude any further
exercise thereof or of any other right, power, remedy or privilege. The rights
and remedies of Lender under this Agreement and any other Loan Documents are
cumulative and not exclusive of any rights or remedies which they would
otherwise have and may be exercised multiple times. Any waiver, consent or
approval of any kind or character on the part of Lender of any breach or default
under this Agreement or any such waiver of any
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provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.
9.3 Holidays. Whenever any payment or action to be made or taken hereunder
shall be stated to be due, or any time period is otherwise set to expire, on a
day which is not a Business Day, such payment or action shall be made or taken
on the next following Business Day, and such extension of time shall be included
in computing interest or fees, if any, in connection with such payment or
action, or such time period shall be extended to the next following Business
Day.
9.4 Notices. All notices, requests, demands, directions and other
communications (collectively, "Notices") given to or made upon any party hereto
under the provisions of this Agreement shall be in writing and shall be
delivered or sent to the respective parties at the addresses and numbers set
forth below or in accordance with any subsequent written direction from any
party to the others. All Notices shall, except as otherwise expressly herein
provided, be effective (i) in the case of hand delivered notice, when hand
delivered, (ii) if given by mail, with first class postage prepaid, return
receipt requested, on the date of delivery indicated on the return receipt, and
(iii) if given by any other means (including by air courier), when delivered.
If to Borrower:
000 X. Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Vice President
With a copy to:
Xxxxxx X. Xxxx, Esquire
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
If to Lender:
00 Xxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
9.5 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
9.6 Governing Law. This Agreement shall be deemed to be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania without regard to its conflicts of laws principles.
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9.7 Prior Understanding. This Agreement, together with the other Loan
Documents, supersedes all prior and contemporaneous understandings and
agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein and therein, including any
prior confidentiality agreements and commitments.
9.8 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Lender and Borrower and their heirs, personal
representatives, successors and permitted assigns, except that Borrower may not
assign or transfer any of its rights nor delegate its obligations hereunder
without the prior written consent of Lender; and except that Lender may not
assign its right to receive Shares without the prior written consent of Borrower
and the receipt by Borrower of an opinion of counsel satisfactory to Borrower
that such assignment is in compliance with all applicable securities laws.
9.9 Counterparts. This Agreement may be executed by different parties
hereto on any number of separate counterparts, each of which, when so executed
and delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.
9.10 Exceptions. The representations and warranties and covenants contained
herein shall be independent of each other and no exception to any
representation, warranty or covenant shall be deemed to be an exception to any
other representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exceptions be deemed to permit any action or
omission that would be in contravention of applicable Law.
9.11 No Third Parties Benefitted. This Agreement is made and entered into
for the sole protection and benefit of Borrower and Lender. No trust fund is
created by this Agreement and no other persons or entities will have any right
of action under this Agreement or any right against Lender to obtain any
proceeds of the Loan.
9.12 Interpretation. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and
each gender will include any other gender. The captions of the articles,
sections, schedules and exhibits of this Agreement are for convenience only and
do not define or limit any terms or provisions. In the event of a conflict
between the terms of the other Loan Documents and this Agreement, the terms of
this Agreement shall control.
9.13 Status of Parties. The relationship of the parties hereto is that of
borrower and lender and nothing contained herein or in any of the other Loan
Documents shall be construed to constitute a partnership, joint venture or
co-tenancy between Borrower and Lender.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, or individually, have executed this Agreement under seal as of the
day and year first above written.
[SEAL] BORROWER:
ATTEST: PINNACLE FOODS, INC., a Pennsylvania
Corporation
By: By:
---------------------------- ----------------------------
Name: Name: Xxxxxxx Xxxxx
---------------------------- Title: Vice President
Title:
----------------------------
LENDER:
WITNESS
By:
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Name: XXXXXX X. XXXXXXXX
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[SIGNATURE PAGE TO LOAN AGREEMENT, DATED JUNE 29, 2000, BY AND BETWEEN
PINNACLE FOODS, INC. AND THE PARTY NAMED AS LENDER THEREIN]
EXHIBIT A
[STOCK PLEDGE AGREEMENT]
