-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DXKVoCmbVCbuaSVJ5eNh3D/dVtQYtu6uLQXtWDtjs5b73nnFpRlwKf2VCy2CtBaC Bxcb8kAQcweh+8sPF+V9Rw== 0000950144-96-000002.txt : 19960103 0000950144-96-000002.hdr.sgml : 19960103 ACCESSION NUMBER: 0000950144-96-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951001 FILED AS OF DATE: 19960102 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAVANNAH FOODS & INDUSTRIES INC CENTRAL INDEX KEY: 0000086941 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060] IRS NUMBER: 581089367 STATE OF INCORPORATION: DE FISCAL YEAR END: 1003 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11420 FILM NUMBER: 96500068 BUSINESS ADDRESS: STREET 1: P O BOX 339 CITY: SAVANNAH STATE: GA ZIP: 31402 BUSINESS PHONE: 9122341261 10-K 1 SAVANNAH FOODS & INDUSTRIES, INC. 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended October 1, 1995 --------------------------------------------------- or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to --------------------- ---------------------- Commission file number 1-11420 ------------------------------------------------------ SAVANNAH FOODS & INDUSTRIES, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its Charter) Delaware 58-1089367 - ------------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) P. O. Box 339, Savannah, Georgia 31402 - ---------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 234-1261 ------------------------- Securities registered pursuant to Section 12(b) of the Act: Common Stock - Par Value: $.25 per share - ---------------------------------------------------------------------------- (Title of Class) Securities registered pursuant to Section 12(g) of the Act: None - ---------------------------------------------------------------------------- (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) At November 30, 1995, there were 26,238,196 shares of Common Stock outstanding. The aggregate market value of the voting stock held by non-affiliates of the Registrant on November 30, 1995 was $324,697,676. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on February 15, 1996 are incorporated by reference in Part III hereof. The exhibit index is located on page 35 of this filing. Page 1 of 176 pages. 2 PART I Item 1. Business Savannah Foods & Industries, Inc. ("Registrant") was incorporated in Delaware on February 19, 1969, as the successor to Savannah Sugar Refining Corporation, which was originally incorporated in New York in 1916. Registrant and its subsidiaries collectively comprise one business segment and are engaged in the production, marketing, and distribution of food products, primarily refined sugar. Effective October 2, 1995, the first day of fiscal 1996, Registrant reorganized the business structure of several of its subsidiaries. This reorganization did not affect the overall business of Registrant, but was done primarily for internal management purposes. Registrant and its wholly-owned subsidiaries, Savannah Foods Industrial, Inc. and Dixie Crystals (R) Brands, Inc., are engaged in the refining and marketing of a complete line of bulk and liquid sugars and sugar products, including edible molasses, liquid animal feeds and corn syrup blends. They also produce and market a complete line of packaged sugars and portion control items consisting of sugar envelopes, artificial sweeteners, salt, pepper, non-dairy creamer, and certain other products. Industrial and grocery products are marketed primarily in the southeastern portion of the United States, Louisiana, and Texas, but are also widely distributed into other states generally east of the Mississippi and south of New England. Foodservice products are marketed throughout the United States. Products are marketed under the trade names Dixie Crystals(R), Colonial(R), Evercane(R), and Savannah Gold(R), but are also sold under Registrant's other controlled labels and under customers' private label brands. Registrants saccharin-based sweetener is marketed under the trade name Sweet Thing(R) and its aspartame-based sweetener is marketed under the trade name Sweet Thing II(R). These products are marketed both by means of direct sales and through brokers and are primarily distributed directly to the customer by common carrier truck or railcar. Michigan Sugar Company, a wholly-owned subsidiary of Registrant, and its wholly-owned subsidiary, Great Lakes Sugar Company, are engaged in the processing of sugar beets into refined sugar and the production of beet pulp and molasses. The refined sugar is marketed primarily in the states of Michigan and Ohio, but is also distributed in the midwestern and eastern parts of the United States. Packaged sugar is marketed under the trade name PIONEER(R) , but is also sold under customers' private label brands. These products are marketed both by means of direct sales and through brokers and are primarily distributed directly to the 2 3 customer by common carrier truck or railcar. Most of the beet pulp is pelletized and sold for export. The balance is sold in the domestic market. The majority of the molasses is sold to Registrant's beet molasses desugarization facility for further processing to recover additional sugar. King Packaging Company, Inc. a wholly-owned subsidiary of Dixie Crystals (R) Brands, Inc., packs custom made meal kits for the food service industry and provides complementary products to the portion control products manufactured at Registrant's other locations. These products are marketed to the food service trade through-out the United States both by means of direct sales and through brokers and are primarily shipped directly to customers by common carrier truck. Raceland Sugars, Inc., a wholly-owned subsidiary of Savannah Foods Industrial, Inc., operates a raw sugar mill and is engaged in the business of producing raw sugar which is marketed in the Louisiana area. Additionally, the by-products, molasses and bagasse, are currently sold in the domestic market. Raw Materials. A large portion of the raw sugar for Registrant's Port Wentworth, GA refinery, and all the raw sugar for the Clewiston, FL refinery, is normally supplied by cane sugar producers in the state of Florida. A large portion of the raw sugar for Registrant's Gramercy, LA refinery is normally supplied by cane sugar producers in the state of Louisiana. In the case of the Savannah and Gramercy refineries, the remaining raw sugar requirements are purchased on the open market, and consist of off-shore cargoes purchased directly and through raw sugar trade houses. Registrant uses the futures market as a hedging and purchasing mechanism, as circumstances warrant. Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company, process sugar beets under annual contracts from Michigan and Ohio farmers. The land around the processing plants of the company is well suited to growing sugar beets, and the company has not experienced difficulty in obtaining a sufficient quantity of beets to support successful operation of its plants. Under the contracts with the farmers, certain sales expenses and other non- processing expenses are first deducted from the proceeds of refined sugar, pulp, and molasses sales after which the balance is divided between the company and the farmers. Competition. All phases of the refined sugar business and all geographic markets of the business engaged in by Registrant and its subsidiaries are highly competitive. This competition is not only with other cane sugar refiners and beet sugar processors, but also with corn sweeteners, artificial sweeteners, and with resellers who purchase all of these sweeteners. Competing cane sugar refineries are located in Florida, Louisiana, Maryland, New York, Texas, and 3 4 California. Competing beet sugar processors are located in California, Colorado, Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, Texas, and Wyoming. Competition is primarily based upon price, but is also based upon product quality and customer service. At times, the cane sugar refiners are at a competitive disadvantage to the beet sugar producers due to differing methods by which raw materials are purchased. In the beet industry, the beet farmers participate in any increase or decrease in the selling price of refined sugar. However, in the cane industry, refiners purchase raw sugar at prices which are kept artificially high by United States policy to support sugar farmers, and which do not fluctuate in tandem with refined sugar selling prices. Consequently, when competitive pressures reduce refined sugar prices, the margins of cane sugar refiners are affected more adversely than those of beet sugar producers. Number of Employees. At October 1, 1995, Registrant and its subsidiaries had 2,086 full-time employees. In addition, Michigan Sugar Company, Great Lakes Sugar Company, and Raceland Sugars, Inc. employ a number of seasonal workers during the beet and cane processing campaigns. Item 2. Properties. Registrant and its wholly-owned subsidiaries own and operate three cane sugar refineries, two sugar melt and transfer facilities, five sugar beet processing plants, a beet molasses desugarization facility, a raw sugar mill, and four foodservice production facilities. The three cane sugar refineries are located in Port Wentworth, Georgia; Gramercy, Louisiana and Clewiston, Florida and are owned by Savannah Foods Industrial, Inc. The Port Wentworth facility borders the Savannah River and the Gramercy facility borders the Mississippi River. Both of these locations include a deep water dock with facilities for shipping and receiving ocean-going vessels. Savannah Foods Industrial, Inc. also owns sugar melt and transfer facilities in St. Louis, Missouri and Ludlow, Kentucky. The St. Louis facility borders on the Mississippi River and has a dock for receiving sugar and molasses shipments. Michigan Sugar Company owns and operates four sugar beet processing plants which are located in Caro, Carrollton, Sebewaing, and Croswell, Michigan. Great Lakes Sugar Company owns and operates a sugar beet processing plant in Fremont, Ohio and a storage facility in Findlay, Ohio. The beet molasses desugarization facility, which is owned by Registrant, is located in Fremont, Ohio. 4 5 Dixie Crystals(R) Brands, Inc. owns production facilities in Perrysburg, Ohio; Visalia, California and Savannah, Georgia. Also, King Packaging Company, Inc. owns and operates a packaging facility in Bremen, Georgia. Raceland Sugars, Inc. owns and operates a raw sugar mill in Raceland, Louisiana. In addition to its milling operations, Raceland produces and harvests sugar cane for use at its mill. These farming operations are done on leased land. The facilities listed above provide Registrant with sufficient productive capacity to meet the demands of its current markets. Item 3. Legal Proceedings. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1995. 5 6 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters. Registrant's common stock, par value $.25 per share ("Common Stock"), is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "SFI". The following table sets forth for the periods indicated the high and low sales prices on the NYSE composite tape. The information provided has been adjusted to the nearest 1/8 and was compiled from quotations furnished by the New York Stock Exchange. Registrant has paid cash dividends on its Common Stock every year since 1924. The following information is for the twelve-month periods ended October 2, 1994 and October 1, 1995:
Quarter Dividends Ended High Low Paid -------- -------- ------- --------- 01/02/94 $16.500 $13.000 $.135 04/03/94 15.375 10.500 .135 07/03/94 12.250 10.000 .135 10/02/94 12.750 10.375 .135 ----- $.540 ===== 01/01/95 $14.750 $10.750 $.135 04/02/95 14.625 10.375 .135 07/02/95 11.875 9.000 .025 10/01/95 14.125 10.375 .025 ----- $.320 =====
As of October 1, 1995, the following indicates the number of holders of record of equity securities: Title of Class Number of Record Holders -------------- ------------------------ Common Stock 3,167 Item 6. Selected Financial Data. See following pages. 6 7 SAVANNAH FOODS & INDUSTRIES, INC. SUMMARY OF OPERATIONS (In thousands except for per share amounts and ratios)
Fiscal Period Ended --------------------------------------------------------------------------- October 1, October 2, October 3, January 3, December 29, 1995 1994 1993 (1) 1993 1991 - -------------------------------------------------------------------------------------------------------------------------------- OPERATIONS FOR THE FISCAL PERIOD Net sales........................................ $1,098,544 $1,074,367 $818,116 $1,138,114 $1,199,710 Income from operations (excludes other income and expenses, taxes and change in accounting principle)..................................... 7,386 20,297 11,839 49,143 66,884 (Loss) income before change in accounting principle...................................... (3,493) 5,743 1,986 27,340 38,260 Net (loss) income (2)............................ (3,493) 5,743 2,586 9,170 38,260 Other income statement information: Depreciation and amortization expense.......... 28,314 28,972 19,362 23,705 20,510 Interest expense............................... 14,847 13,380 10,226 10,526 9,820 Benefit from (provision for) income taxes...... 2,585 (2,863) (1,155) (13,628) (21,798) Cash dividends declared.......................... 8,396 14,169 10,627 13,890 13,116 Capital expenditures (3)......................... 17,303 22,218 39,877 45,301 55,661 - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL POSITION AT THE END OF THE FISCAL PERIOD Current assets................................... $ 197,802 $ 198,880 $269,990 $ 371,387 $ 356,769 Current liabilities.............................. 114,740 85,140 154,760 233,519 223,104 Working capital.................................. 83,062 113,740 115,230 137,868 133,665 Property, plant and equipment - gross............ 436,991 421,312 407,924 355,435 318,391 Accumulated depreciation......................... 206,100 180,810 159,111 129,306 112,092 Total assets..................................... 476,507 486,127 567,852 635,755 581,819 Long-term debt................................... 106,864 140,224 142,078 126,464 94,364 Stockholders' equity............................. 169,649 188,174 194,714 210,620 224,275 - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE Weighted average shares outstanding.............. 26,238 26,238 26,238 26,491 26,782 Shares outstanding at end of fiscal period....... 26,238 26,238 26,238 26,238 26,723 (Loss) income before change in accounting principle per weighted average share outstanding.................................... $ (.13) $ .22 $ .08 $ 1.03 $ 1.43 Net (loss) income per weighted average share outstanding (2)................................ (.13) .22 .10 .35 1.43 Dividends declared per share..................... .32 .54 .405 .525 .49 Stockholders' equity per share (4)............... 6.47 7.17 7.42 8.03 8.39 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS Current assets divided by current liabilities.... 1.72 2.34 1.74 1.59 1.60 Long-term debt divided by long-term debt and stockholders' equity....................... .39 .43 .42 .38 .30 Tax benefit (expense) divided by pre-tax (loss) income.................................. .43 .33 .37 .33 .36 - --------------------------------------------------------------------------------------------------------------------------------
(1) On July 21, 1993, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30. As a result, the fiscal period ended October 3, 1993 represents a 39 week period. For further information, see Note 2 to the accompanying consolidated financial statements. (2) The Company adopted FAS 109, "Accounting for Income Taxes" during the fiscal period ended October 3, 1993 and adopted FAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" during the fiscal period ended January 3, 1993. For more information on the adoption of FAS 109, see Note 7 to the accompanying consolidated financial statements. (3) Capital expenditures include $1,000,000 for the acquisition of certain fixed asets of Reckitt and Colman, Inc. in January 1995, $4,757,000 for the acquisition of King Packaging Company, Inc. fixed assets in July 1993 and $15,798,000 for the acquisition of Raceland Sugars, Inc. fixed assets in October 1991. (4) Based on shares outstanding at end of fiscal period. 7 8 Item 7. Management's Discussion and Analysis of the Company's Financial Position and Results of Operations. Change in fiscal year end: The Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30, beginning with the fiscal period ended October 3, 1993. The decision to change the fiscal year end was made to conform the Company's financial reporting year to the natural business year of the sugar industry. This is further discussed in Notes 1 and 2 to the consolidated financial statements. Liquidity Operating working capital, defined as non-cash assets and non-interest bearing liabilities excluding dividends payable, increased by $10,255,000 during fiscal 1995. This increase, funded through short-term borrowings, resulted from a decision to increase inventory levels to take advantage of certain sales opportunities. The Company expects to liquidate this inventory in fiscal 1996 and to repay the related short-term debt. In the absence of the decision by management to temporarily increase inventory, operating working capital would have decreased by approximately $12,000,000 during fiscal 1995. The Company maintains revolving credit facilities, as discussed below, to provide liquidity for short-term operating needs. The Company also has the ability to fund seasonal increases in inventory through borrowings from the Commodity Credit Corporation. Maximum short-term borrowings during fiscal 1995 were $68,500,000. These two sources of short-term funds provide ample liquidity to the Company to meet its operating cash requirements. See Note 6 to the Company's financial statements for a discussion of the covenants related to the Company's revolving credit facilities. Capital Resources Long-term debt, including the current portion, decreased $28,703,000 as a result of debt payments during fiscal 1995. $20,000,000 of the debt payments were funded with excess cash generated through working capital reductions achieved during fiscal 1994. Changes in debt and equity resulted in a decrease from 43% to 39% in the ratio of long-term debt to total capital. During August, 1995, the Company entered into revolving credit agreements aggregating $140,000,000, of which $10,000,000 was outstanding as long-term debt and $22,300,000 was outstanding as short-term debt at year end. The remaining available balance of $107,700,000 is intended to meet working capital and other cash needs as they arise. All of the $140,000,000 of available facilities are committed through January 1, 1999. The Company's most restrictive loan covenants are included in its Senior Notes as discussed in Note 6 to the financial statements. Both the Senior Notes and the Company's revolving credit facilities include 8 9 requirements to maintain certain levels of income or operating cash flow in relation to interest expense, and to maintain a minimum net worth. As discussed in Note 6, at October 1, 1995, the Company was not in compliance with the covenants contained in the Senior Notes agreement, but has obtained amendments through December, 1995 which allow the Company to comply with the amended terms of the agreement. Discussions between the Company and the Senior Note lenders are continuing to further amend the terms of this debt. Additionally, under the terms of the Company's revolving credit facilities, the Company has the ability to refinance the Senior Notes if it is in compliance with the covenants contained in the revolving credit agreements. The Company was in compliance with the terms of the revolving credit facilities at the end of fiscal 1995. In the event that the Company is not in compliance with the terms of the covenants in its revolving credit facilities, the Company believes it will be able to obtain appropriate waivers. In the event that waivers are not obtained related to the revolving credit facilities, the agreements would likely be modified. If not modified, the agreements also provide an option to the revolving credit lenders to accelerate the repayment of this indebtedness. At October 1, 1995, stockholders' equity was $169,649,000 compared to equity at October 2, 1994, of $188,174,000. Equity decreased as a result of a net loss of $3,493,000 for the year ended October 1, 1995, dividends of $8,396,000, an increase in the minimum pension liability adjustment of $6,632,000, and a currency translation adjustment of $425,000. Equity increased through a $421,000 reduction in the note receivable from the employee stock ownership plan. In January 1995, the Company purchased the disposable salt and pepper shaker business of Reckitt & Colman for approximately $7,000,000. This product line is projected to add about $5,000,000 in sales to Dixie Crystals(R) Brands and complement the current non-sugar product line. The Company is continually searching for similar opportunities to expand into higher value-added products outside of sugar. Fixed asset additions during fiscal 1995, excluding Reckitt & Colman, were $16,303,000 compared to depreciation and amortization for the same period of $28,314,000. The capital expenditures were primarily made to upgrade and install packaging and production equipment. These projects are expected to benefit the Company through increased efficiency, improved quality control, and expanded operational capabilities. The Company expects that expenditures for fixed assets in fiscal 1996 will approximate $10,000,000 and that depreciation and amortization for fiscal 1996 will approximate that of 1995. During fiscal 1996 the Company expects to generate approximately $12,000,000 through the liquidation of Company-owned life insurance. This liquidation will also eliminate the need to fund over $3,000,000 of additional whole-life insurance premiums during fiscal 1996. Over a five year time period, this decision will eliminate the need to fund a total of more than $10,000,000 in whole-life insurance premiums (including the $3,000,000 not expended in fiscal 1996). The $12,000,000 cash received and the $3,000,000 not expended in fiscal 1996 are expected to be used to reduce long-term debt during fiscal 1996. This insurance 9 10 is being liquidated because its return did not exceed the Company's cost of capital and because the Company wants to utilize these funds in its business. On November 17, 1995, the Board of Directors approved the formation of a grantor trust which is expected to purchase approximately 2,500,000 shares of Company common stock from the Company. It is intended that over an extended period of time the trust will use such shares or the proceeds from the sale of such shares to satisfy obligations of the Company under various employee benefit plans, including the Company's qualified defined benefit pension plans, its supplemental pension plan, and obligations under deferred compensation contracts for employees and directors, all of which are discussed in Notes 9 and 10 to the Company's financial statements. Results of Operations Year ended October 1, 1995 and year ended October 2, 1994 The Company's results of operations for the fiscal year ended October 1, 1995 was a net loss of ($3,493,000), or ($.13) per share, on sales of $1,098,544,000, compared to income of $5,743,000, or $.22 per share, on sales of $1,074,367,000 for the fiscal year ended October 2, 1994. Sugar sales volume was flat compared to fiscal 1994 while sugar sales prices increased slightly. Average raw sugar costs increased dramatically in fiscal 1995, from $22.07 per cwt. in fiscal 1994, to $23.03 per cwt. in fiscal 1995. Raw sugar shortages in the summer of 1995 pushed raw sugar costs as high as $25.70 per cwt. in late July 1995. This rise in raw sugar costs primarily affected the cane refineries which, as a result, reported an operating loss for fiscal 1995. The net loss also included a $1,600,000 charge for the settlement of litigation, a $1,500,000 charge for a work force reduction, and a $1,200,000 charge related to capital projects which will not be pursued because of changing business circumstances. Fiscal 1994 included a $2,950,000 charge related to the same litigation mentioned above. Michigan Sugar's sales volume decreased 3% in fiscal 1995 due to marketing allotments imposed by the U. S. Department of Agriculture (USDA) which restricted the amount of sugar sold. However, higher sugar content in the beets resulted in lower processing costs per cwt., and operating income in this division increased substantially over fiscal 1994. Higher molasses and beet pulp prices also contributed to the increased earnings. Operating income for our Foodservice division increased from fiscal 1994 despite higher sugar costs and competitive pricing pressures. The increase was achieved through focused selling of higher value-added sugar and non-sugar products along with lower operating costs. Raceland Sugars, Inc.'s operating income decreased slightly from fiscal 1994 as increased operating costs offset higher sales prices and a larger crop. 10 11 Selling, general and administrative expenses increased 7% in fiscal 1995 from fiscal 1994 primarily due to higher advertising and selling costs. Interest expense increased as a result of higher interest rates on short-term borrowings for working capital. The fiscal 1996 national beet crop is estimated to be 4.1 million tons compared to 4.5 million tons in fiscal 1995. A smaller beet crop usually means higher refined sugar selling prices, increased cane refining throughput and lower per unit refining costs. This should improve operating income for the Company's cane based operations in fiscal 1996. The Company's beet sugar division, Michigan Sugar, will have lower earnings in fiscal 1996 due to a summer drought and insect problems which reduced both sugar beet yields and sugar content significantly from fiscal 1995. Raceland should benefit from a larger crop and higher raw sugar prices in fiscal 1996 and operating income should improve over fiscal 1995. The sugar portion of the 1995 Farm Bill has yet to be finalized in Congress. The Company believes that the sugar program needs reform. The outcome of the bill will not be known until next year and it is impossible to predict the results. Year ended October 2, 1994 and nine months ended October 3, 1993 The Company's net income for the fiscal year ended October 2, 1994 was $5,743,000, or $.22 per share, compared to income of $2,586,000, or $.10 per share, for the nine months ended October 3, 1993. Income for fiscal 1993 includes a $3,030,000 charge to net income (a $4,900,000 increase in cost of sales, net of the associated $1,870,000 income tax benefit) related to a LIFO inventory liquidation at Michigan Sugar as further discussed in Note 2 to the consolidated financial statements and a $600,000 cumulative effect credit due to adopting FAS 109. Income for fiscal 1993 before the cumulative effect of adopting FAS 109 was $1,986,000, or $.08 per share. Average weekly sales volume and prices were down in fiscal 1994 compared to fiscal 1993 due to competitive pressure from beet sugar producers marketing a larger beet crop along with additional sugar carried over from the previous year. Productivity increased in fiscal 1994 at the cane refineries. However, higher raw sugar costs caused by a low raw sugar quota reduced average weekly operating income in this division compared to fiscal 1993. Michigan Sugar's average weekly sales volume increased 4% in fiscal 1994 due to a larger crop in Michigan and a carry over from the previous crop. However, average weekly operating income dropped from fiscal 1993 due to lower beet pulp prices and a smaller beet crop in Ohio. 11 12 Dixie Crystals(R) Foodservice's average weekly operating income decreased from fiscal 1993 due to higher sugar costs and competitive pricing pressures. Cost cutting programs which lowered manufacturing costs helped minimize the impact of these negative factors. Raceland Sugars, Inc. showed a significant increase in average weekly operating income in fiscal 1994 compared to fiscal 1993 as a result of higher raw sugar prices in 1994. Selling, general and administrative expenses decreased 7% on an average weekly basis in fiscal 1994 from fiscal 1993 primarily due to a reduction in storage costs achieved through a production optimization program. Interest expense decreased slightly on an average weekly basis in fiscal 1994 due to lower short-term borrowings. 12 13 Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements: Page -------------------- ---- Report of Independent Accountants 14 Consolidated Balance Sheets at October 1, 1995 and October 2, 1994 15 Consolidated Statements of Operations for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993 16 Consolidated Statements of Changes in Stockholders' Equity for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993 17 Consolidated Statements of Cash Flows for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993 18 Notes to Consolidated Financial Statements 19 (b) Financial Statement Schedules for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993:
Schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto. 13 14 Report of Independent Accountants November 17, 1995 To the Stockholders and Board of Directors of Savannah Foods & Industries, Inc. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Savannah Foods & Industries, Inc. and its subsidiaries at October 1, 1995 and October 2, 1994, and the results of their operations and their cash flows for the fifty-two weeks ended October 1, 1995, the fifty-two weeks ended October 2, 1994 and the thirty-nine weeks ended October 3, 1993, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 7 to the financial statements, the Company changed its method of accounting for income taxes during the thirty-nine weeks ended October 3, 1993. PRICE WATERHOUSE LLP Savannah, Georgia 14 15 SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Balance Sheets (In thousands except for shares and per share amounts)
October 1, October 2, 1995 1994 ---------- ---------- Assets - ------ Current assets: Cash and cash equivalents (Note 1) $ 11,574 $ 28,436 Accounts receivable 66,991 75,776 Inventories (net of LIFO reserve of $10,460 in 1995 and $8,889 in 1994) (Notes 1 and 4) 103,121 85,340 Other current assets (Notes 1 and 7) 16,116 9,328 -------- -------- Total current assets 197,802 198,880 Property, plant and equipment (net of accumulated depreciation of $206,100 in 1995 and $180,810 in 1994) (Notes 1 and 5) 230,891 240,502 Other assets (Notes 1, 7 and 9) 47,814 46,745 -------- -------- $476,507 $486,127 ======== ======== Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Short-term borrowings (Note 6) $ 22,300 $ - Current portion of long-term debt (Note 6) 6,300 1,643 Trade accounts payable 63,259 56,953 Dividends payable 656 3,542 Other liabilities and accrued expenses 22,225 23,002 -------- -------- Total current liabilities 114,740 85,140 -------- -------- Long-term debt (Note 6) 106,864 140,224 -------- -------- Deferred employee benefits (Notes 9 and 10) 85,254 72,589 -------- -------- Stockholders' equity (Notes 6 and 8): Common stock $.25 par value; $.55 stated value; 64,000,000 shares authorized; 31,306,800 shares issued 17,365 17,365 Capital in excess of stated value 12,190 12,190 Retained earnings 190,176 202,065 Minimum pension liability adjustment (Note 9) (14,842) (8,210) Cumulative translation adjustment (425) - -------- -------- 204,464 223,410 Less - Treasury stock, at cost (5,068,604 shares) 31,275 31,275 - Note receivable from employee stock ownership plan 3,540 3,961 -------- -------- Total stockholders' equity 169,649 188,174 Commitments and contingencies (Note 11) - - -------- -------- $476,507 $486,127 ======== ========
(The accompanying notes are an integral part of the financial statements.) 15 16 SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Operations (In thousands except for shares and per share amounts)
Fiscal Period Ended (Notes 1 and 2) -------------------------------------------- October 1, October 2, October 3, 1995 1994 1993 (52 weeks) (52 weeks) (39 weeks) ---------- ---------- ---------- Net sales $1,098,544 $1,074,367 $ 818,116 ---------- ---------- ---------- Operating expenses: Cost of sales and operating expenses 1,005,914 971,706 743,731 Selling, general and administrative expenses 56,930 53,392 43,184 Depreciation and amortization (Note 1) 28,314 28,972 19,362 ---------- ---------- ---------- 1,091,158 1,054,070 806,277 ---------- ---------- ---------- Income from operations 7,386 20,297 11,839 ---------- ---------- ---------- Other income and (expenses): Interest and other investment income 1,258 2,170 1,412 Interest expense (Note 6) (14,847) (13,380) (10,226) Other income (expense) 125 (481) 116 ---------- ---------- ---------- (13,464) (11,691) (8,698) ---------- ---------- ---------- (Loss) income before income taxes and change in accounting principle (6,078) 8,606 3,141 Benefit from (provision for) income taxes (Notes 1 and 7) 2,585 (2,863) (1,155) ---------- ---------- ---------- (Loss) income before change in accounting principle (3,493) 5,743 1,986 Cumulative effect of change in accounting principle (Notes 1 and 7) - - 600 ---------- ---------- ---------- Net (loss) income $ (3,493) $ 5,743 $ 2,586 ========== ========== ========== (Loss) income per weighted average share outstanding: (Loss) income before change in accounting principle $ (.13) $ .22 $ .08 Cumulative effect of change in accounting principle - - .02 ---------- ---------- ---------- Net (loss) income $ (.13) $ .22 $ .10 ========== ========== ========== Weighted average shares outstanding 26,238,196 26,238,196 26,238,196 ========== ========== ==========
(The accompanying notes are an integral part of the financial statements.) 16 17 SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Changes in Stockholders' Equity (In thousands except for per share amounts)
Note Receivable from Capital in Minimum Employee Excess of Pension Cumulative Stock Common Stated Retained Liability Translation Treasury Ownership Stock Value Earnings Adjustment Adjustment Stock Plan Total ------- ---------- -------- ---------- ----------- --------- ---------- ----- Balance at January 3, 1993 $17,365 $12,190 $218,532 $ (1,437) $ - $(31,275) $(4,755) $210,620 Net income 2,586 2,586 Cash dividends declared ($.405 per share) (10,627) (10,627) Increase in minimum pension liability adjustment (8,016) (8,016) Decrease in note receivable from employee stock ownership plan 151 151 ------- ------- -------- -------- ------- -------- ------- -------- Balance at October 3, 1993 17,365 12,190 210,491 (9,453) - (31,275) (4,604) 194,714 Net income 5,743 5,743 Cash dividends declared ($.54 per share) (14,169) (14,169) Decrease in minimum pension liability adjustment 1,243 1,243 Decrease in note receivable from employee stock ownership plan 643 643 ------- ------- -------- -------- ------- -------- ------- -------- Balance at October 2, 1994 17,365 12,190 202,065 (8,210) - (31,275) (3,961) 188,174 Net loss (3,493) (3,493) Cash dividends declared ($.32 per share) (8,396) (8,396) Increase in minimum pension liability adjustment (6,632) (6,632) Increase in cumulative translation adjustment (425) (425) Decrease in note receivable from employee stock ownership plan 421 421 ------- ------- -------- -------- ------- -------- ------- -------- Balance at October 1, 1995 $17,365 $12,190 $190,176 $(14,842) $ (425) $(31,275) $(3,540) $169,649 ======= ======= ======== ======== ======= ======== ======= ========
(The accompanying notes are an integral part of the financial statements.) 17 18 SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Cash Flows (In thousands of dollars)
Fiscal Period Ended (Notes 1 and 2) ---------------------------------------------- October 1, October 2, October 3, 1995 1994 1993 (52 weeks) (52 weeks) (39 weeks) ---------- ---------- ---------- Cash flows from operations: Net (loss) income $(3,493) $ 5,743 $ 2,586 Adjustments to reconcile net (loss) income to net cash provided by operations - Depreciation and amortization 28,314 28,972 19,362 Cumulative effect of change in accounting principle - - (600) Provision for deferred income taxes (207) (5,283) 6,986 Net loss on disposal of assets 674 460 204 Changes in balance sheet accounts - Accounts receivable 8,785 11,254 (25,347) Inventories (17,781) 60,299 133,498 Other current assets (6,952) 2,657 (1,092) Trade accounts payable 6,306 (49,457) (39,441) Income taxes accrued - - (17,593) Accrued expenses related to beet operations - - (22,884) Other liabilities and accrued expense (777) 3,373 (1,951) Other 1,122 1,431 1,547 ------- ------- ------- Cash provided by operations 15,991 59,449 55,275 ------- ------- ------- Cash flows from investing activities: Additions to property, plant and equipment (16,303) (22,218) (35,120) Proceeds from sale of property, plant and equipment 784 3,309 2,342 Use of escrow balances related to industrial revenue bonds for additions to property, plant and equipment - 3,669 460 Liquidation (acquisition) of investments 3,615 18,559 (7,691) Acquisition of businesses (7,050) - (8,925) Other (2,182) (2,930) 198 ------- ------- ------- Cash used for investing activities (21,136) 389 (48,736) ------- ------- ------- Cash flows from financing activities: Increase (decrease) in short-term borrowings 22,300 (26,300) (3,700) Increase in long-term debt - - 10,111 Payments of long-term debt (28,703) (2,632) (1,337) Liquidation of unused industrial revenue bond escrow balances 5,742 - - Dividends paid (11,282) (10,627) (10,627) Other 226 676 (1,484) ------- ------- ------- Cash used for financing activities (11,717) (38,883) (7,037) ------- ------- ------- Cash flows for period (16,862) 20,955 (498) Cash and cash equivalents, beginning of period 28,436 7,481 7,979 ------- ------- ------- Cash and cash equivalents, end of period $11,574 $28,436 $ 7,481 ======= ======= =======
(The accompanying notes are an integral part of the financial statements.) 18 19 SAVANNAH FOODS & INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies: Fiscal year - As described in Note 2, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30. The fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993 include 52 weeks, 52 weeks and 39 weeks, respectively. Principles of consolidation and business segments - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Business entities in which the Company owns 50% or less are accounted for using the equity method. The Company has one primary business segment - Sugar Products. Changes in accounting principles - As discussed in Note 7, Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109) was prospectively adopted effective January 4, 1993, the first day of the fiscal period ended October 3, 1993. Cash and cash equivalents - Cash and cash equivalents include all investments purchased with an original maturity of 90 days or less which have virtually no risk of loss of value of the principal amount of the investment. Inventories - Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for sugar, packaging materials, and certain other items. Costs for maintenance parts, sugar cane and other non-sugar products are determined using the first-in, first-out (FIFO) and moving average methods. Futures transactions and interest rate swaps - The Company uses futures, options and interest rate swaps as hedges in its inventory purchasing and cash management programs. Gains and losses on such transactions related to inventory are matched to specific inventory purchases and charged or credited to cost of sales as such inventory is sold. Gains and losses on transactions related to loans are included in interest expense during the period in which the related instruments are outstanding. In connection with the Company's futures trading activity, the Company maintains deposits with futures brokers. These deposits are included in "Other current assets". Amortization of intangibles - The Company has intangible assets included in "Other assets" aggregating $11,912,000 and $8,031,000 at October 1, 1995 and October 2, 1994, respectively. Goodwill is being amortized over fifteen years on a straight-line basis, and other intangible assets are being amortized over five years on a straight-line basis. Amortization expense was $2,169,000, $2,617,000 and $1,363,000 19 20 for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993, respectively. Property, plant and equipment - Property, plant and equipment is valued at cost less accumulated depreciation and amortization. For financial reporting purposes, depreciation is computed on the straight-line method. Accelerated depreciation methods are used for tax purposes on $281,162,000 of equipment. Accrued expenses related to beet and sugar cane operations - The Company's beet and sugar cane processing plants are generally operated from October through February and then, from March through September, are repaired for the next processing cycle. As sugar is processed from October through February, the Company accrues estimated repair costs and other costs to be incurred in March through September and includes such costs in inventory and, as the sugar is sold, in cost of sales. In contrast, some sugar processors capitalize such costs and include them as prepaid expenses related to the next processing cycle. Fair value of financial instruments - For cash, cash equivalents, accounts receivable, trade accounts payable, dividends payable, accrued expenses and short-term borrowings, the carrying amounts approximate fair value because of the short maturities of these instruments. Revenue recognition - The Company recognizes revenue as product is shipped. Reclassifications - Certain prior year amounts have been reclassified to conform to current year presentation. 20 21 Note 2 - Change in Fiscal Year End: In July 1993, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30 in order to conform the Company's financial reporting to the natural business year of the sugar industry. Inventory quantities are significantly lower at the end of the new fiscal year than at the end of a calendar year. Therefore, as a consequence of the change in fiscal year end the Company experienced a LIFO inventory liquidation in the 1993 fiscal period and recorded a charge to operations of $3,030,000, net of tax of $1,870,000. To aid comparative analysis, the Company has presented below results of operations (condensed) for the nine-month periods ended October 3, 1993 and September 27, 1992 (in thousands except for shares and per share amounts):
Fiscal Period Ended --------------------------------------- October 3, September 27, 1993 1992 (Unaudited) ------------------- ----------------- Net sales $ 818,116 $ 833,341 Operating expenses 806,277 798,974 ---------- ---------- Income from operations 11,839 34,367 Other income and (expenses) (8,698) (6,740) ---------- ---------- Income before income taxes and change in accounting principle 3,141 27,627 Provision for income taxes 1,155 9,903 ---------- ---------- Income before change in accounting principle 1,986 17,724 Cumulative effect of change in accounting principle 600 (18,170) ---------- ---------- Net income (loss) $ 2,586 $ (446) ========== ========== Income per weighted average share outstanding: Income before change in accounting principle $ .08 $ .67 Cumulative effect of change in accounting principle .02 (.69) ---------- ---------- Net income (loss) $ .10 $ (.02) ---------- ---------- Weighted average shares outstanding 26,238,196 26,571,834 ========== ==========
Note 3 - Acquisitions: On January 31, 1995, the Company acquired certain assets of Reckitt and Colman, Inc., which are used in the manufacture, sale and distribution of filled plastic salt and pepper shakers for $7,050,000 in cash. On July 7, 1993, the Company acquired the outstanding common stock of King Packaging Company, Inc., a supplier of plastic cutlery and customized meal kits to the foodservice and healthcare industries. The acquisition was accounted for as a purchase, and the acquisition costs 21 22 of the assets acquired and the liabilities assumed are as follows (in thousands of dollars): Cash $ 7,244 Inventories 1,770 Other current assets 3,086 Property, plant and equipment 4,757 Value of non-compete agreements 8,203 Other assets 290 ------- Assets acquired 25,350 Liabilities assumed (977) ------- $24,373 =======
Note 4 - Inventories: A summary of inventories by method of pricing and class is as follows:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Last-in, first-out $ 64,642 $46,952 First-in, first-out 9,807 9,350 Moving average 28,672 29,038 -------- ------- $103,121 $85,340 ======== ======= Raw materials and work-in-process $ 46,533 $26,924 Packaging materials, parts and supplies 26,245 27,115 Finished goods 30,343 31,301 -------- ------- $103,121 $85,340 ======== =======
Certain LIFO inventory quantities were reduced during fiscal 1995 and 1994. These reductions resulted in the liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 1995 and 1994 purchases. The effect of these liquidations decreased cost of goods sold by $586,000 in fiscal 1995 and $1,762,000 in fiscal 1994, and increased net income by $364,000, or $.01 per share, in fiscal 1995 and $1,097,000, or $.04 per share, in fiscal 1994. The replacement cost of inventories exceeded reported cost by approximately $11,101,000 at October 1, 1995 and $10,013,000 at October 2, 1994. 22 23 Note 5 - Property, Plant and Equipment: Property, plant and equipment is summarized as follows:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Land $ 8,143 $ 8,417 Buildings 94,670 91,053 Machinery and equipment 326,842 314,530 Leasehold improvements 1,201 1,159 Projects-in-process 6,135 6,153 -------- -------- 436,991 421,312 Less - Accumulated depreciation and amortization (206,100) (180,810) -------- -------- $230,891 $240,502 ======== ========
Repairs and maintenance expense was $35,241,000, $31,584,000 and $26,706,000 for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993, respectively. Note 6 - Long-term Debt, Credit Arrangements and Leases: Long-term debt is summarized as follows:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Senior notes - $47,857 Series A at 8.35% and $12,143 Series B at 7.15% $ 60,000 $ 70,000 Long-term debt supported by revolving credit facilities with banks 10,000 20,000 Notes payable to banks related to the ESOP 14,100 15,500 Industrial revenue bonds 22,500 28,000 Other long-term debt 6,564 8,367 -------- -------- 113,164 141,867 Less - Current portion (6,300) (1,643) -------- -------- $106,864 $140,224 ======== ========
The Senior Notes are payable in amounts of $8,750,000 in fiscal 1999, $17,304,000 in fiscal 2000, $15,750,000 in fiscal 2001, $13,821,000 in fiscal 2002, and $4,375,000 in fiscal 2003. The market value of the Company's $60,000,000 fixed rate long-term debt at October 1, 1995 is approximately $64,087,000 based on a market value based prepayment calculation negotiated with the lenders. During August, 1995, the Company entered into revolving credit agreements aggregating $140,000,000, of which $10,000,000 was outstanding as long-term debt and $22,300,000 was outstanding as short-term debt at year end. The revolving credit facilities are committed through January 1, 1999 and, in general, enable the Company to borrow funds at LIBOR plus 1/2%. The Company pays an annualized fee of 1/5% on the unused portion of these facilities. At October 1, 1995, the Company had $14,100,000 in notes payable related to the Employee Stock Ownership Plan (ESOP) and $22,500,000 of 23 24 industrial revenue bonds. These notes and bonds carry tax-advantaged variable rates of interest equal to approximately 4.86% in 1995. The ESOP loans are payable as follows: $4,285,000 in fiscal 1996, $6,215,000 in fiscal 1998 and $3,600,000 payable in fiscal 1999 through fiscal 2005. The $22,500,000 industrial revenue bonds consist of $4,500,000 due in fiscal 2000, $4,500,000 due in fiscal 2001, $6,000,000 payable in $1,000,000 installments in fiscal 2002 through 2007, $3,500,000 due in fiscal 2004, $2,500,000 payable in $500,000 installments from fiscal 2001 through 2005 and $1,500,000 due in 2017. These bonds are secured by financing statements on project-related equipment, the cost of which approximates the bond amounts. The Company uses interest rate exchange agreements, more commonly called interest rate swaps, to manage its interest rate exposure. The effect of certain of the swap agreements is to fix the rate on the $10,000,000 long-term debt borrowed under revolving credit agreements, the $14,100,000 ESOP loans and the $22,500,000 industrial revenue bonds over the remaining period of these swap contracts. The average fixed interest rate on this $46,600,000 of debt fixed through these swap agreements is 8.00%. These swaps were entered into to fix the interest rate on variable debt at rates which the Company considered attractive at the time the agreements were consummated. When the Company entered into these agreements, it compared its anticipated interest costs to other long term borrowing sources such as private placements and other fixed rate borrowing options. Accordingly, the Company has realized its desired objectives in the use of these derivatives. If the Company had canceled these agreements as of October 1, 1995, it would have been required to pay the counter-parties to the agreements an aggregate amount of $2,100,000. The Company has also entered into forward swap agreements for periods ranging from 1998 to 2004. These swaps, in conjunction with the Company's existing fixed rate debt, will fix the rate on approximately $80,000,000 of debt for this time period. The Company entered into these agreements to fix the rate on variable rated debt intended to be borrowed to refinance fixed rate debt currently outstanding. The swaps require the Company to pay fixed rates ranging from 6.5% to 7.0% against 90 day LIBOR. These transactions were entered into to protect the Company against interest rate increases and to fix future interest rates at rates the Company considers attractive. If the Company had canceled these agreements as of October 1, 1995, it would have been required to pay the counter-parties to the agreements an aggregate amount of $290,000. 24 25 Short-term borrowings, including borrowings under the Company's revolving credit facilities which were for temporary working capital needs, are summarized as follows:
Fiscal Period Ended ---------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Daily average outstanding borrowings $31,373 $27,953 $49,816 Daily weighted average interest rate 6.29% 3.82% 3.42% Maximum borrowings $68,500 $62,300 $85,500 Amount outstanding at year-end $22,300 $ - $26,300
The Company's most restrictive loan covenants are included in its Senior Notes and require maintenance of a minimum net worth and a minimum income level in relation to interest expense. At October 1, 1995, the Company was not in compliance with these covenants, but has obtained amendments through December, 1995 which allow the Company to comply with the amended terms of the agreement. Discussions between the Company and the Senior Note lenders are continuing to further amend the terms of this debt. Under the terms of the Company's revolving credit facilities, the Company has the ability to refinance the Senior Notes if it is in compliance with the covenants contained in the revolving credit agreements. The Company was in compliance with the terms of the revolving credit facilities at the end of fiscal 1995. In the event that the Company is not in compliance with the terms of the covenants in its revolving credit facilities, the Company believes it will be able to obtain appropriate waivers. In the event that waivers are not obtained related to the revolving credit facilities, the agreements would likely be modified. If not modified, the agreements also provide an option to the revolving credit lenders to accelerate the repayment of this indebtedness. Interest expense was $14,847,000 in fiscal 1995, $13,380,000 in fiscal 1994, and $10,226,000 for the 39 week fiscal 1993 period. Cash payments of interest were $14,634,000 in fiscal 1995, $13,364,000 for fiscal 1994, and $9,377,000 for the 1993 fiscal 39 week period. Annual maturities of long-term debt each year for the next five fiscal years are $6,300,000 in 1996, $2,110,000 in 1997, $7,894,000 in 1998, $19,440,000 in 1999, $22,494,000 in 2000 and $54,926,000 in subsequent years through 2017. Lease expense related to operating leases aggregated $1,552,000, $1,887,000, and $1,553,000 in fiscal 1995, 1994 and 1993, respectively. Lease commitments on operating leases exceeding one year for fiscal 1996, 1997, 1998, 1999, and 2000 are $1,210,000, $1,190,000, $1,173,000, $805,000 and $662,000, respectively. Note 7 - Income Taxes: The Company prospectively adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109) effective January 4, 1993, the first day of the fiscal period ended October 3, 1993. The adoption of FAS 109 changed the Company's method of 25 26 accounting for income taxes from the deferred method (Accounting Principles Board Opinion No. 11) to an asset and liability approach. Previously the Company deferred the past tax effects of timing differences between financial reporting and taxable income. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities. Under FAS 109, assets and liabilities acquired in business combinations accounted for under the purchase method are assigned their fair values, and deferred taxes are provided for lower or higher tax bases. Under APB 11, values assigned were net-of-tax. In adopting FAS 109, the Company adjusted the carrying amounts of the Michigan Sugar Company fixed assets and LIFO inventories acquired in 1984. Pretax income from operations for the fiscal period ended October 3, 1993 was reduced by $5,600,000 representing additional cost of sales and depreciation expense resulting from the higher carrying amounts. The net adjustments to the January 4, 1993 balance sheet to adopt FAS 109 resulted in a $600,000 credit to net income. This amount is reflected in the accompanying consolidated statement of operations for the fiscal period ended October 3, 1993 as a cumulative effect of a change in accounting principle. Pretax income for all periods presented was taxed exclusively in the United States. The benefit from (provision for) income taxes is comprised of the following:
Fiscal Period Ended ---------------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Current federal $1,515 $(8,071) $ 3,692 Current state 863 (75) 232 Deferred federal 271 4,794 (4,977) Deferred state (64) 489 (102) ------ ------- ------- Benefit from (provision for) income taxes $2,585 $(2,863) $(1,155) ====== ======= ======= Tax effect of change in: Minimum pension liability $4,716 $ (720) $ 5,502 Cumulative translation adjustment 261 - - ------ ------- ------- $4,977 $ (720) $ 5,502 ====== ======= =======
Cash payments of income taxes amounted to $6,637,000, $7,504,000 and $11,834,000 for the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993, respectively. 26 27 Deferred income tax assets (liabilities) are comprised of the following:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Depreciation $(22,854) $(22,406) Other post employment benefits 12,316 11,951 Accrued pension liability 12,769 8,296 Deferred compensation 6,227 5,571 Tax benefit purchases (2,616) (3,335) Other non-current 659 368 -------- -------- Total net non-current asset 6,501 445 -------- -------- Other accrued expenses 847 2,865 Inventory (411) (410) Other current 1,226 79 -------- -------- Total net current asset 1,662 2,534 -------- -------- Net deferred asset $ 8,163 $ 2,979 ======== ========
A reconciliation between the benefit from (provision for) income taxes and the amount computed by applying the U. S. federal income tax rate to income before income taxes and change in accounting principle is as follows:
Fiscal Period Ended -------------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Computed "expected" tax benefit (expense) $2,127 $(3,012) $(1,068) (Increases) reductions in taxes resulting from: State income taxes, net of federal income tax benefit (280) 269 (95) Tax-free income earned 120 104 107 ESOP dividends 254 506 547 Effect of tax rate increase - - (181) Other 364 (730) (465) ------ ------ ------ Benefit from (provision for) income taxes $2,585 $(2,863) $(1,155) ====== ======= =======
The Company increased its deferred income tax liability in the last quarter of the fiscal period ended October 3, 1993 as a result of legislation enacted during 1993 increasing the corporate tax rate from 34% to 35% commencing in 1993. Note 8 - Stockholders' Equity: The Certificate of Incorporation of the Company, as amended, authorizes a class of preferred stock to consist of up to 1,000,000 shares of $.50 par value stock. The Board of Directors can determine the characteristics of the preferred stock without further stockholder approval. On November 17, 1995, the Board of Directors approved the formation of a grantor trust which is expected to purchase approximately 2,500,000 27 28 shares of Company common stock from the Company. It is intended that over an extended period of time the trust will use such shares or the proceeds from the sale of such shares to satisfy obligations of the Company under various employee benefit plans, including the Company's qualified defined benefit pension plans, its supplemental pension plan, and obligations under deferred compensation contracts for employees and directors, all of which are discussed in Notes 9 and 10 below. Note 9 - Pension Plans: Substantially all employees and retirees of the Company are covered by noncontributory defined benefit pension plans. The Company also provides supplemental pension benefits to certain retired employees. The supplemental pension benefits are determined annually by the Board of Directors. Benefits under the noncontributory defined benefit pension plans for bargaining employees are primarily based on years of service; benefits for other employees are generally based on years of service and the employee's highest consecutive three-year average earnings. The Company's policy is to contribute at least the minimum amount required by the Employee Retirement Income Security Act. At October 1, 1995, the assets of these plans are invested primarily in cash equivalents, mutual stock and bond funds, and common stocks including 194,087 shares of the Company's common stock with a market value of $2,620,000. The plan received $69,000 in dividends from these shares during the fiscal period ended October 1, 1995. The following table sets forth the status of the Company's qualified defined benefit pension plans and the pertinent assumptions used in computing this information as of the end of each respective period:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Actuarial present value of benefit obligation based on current compensation: Vested $(78,364) $(65,650) Nonvested (6,927) (6,370) -------- -------- Accumulated benefit obligation (85,291) (72,020) Increase in present value of benefit obligation to reflect projected compensation increases (7,524) (7,520) -------- -------- Projected benefit obligation (92,815) (79,540) Plan assets at fair value 62,835 57,120 -------- -------- Projected benefit obligation (in excess of) plan assets (29,980) (22,420) Unrecognized prior service cost 3,386 3,614 Unrecognized net loss 31,876 22,904 Unrecognized net asset at transition (2,352) (3,428) Adjustment required to recognize minimum liability (25,369) (15,570) -------- -------- Pension liability included in "Deferred employee benefits" $(22,439) $(14,900) ======== ========
28 29 The table above is based on a discount rate of 7.5% for the fiscal period ended October 1, 1995 and 8.5% for the fiscal period ended October 2, 1994, and projected salary increases of 4.5% for the fiscal periods ended October 1, 1995 and October 2, 1994. Pension expense is summarized as follows:
Fiscal Period Ended ---------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Costs related to services provided by employees during the year $2,250 $2,401 $1,573 Interest cost on projected benefit obligation 6,601 6,274 4,910 Actual gain on plan assets (6,390) (1,172) (2,476) Net amortization and deferrals 437 (4,564) (2,692) ------ ------ ------ Pension expense related to defined benefit plans 2,898 2,939 1,315 Supplemental pension benefits 190 126 91 ------ ------ ------ Total pension expense $3,088 $3,065 $1,406 ====== ====== ======
The expected long-term rate of return on plan assets used in determining "Pension expense related to defined benefit plans" as shown above was 9.5%, 9.5% and 10.5% for the fiscal periods ended October 1, 1995, October 2, 1994, and October 3, 1993, respectively. The Company sponsors an unqualified Supplemental Executive Retirement Plan (SERP) to supplement its qualified plan for certain management employees. The actuarially determined expense related to this plan is summarized as follows:
Fiscal Period Ended ---------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Costs related to services provided by employees during the year $ 283 $ 285 $165 Interest cost on projected benefit obligation 912 781 569 Net amortization and deferrals 169 189 66 ------ ------ ---- Total pension expense related to SERP plan $1,364 $1,255 $800 ====== ====== ====
29 30 The table below summarizes the status of the SERP plan at the end of each respective period:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Actuarial present value of benefit obligation based on current compensation: Vested $(11,097) $ (9,320) Nonvested (917) (1,033) -------- -------- Accumulated benefit obligation (12,014) (10,353) Increase in present value of benefit obligation to reflect projected compensation increases (850) (399) -------- -------- Projected benefit obligation (12,864) (10,752) Unrecognized prior service cost 197 209 Unrecognized net loss 2,893 1,502 Unrecognized net obligation at transition 70 149 Adjustment required to recognize minimum liability (2,310) (1,461) -------- -------- Pension liability included in "Deferred employee benefits" $(12,014) $(10,353) ======== ========
The table above is based on a discount rate of 7.5% for the fiscal period ended October 1, 1995 and 8.5% for the fiscal period ended October 2, 1994, and projected salary increases of 4.5% for the fiscal periods ended October 1, 1995 and October 2, 1994. In accordance with the provisions of Statement of Financial Accounting Standards No. 87 - Employers' Accounting for Pensions, the Company has recorded an additional minimum liability at October 1, 1995 and at October 2, 1994 representing the excess of the accumulated benefit obligation over the fair value of plan assets and accrued pension liability for its pension and SERP plans. The additional liability has been offset by an intangible asset which is included in "Other assets" to the extent of previously unrecognized prior service cost. Amounts in excess of previously unrecognized prior service cost are recorded net of the related deferred tax benefit as a reduction of stockholders' equity of $14,842,000 at October 1, 1995 and $8,210,000 at October 2, 1994. Note 10 - Other Retirement and Benefit Plans: The Company sponsors a deferred compensation program which permits directors and certain management employees to defer portions of their compensation and earn a guaranteed interest rate on the deferred amounts. In effect, such amounts deferred are unsecured loans to the Company. The salaries, which have been deferred since the program's inception have been accrued, and the expense, other than salaries, related to this program is interest on the deferred amounts. Interest expense during the fiscal periods ended October 1, 1995, October 2, 1994 and October 3, 1993 includes $2,320,000, $1,915,000 and $1,247,000, respectively, related to this program. The Company has included in "Deferred employee benefits" $17,694,000 at October 1, 1995 and $15,176,000 at October 2, 1994 to reflect its liability under this program. Payments required to be made to participants in this program 30 31 for the next five fiscal years are $1,455,000 in 1996, $1,459,000 in 1997, $1,460,000 in 1998, $1,634,000 in 1999, and $2,094,000 in 2000. The Company sponsors 401(k) plans in which substantially all non-bargaining employees and certain bargaining unit employees are eligible to participate. These plans allow eligible employees to save a portion of their salary on a pre- tax basis. The Company makes monthly contributions to these plans which aggregated $437,000, $408,000, and $320,000 for the fiscal periods ended October 1, 1995, October 2, 1994, and October 3, 1993, respectively. The Company also sponsors an Employee Stock Ownership Plan (ESOP) in which substantially all non-bargaining employees participate. Contributions may be made in the form of cash or Company stock. The Company has expensed contributions to the ESOP of $109,000 in fiscal 1995 and $1,235,000 in fiscal 1993. The Company also sponsors benefit plans that provide postretirement health care and life insurance benefits to certain employees who meet the applicable eligibility requirements. The cost of postretirement health care and life insurance benefits is summarized as follows:
Fiscal Period Ended -------------------------------------- October 1, October 2, October 3, 1995 1994 1993 ---------- ---------- ---------- (In thousands of dollars) Costs related to services provided by employees during the year $ 476 $ 669 $ 428 Interest cost on accumulated benefit obligation 2,447 2,369 1,878 ------ ------ ------ Total postretirement benefit expense $2,923 $3,038 $2,306 ====== ====== ======
The actuarial and recorded liabilities for these postretirement benefits, none of which have been funded, are as follows:
October 1, October 2, 1995 1994 ---------- ---------- (In thousands of dollars) Accumulated postretirement benefit obligation: Retirees $(20,473) $(17,753) Active participants (11,634) (11,244) -------- -------- Accumulated benefit obligation (32,107) (28,997) Unrecognized net gain (1,000) (3,163) -------- -------- Accrued postretirement benefit obligation included in "Deferred employee benefits" $(33,107) $(32,160) ======== ========
The assumed discount rate was 7.5% for the fiscal period ended October 1, 1995 and 8.5% for the fiscal period ended October 2, 1994. For the fiscal period ended October 1, 1995, the rate of increase in the per capita costs of covered health care benefits was assumed to be 7.5% for the first four years, 6% for the next five years, and 5% thereafter. For the fiscal period ended October 2, 1994, the rate of increase in the per capita costs of covered health care benefits was assumed to be 8% 31 32 for the first five years, 6% for the next five years and 5% thereafter. Increasing the health care cost trend rate assumption by one percentage point would increase the accumulated postretirement benefit obligation as of October 1, 1995 by approximately $2,064,000 and would increase postretirement benefit cost by approximately $237,000 for the fiscal period ended October 1, 1995. Note 11 - Commitments and Contingencies: The Company has contracted for the purchase of a substantial portion of its future raw sugar requirements. Prices to be paid for raw sugar under these contracts are based in some cases on market prices during the anticipated delivery month. In other cases prices are fixed and, in these instances, the Company generally obtains commitments from its customers to buy the sugar prior to fixing the price, or enters into futures transactions to hedge the commitment. The Company is exposed to loss in the event of non-performance by the other party to the interest rate swap agreements discussed in Note 6. However, the Company does not anticipate non-performance by the counter-parties to the transactions. As of the end of fiscal 1995, approximately $2,500,000 of a claim by the United States Customs Service (Customs) remains unresolved. Customs has alleged that drawback claims prepared by the Company for certain export shipments of sugar during the years 1984 to 1988 are technically and/or substantively deficient and that the Company, therefore, is not entitled to monies previously received under these drawback claims. The Company disputes Customs' findings and has been vigorously protesting this matter with Customs. The ultimate resolution of this matter is not expected to have a materially adverse effect on the Company's financial position or results of operations. During the last quarter of fiscal 1995 the Company preliminarily settled a case between National Utility Service, Inc. (NUS) and the Company in the United States District Court for the District of New Jersey through a payment by the Company of approximately $4,550,000 to NUS during the fourth quarter of fiscal 1995. This dispute arose from a contract between the Company and NUS for energy cost saving recommendations. The Company expensed $1,600,000 in fiscal 1995 and $2,950,000 in fiscal 1994. The Company is pursuing an appeal of this matter to the U.S. Supreme Court. 32 33 Note 12 - Quarterly Financial Information (Unaudited): Unaudited quarterly financial information for the fiscal periods ended October 1, 1995 and October 2, 1994 is as follows:
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- (In thousands of dollars except for per share amounts) Fiscal period ended October 1, 1995 Net sales $282,477 $253,377 $275,554 $287,136 Gross profit 28,848 20,907 20,472 22,403 Income (loss) from operations 8,460 337 217 (1,628) Net income (loss) 3,618 (1,927) (2,428) (2,756) Per share .14 (.07) (.10) (.10) Fiscal period ended October 2, 1994 Net sales $280,186 $247,005 $272,891 $274,285 Gross profit 30,979 22,308 23,127 26,247 Income from operations 8,317 1,613 3,197 7,170 Net income (loss) 3,541 (271) 233 2,240 Per share .13 (.01) .01 .09
33 34 Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of Registrant. The information relating to the Directors of the Company is incorporated by reference from the "ELECTION OF DIRECTORS" section, pages 4 through 7, of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on February 15, 1996, to be filed pursuant to Section 14 of the Securities Exchange Act of 1934 ("1996 Proxy Statement"). The information relating to the Executive Officers of the Company is incorporated by reference from the "MANAGEMENT OF SAVANNAH FOODS & INDUSTRIES, INC." section, page 8 of the 1996 Proxy Statement. The information relating to disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is incorporated by reference from the "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" section, page 15, of the 1996 Proxy Statement. Item 11. Executive Compensation. The information relating to executive compensation is incorporated by reference from the "EXECUTIVE COMPENSATION" section, pages 9 and 10, the "BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD" section, pages 14 and 15, the "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" section, pages 11 and 12, the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section, page 12, and the performance graph, page 13, of the 1996 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information relating to the security ownership of certain beneficial owners and management is incorporated by reference from the "STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" section, pages 2 and 3, of the 1996 Proxy Statement. Item 13. Certain Relationships and Related Transactions. The information relating to certain relationships and related transactions is incorporated by reference from the "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" section, page 14, and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section, page 12, of the 1996 Proxy Statement. 34 35 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a)(1) and (2): See index of Financial Statements, Item 8(a) and 8(b), page 13. (a)(3) Exhibits: Page Exhibit No. Number Description - ---- ------ ----------- 3-1 Articles of Incorporation, as amended, is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 3-1. 40 3-2 Amendment to By-Laws. 41 3-3 By-Laws, as amended, including amendment in Exhibit 3-2. 54 4-1 Letter Agreements dated August 24, 1995 and Master Credit Agreement between Savannah Foods & Industries, Inc. and the bilateral lenders named therein. 4-2 Note Agreement, dated as of September 1, 1992, between Savannah Foods & Industries, Inc., as borrower, and the lenders named therein, consisting of $50,000,000 8.35% Series A Senior Notes due November 1, 2002 and $20,000,000 7.15% Series B Senior Notes due November 1, 2002 is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended October 2, 1994 as Exhibit 4-2. 4-3 In reliance upon Item 601(b) (4) (iii) of Regulation S-K, various instruments defining the rights of holders of long-term debt of Registrant are not being filed herewith because the total of securities authorized under each such instrument does not exceed 10% of the total assets of Registrant. Registrant hereby agrees to furnish a copy of any such instrument to the Commission upon request. 10-1* Profit Sharing and Management Incentive Compensation Plan is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-1. 10-2* Supplemental Executive Retirement Plan, as amended and restated, is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-2. 35 36 Page Exhibit No. Number Description - ---- ------- ----------- 10-3* Amendment No. 1 to the Supplemental Executive Retirement Plan is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-3. 10-4* Deferred Compensation Plan for Key Employees, as amended and restated, is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-4. 10-5* Amendment No. 1 to the Deferred Compensation Plan for Key Employees is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-5. 10-6* Amendment No. 2 to the Deferred Compensation Plan for Key Employees is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year ended October 2, 1994 as Exhibit 10-6. 10-7* Employment Agreements with all other Executive Officers of the Company are incorporated by reference to Commission File No. 1-11420 filed on Form 10-K for the year ended January 1, 1989 as Exhibit 10-7. 10-8* Employment Agreement - W. W. Sprague, III is incorporated by reference to Commission File No. 1-11420 filed on Form 10-K for the year ended December 29, 1991 as Exhibit 10-8. 161 10-9* Employment Agreement - David H. Roche 174 21-1 Subsidiaries of Registrant 175 23-1 Consent of Independent Accountants 176 27-1 Financial Data Schedules * Indicates exhibits which are management contracts or compensatory agreements. (b) Reports on Form 8-K: None. (c) See (a)(3) Exhibits above. (d) Not applicable. 36 37 UNDERTAKINGS For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned Registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into Registrant's Registration Statements on Form S-8 Number 2-63448, Monthly Investment Plan for Employees of Savannah Foods & Industries, Inc. (filed June 19, 1984 as amended on April 3, 1992); and Number 2-94678, Employee Retirement Savings Account Plan (filed December 22, 1984 as amended on October 18, 1994). Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to Directors, Officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, Officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, Officer or controlling persons in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 37 38 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SAVANNAH FOODS & INDUSTRIES, INC. Dated: December 18, 1995 By: /s/ William W. Sprague, III ---------------------------- William W. Sprague, III President and Chief Executive Officer 38 39 Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of Registrant in the capacities and on the dates indicated: /s/ William W. Sprague, III President and December 18 , 1995 - -------------------------- Chief Executive Officer William W. Sprague, III and Director /s/ Gregory H. Smith Senior Vice President December 18 , 1995 - -------------------------- Chief Financial Officer Gregory H. Smith and Treasurer (PRINCIPAL FINANCIAL AND PRINCIPAL ACCOUNTING OFFICER) /s/ F. Sprague Exley Senior Vice President - December 18 , 1995 - -------------------------- Human Resources and F. Sprague Exley Administration and Assistant Secretary and Director /s/ W. Waldo Bradley Director December 18 , 1995 - -------------------------- W. Waldo Bradley /s/ John D. Carswell Director December 19 , 1995 - -------------------------- John D. Carswell /s/ Hugh M. Tarbutton Director December 18 , 1995 - -------------------------- Hugh M. Tarbutton /s/ Arthur Gignilliat, Jr. Director December 18 , 1995 - -------------------------- Arthur Gignilliat, Jr. /s/ Robert L. Harrison Director December 18 , 1995 - -------------------------- Robert L. Harrison /s/ Arnold Tenenbaum Director December 18 , 1995 - -------------------------- Arnold Tenenbaum
39 EX-3.2 2 AMENDMENT TO BY LAWS 1 Exhibit 3-2 AMENDMENT TO THE BY-LAWS OF THE CORPORATION An amendment to the By-Laws of the Corporation was approved by stockholders at the February 16, 1995 Annual Meeting of Stockholders. Article III, Section 2 of the By-Laws was amended to increase the maximum number of Directors from thirteen to fifteen. The first paragraph of Article III, Section 2, as amended, reads in pertinent part: The number of Directors shall not be less than three nor more than fifteen as fixed from time to time resolution of the Board of Directors...... 40 EX-3.3 3 BY-LAWS 1 Exhibit 3-3 Page 1 BY-LAWS OF SAVANNAH FOODS & INDUSTRIES, INC. (A DELAWARE CORPORATION) ARTICLE I. OFFICES SECTION 1. Registered Office in Delaware. The registered office of SAVANNAH FOODS & INDUSTRIES, INC. (hereinafter called the "Corporation") in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the registered agent in charge thereof shall be The Corporation Trust Company, 100 West Tenth Street, Wilmington, Delaware 19801. SECTION 2. Other Offices. The Corporation may have such other office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be necessary or appropriate for the conduct of the business of the Corporation. ARTICLE II. MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meeting. Meetings of stockholders may be held at such place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine, or as shall be necessary or appropriate for the conduct of the business of the Corporation. SECTION 2. Annual Meetings. The annual meeting of stockholders for the election of directors and the transaction of other business shall be held on the third Thursday in February in each year commencing with the year 1994. At each annual meeting the stockholders entitled to vote shall elect a Board of Directors and may transact such other business as may properly come before the meeting. Section 2 Amended 7/21/93 SECTION 3. Special Meetings. A special meeting of the stockholders, or of any class thereof entitled to vote, for any purpose or purposes, may be called at any time by the Chairman of the Board, the President, or by order of the Board of Directors. SECTION 4. Notice of Meeting. Except as otherwise expressly required by law, written notice of each meeting of stockholders, whether annual or special, stating the place, date and hour of the meeting, shall be given not less than ten days nor more than fifty days before the date on which the meeting is to be held, to each stockholders of record entitled to vote thereat by delivering a notice thereof to him personally or by mailing such notice in a postage prepaid 41 2 Exhibit 3-3 Page 2 envelope directed to him at his address as it appears on the stock ledger of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices intended for him be directed to another address, in which case such notice shall be directed to him at the address designated in such request. Every notice of a special meeting of the stockholders, besides stating the time and place of the meeting, shall state briefly the objects or purposes thereof. Notices of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy unless such attendance is for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; and, if any stockholder shall, in person or by attorney thereunto authorized, in writing or by telegraph, cable or wireless, waive notice of any meeting of the stockholders, whether prior to or after such meeting, notice thereof need not be given to him. If a meeting is adjourned to another time or place and if any announcement of the adjourned time and place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the adjournment is for more than thirty days or the Board of Directors, after adjournment, fixes a new record date for the adjourned meeting. SECTION 5. List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of the stock ledger to prepare and make, at least ten days before every meeting of the stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in his name. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be kept and produced at the time and place of the meeting during the whole time thereof and subject to the inspection of any stockholder who may be present. The original or duplicate stock ledger shall be the only evidence as to who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such meeting. SECTION 6. Quorum. At each meeting of the stockholders, the holders of record of a majority of the issued and outstanding stock of the Corporation entitled to vote at such meeting, present in person or by proxy, shall constitute a quorum for the transaction of business, except where otherwise provided by law, the Certificate of Incorporation or these By-Laws. In the absence of a quorum, any officer entitled to preside at, or act as Secretary of, such meeting shall have the power to adjourn the meeting from time to time until a quorum shall be constituted. At any such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called, but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. 42 3 Exhibit 3-3 Page 3 SECTION 7. Voting. Except as otherwise provided in the Certificate of Incorporation, at every meeting of stockholders each holder of record of the issued and outstanding stock of the Corporation entitled to vote at such meeting shall be entitled to one vote, in person or by proxy, for each such share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless the proxy provides for a longer period. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such corporation is held by the corporation, shall neither be entitled to vote nor counted for quorum purposes. Nothing in this Section shall be construed as limiting the right of the Corporation to vote its own stock held by it in a fiduciary capacity. At all meetings of the stockholders, a quorum being present, all matters shall be decided by majority vote of the shares of stock entitled to vote held by stockholders present in person or by proxy, except as otherwise required by the Certificate of Incorporation or the laws of the State of Delaware. Unless demanded by a stockholder of the corporation present in person or by proxy at any meeting of the stockholders and entitled to vote thereat, or so directed by the Chairman of the meeting or required by the laws of the State of Delaware, the vote thereat on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or in his name by his proxy, if there by such proxy, and shall state the number of shares voted by him and the number of votes to which each share is entitled. SECTION 8. Inspectors at Shareholders' Meetings. The Board of Directors, in advance of any shareholders' meeting may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at the shareholders' meeting may, and on the request of any shareholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or any shareholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. Any report or certificate made by them shall be prima facia evidence of the facts stated and the vote as certified by them. SECTION 9. Nominations of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting 43 4 Exhibit 3-3 Page 4 of stockholders, or at any special meeting of stockholders called in the manner set forth in Article II, Section 3 hereof for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 9. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called in the manner set forth in Article II, Section 3 hereof for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a 44 5 Exhibit 3-3 Page 5 written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 9. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective nomination shall be disregarded. Section 9 Inserted 12/6/91 SECTION 10. Action at Meetings of Stockholders. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 10 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 10. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. 45 6 Exhibit 3-3 Page 6 No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 10, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 10 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. The business transacted at any special meeting of stockholders called in the manner set forth in Article II, Section 3 hereof shall be confined to the business stated in the notice of meeting, as determined by the person or persons calling such meeting. Section 10 Inserted 12/6/91 ARTICLE III. BOARD OF DIRECTORS SECTION 1. General Powers. The property, business and affairs of the Corporation shall be managed by the Board of Directors. SECTION 2. Number, Term of Office, and Qualifications. The number of Directors shall not be less than three nor more than fifteen as fixed from time to time by resolution of the Board of Directors; provided however, that the number of Directors to be elected at the annual meeting in 1987 shall be four, to be elected for three-year terms expiring in 1990. And, upon approval of this amendment by the stockholders, the Directors then in office will elect a fifth member for a three-year term expiring in 1990. Section 2 amended 2/16/95 Commencing in the year 1988, all Directors to be elected shall be elected for three-year terms except as hereinafter provided in Section 9 of Article III of these By-Laws with respect to Directors elected to fill certain vacancies; provided, however, that the director elected by the Board of Directors in 1990 to fill the vacancy created by the increase in the number of Directors to 13 will serve until the annual meeting in 1991. No person shall be eligible to serve as a Director beyond December 31 of the year in which he reaches the age of sixty-eight, and no person shall be eligible to serve as a Director beyond December 31 of the third year following retirement from his principal occupation of employment at the time he first became a Director. Each Director shall continue in office until the annual meeting in the year in which his term expires and until his successor shall have been elected and qualified, or until his death, resignation, or removal. Section 2 Amended 2/1/91 46 7 Exhibit 3-3 Page 7 SECTION 3. Quorum and Manner of Acting. Unless otherwise provided by law, the presence of one-third of the whole Board of Directors shall be necessary to constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. At all meetings of directors, a quorum being present, all matters shall be decided by the affirmative vote of a majority of the directors present, except as otherwise required by the laws of the State of Delaware. SECTION 4. Place of Meetings, etc. The Board of Directors may hold its meetings and keep the books and records of the Corporation at such place or places within or without the State of Delaware, as the Board may from time to time determine. SECTION 5. Annual Meeting. As promptly as practicable after each annual meeting of stockholders for the election of directors, the Board of Directors shall meet in Savannah, Georgia, for the purpose of organization, the election of officers and the transaction of other business. Notice of such meeting need not be given. If such meeting is held at any other time, notice thereof must be given as hereinafter provided for special meetings of the Board of Directors or a consent and waiver of notice thereof must be signed by all the directors. SECTION 6. Regular Meetings. The Board of Directors shall hold six regular meetings annually at such time and place, within or without the State of Delaware, as determined by the President and specified in the notice of call thereof. The President shall endeavor to schedule the regular meetings during a calendar year at approximately even intervals if practicable. Notice of call of such meetings shall specify the time and date and be given each director in writing mailed no less than five (5) days nor more than thirty (30) days before such meeting. Section 6 Amended 3/4/88 SECTION 7. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, when there is such an officer, or by the President, and shall be called at the request in writing of any three directors, on not less than three hours' notice to each director personally or by telegram, or on not less than three days' written notice to each director by mail. Notice of call of each special meeting shall state the date, time and place of the meeting. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the director or directors entitled to said notice, whether prior to or after the meeting in question, shall be deemed equivalent thereto for purposes of this Section 7. No notice to or waiver by any director with respect to any special meeting shall be required if such director shall be present at said meeting. SECTION 8. Resignation. Any director of the Corporation may resign at any time by giving written notice to the Chairman of the Board, when there is such an officer, or to the President or the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such 47 8 Exhibit 3-3 Page 8 vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. (A). Any director or the entire Board of Directors may be removed, with or without cause, by an affirmative vote of 75% of the holders of the outstanding stock of the Corporation entitled to vote in the election of directors, considered for this purpose as one class, taking such action at an annual meeting of stockholders or at a special meeting of stockholders duly called for such purpose. Alternatively, any director may be removed for cause at any time by the affirmative vote of a majority of the directors then in office. SECTION 9. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, unless otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. Each director so chosen shall hold office for the unexpired term of the director whose place shall be vacant, provided that each director so chosen to fill the vacancy created by increase in the number of directors shall be elected for a term to be designated by the Directors at the time of his election and shall continue in office for such term and until his successor shall have been elected and qualified, and until his death, resignation or removal. SECTION 10. Compensation of Directors. Directors, by resolutions of the Board, may be appropriately compensated for their work as directors, and for attendance at each regular or special meeting of the Board, or any Committee thereof. Nothing herein contained shall be construed to preclude any director from servicing the Corporation or any subsidiary thereof in any other capacity and receiving compensation therefore. SECTION 11. Executive Committee and Other Committees. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate from among its members an Executive Committee and other committees to serve at the pleasure of the Board. Each committee shall consist of three or more directors. Except as set forth below and as otherwise limited by the General Corporation Law of the State of Delaware, the Executive Committee shall have all of the authority of the Board of Directors. Each other committee shall be empowered to perform such functions as may, by resolution, be delegated to it by the Board. The Board of Directors may designate one or more directors as alternate members of any such committee, who may replace any absent member or members at any meetings of such committee. Vacancies in any committee, whether caused by resignation or by increase in the number of members constituting said committee, shall be filled by a majority of the entire Board of Directors. The Executive Committee may fix its own quorum and elect its own Chairman. In the absence or disqualification of any member of such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. The Board of Directors shall have power to change the membership of any such committee at any time and to discharge any such committee, either with or without cause, at any time. Each 48 9 Exhibit 3-3 Page 9 member of any such committee shall be paid such fee, if any, as shall be fixed by the Board of Directors for each meeting of such committee which he shall attend and, in addition, such transportation and other expenses actually incurred by him in going to the meeting of such committee and returning therefrom as the Board of Directors shall approve. SECTION 12. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes or proceedings of the Board or committee. ARTICLE IV. OFFICERS SECTION 1. Number. The principal officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board of Directors, an Executive Vice President, and such other officers as may be appointed in accordance with the provisions of these By-Laws. The offices of Executive Vice President, or of a Vice President, the Secretary and the Treasurer or any of them may be held by the same persons in the discretion of the Board of Directors. The offices of President and Treasurer may also be held by the same person. SECTION 2. Election and Term of Office. The principal officers of the Corporation shall be chosen annually by the Board of Directors at the annual meeting thereof. Each such officer shall hold office until his successor shall have been duly chosen and shall qualify, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Subordinate Officers. In addition to the principal officers enumerated in Section I of this Article IV, the Corporation may have one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers, agents and employees as the Board of Directors may deem necessary, each of whom shall hold office for such period, have such authority, and perform such duties as the President or the Board of Directors may from time to time determine. The Board of Directors may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents or employees. SECTION 4. Removal. Any officer may be removed, either with or without cause, at any time, by resolution adopted by the Board of Directors at any regular meeting of the Board, or at any special meeting of the Board called for that purpose at which a quorum is present. SECTION 5. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 49 10 Exhibit 3-3 Page 10 SECTION 6. Vacancies. A vacancy in any office may be filled for the unexpired portion of the term in the manner prescribed in these By-Laws for election or appointment to such office for such term. SECTION 7. Chairman of the Board. When there is a Chairman of the Board he shall preside at all meetings of stockholders and at all meetings of the Board of Directors. He shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 8. President. The President shall be the Chief Executive Officer of the Corporation, and as such shall have general supervision of the affairs of the Corporation, subject to the control of the Board of Directors. He shall be an ex officio member of all standing committees. In the absence of the Chairman of the Board, or whenever the office is vacant, the President shall preside at all meetings of stockholders and at all meetings of the Board of Directors. Subject to the control and direction of the Board of Directors the President may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. In general, he shall perform all duties incident to the office of President, as herein defined, and all such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Vice Presidents. When there is an Executive Vice President, he shall, in the absence or disability of the President, perform the duties and exercise the powers of the President. He shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. In the absence or disability of the Executive Vice President, the Board of Directors shall determine the Vice President or other officer to perform the duties and exercise the powers of the President. Vice Presidents shall perform such duties and have such other powers as the President or the Board of Directors may from time to time prescribe. SECTION 10. Secretary. The Secretary, if present, shall act as secretary at all meetings of the Board of Directors and of the stockholders, and keep the minutes thereof in a book or books to be provided for that purpose; shall see that all notices required to be given by the Corporation are duly given and served; shall have charge of the stock records of the Corporation; shall see that all reports, statements and other documents required by law are properly kept and filed; and in general, shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or the Board of Directors. SECTION 11. Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds and securities of the Corporation, and shall deposit all such funds in the name of the Corporation in such banks or other depositories as shall be selected by the Board of Directors. He shall exhibit at all reasonable times his books of account and records to any of the directors of the Corporation upon application during business hours at the office of the Corporation where such books and records shall be kept; when requested by the Board of Directors, shall render a statement of the condition of the finances of the Corporation at any meeting of the Board or at the 50 11 Exhibit 3-3 Page 11 annual meeting of stockholders; shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; and in general, shall perform all the duties incident to the office of the Treasurer and such other duties as from time to time may be assigned to him by the President or the Board of Directors. The Treasurer shall give such bond, if any, for the faithful discharge of his duties as the Board of Directors may require. SECTION 12. Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors, and the salaries of any other officers may be fixed by the President. ARTICLE V. SHARES AND THEIR TRANSFER SECTION 1. Certificate for Stock. Every stockholder of the Corporation shall be entitled to a certificate or certificates, to be in such form as the Board of Directors shall prescribe, certifying the number of shares of the capital stock of the Corporation owned by him. SECTION 2. Stock Certificate Signature. The certificates for such stock shall be numbered in the order in which they shall be issued and shall be signed by the President or any Vice President and the Secretary or Treasurer of the Corporation, and its seal shall be affixed thereto. If such certificate is countersigned (1) by a transfer agent other than the Corporation or its employee, or, (2) by a registrar other than the Corporation or its employee, the signatures of such officers of the Corporation may be facsimiles. In case any officer of the Corporation who has signed, or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. SECTION 3. Stock Ledger. A record shall be kept by the Secretary, transfer agent or by any other officer, employee or agent designated by the Board of Directors of the name of the person, firm or corporation holding the stock represented by such certificates, the number of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. SECTION 4. Cancellation. Every certificate surrendered to the Corporation for exchange or registration of transfer shall be canceled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided in Section 7 of this Article V. SECTION 5. Registrations of Transfers of Stock. Registrations of transfers of shares of the capital stock of the Corporation shall be made on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, or with a transfer clerk or a transfer agent appointed as in Section 6 of this Article V provided, and on surrender of the certificate or certificates for 51 12 Exhibit 3-3 Page 12 such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation; provided, however, that whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 6. Regulations. The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with the Certificate of Incorporation or these By-Laws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any principal officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them. SECTION 7. Lost, Stolen, Destroyed or Mutilated Certificates. As a condition of the issue of a new certificate for shares of stock in the place of any certificate theretofore issued and alleged to have been lost, stolen, mutilated or destroyed, the Board of Directors, in its discretion, may require the owner of any such certificate, or his legal representatives, to file with the Corporation a bond in such sum and in such form as it may deem sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of such new certificate. Proper evidence of such loss, theft, mutilation or destruction shall be procured for the Board of Directors, if it so requires. The Board of Directors, in its discretion, may authorize the issuance of new certificates without any bond when in its judgment it is proper to do so. SECTION 8. Record Dates. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a date as a record date for any such determination of stockholders. Such record date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. Section 8 Amended 12/6/91 ARTICLE VI. INDEMNIFICATION The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, indemnify any and all persons whom it shall have power to indemnify under said Section from and against any and all of the expenses, liabilities or other matters referred to in, or covered by said Section. 52 13 Exhibit 3-3 Page 13 ARTICLE VII. MISCELLANEOUS PROVISIONS SECTION 1. Corporate Seal. The Board of Directors shall provide a corporate seal, which shall be in the form of a circle, and shall bear the name of the Corporation and words and figures showing that it was incorporated in the State of Delaware in the year 1969. The Secretary shall be the custodian of the seal. The Board of Directors may authorize a duplicate seal to be kept and used by any other officer. SECTION 2. Fiscal Year. The fiscal year of the Corporation shall end on the Sunday nearest September 30 in each year commencing with the year 1993. Section 2 Amended 7/21/93 SECTION 3. Voting of Stocks Owned by the Corporation. The Board of Directors may authorize any person in behalf of the Corporation to attend, vote and grant proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock. SECTION 4. Dividends. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor, at any regular or special meeting declare dividends upon the capital stock of the Corporation as and when they deem expedient. Before declaring any dividend, there may be set apart out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time in their discretion deem proper for working capital, or as a reserve fund to meet contingencies, or for equalizing dividends, or for such other purposes as the Board of Directors shall deem conducive to the interests of the Corporation. ARTICLE VIII. AMENDMENTS The Board of Directors may alter, amend or repeal the By-laws of the Corporation at any regular or special meeting of the Board of Directors. Except as may otherwise be provided in the Certificate of Incorporation, stockholders may alter, amend or repeal the By-laws of the Corporation at any annual or special meeting of stockholders only upon the affirmative vote of a majority of the stock of the Corporation issued and outstanding and entitled to vote in respect thereof, provided that notice of the proposed alteration, amendment or repeal is contained in the notice of such meeting. By-laws, whether made or altered by the stockholders or by the Board of Directors, shall be subject to alteration or repeal by the stockholders as in this Article VIII above provided. Article VIII Amended 12/6/91 53 EX-4.1 4 LETTER AGREEMENT & MASTER CREDIT AGREEMENT 1 EXHIBIT 4-1 The Fuji Bank, Limited Atlanta Agency Marquis One Tower, Suite 2100 245 Peachtree Center Avenue, N.E. Atlanta, Georgia 30303-1208 Telephone 404-653-2100 Telex 9102507122 Fax 404-653-2119 August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $5,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 54 2 Savannah Foods & Industries, Inc. August 24, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: The Fuji Bank, Limited - Atlanta Agency Marquis One Tower, Suite 2100 245 Peachtree Center Avenue Atlanta, GA 30303-1208 Attention: Connie Fowls Facsimile: 404-653-2119 Telephone: 404-653-2100 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, THE FUJI BANK, LIMITED - ATLANTA AGENCY By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 55 3 NationsBank 600 Peachtree Street, N.E. 21st Floor Atlanta, GA 30308-2213 August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $25,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 56 4 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: ADDRESS FOR NOTICES AND REQUESTS: NationsBank 101 North Tryon Street Charlotte, NC 28255 Attention: Judy Dudley Facsimile: 704-386-8694 Telephone: 704-386-8201 LENDING OFFICE AND ADDRESS FOR OTHER COMMUNICATIONS: NationsBank of Georgia, N.A. 600 Peachtree Street Atlanta, GA 30308 Attention: Jan J. Serafen Facsimile: 404-607-6467 Telephone: 404-607-5549 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, NATIONSBANK OF GEORGIA, N.A. By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 57 5 NBD Bank 611 Woodward Avenue Detroit, Michigan 48226 Phone 313-225-4227 James D. Heinz Vice President August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $20,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 58 6 Savannah Foods & Industries, Inc. August 24, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: NBD Bank 611 Woodward Avenue Detroit, MI 28226 Attention: Gilda Johnson Facsimile: 313-225-2649 Telephone: 313-225-3677 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, NBD BANK By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 59 7 Second National Bank 101 North Washington Avenue Saginaw, Michigan 48607 August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $15,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 60 8 Savannah Foods & Industries, Inc. August 24, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: Second National Bank of Saginaw 101 North Washington Avenue Saginaw, Michigan 48607 Attention: Joyce M. Van Ochten Facsimile: 517-776-7420 Telephone: 517-776-7469 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, SECOND NATIONAL BANK OF SAGINAW By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 61 9 Trust Company Bank A SunTrust Bank P O Box 4418 Atlanta, Georgia 30302 August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $10,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 62 10 Savannah Foods & Industries, Inc. August 24, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: Trust Company Bank 25 Park Place, 23rd Floor Atlanta, GA 30303 Attention: Laura J. Sowders Facsimile: 404-588-8833 Telephone: 404-588-7797 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, TRUST COMPANY BANK By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 63 11 Wachovia Bank of Georgia, N.A. 191 Peachtree Street, N.E. Atlanta, Georgia 30303 August 24, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $40,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 64 12 Savannah Foods & Industries, Inc. August 24, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: Wachovia Bank of Georgia, N.A. 191 Peachtree Street, N.E., 30th Floor Atlanta, GA 30303-1757 Attention: Stephen F. Blake Facsimile: 404-332-6920 Telephone: 404-332-4078 If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, WACHOVIA BANK OF GEORGIA, N.A. By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 65 13 The Chase Manhattan Bank, N.A. 1 Chase Plaza New York, New York 10081 August 22, 1995 Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Re: Master Credit Agreement attached hereto as Exhibit A (the "Master Credit Agreement"; capitalized terms which are used herein without definition have the meanings given them in the Master Credit Agreement.) Gentlemen: The undersigned, as the Bank, and the Borrower, by execution and return to the Bank of a counterpart hereof, hereby agree that the Master Credit Agreement is incorporated herein by reference and made a part hereof, and each of them shall be a party to the Master Credit Agreement by virtue hereof. This letter is the Letter Agreement between the Borrower and the Bank, and this Letter Agreement and the Master Credit Agreement shall constitute the Agreement between the Bank and the Borrower. The Bank and the Borrower hereby agree as follows: 1. Establishment of Facility; Commitment. The Bank hereby establishes the Facility, with a Commitment in the amount of $25,000,000. 2. Closing Date. The Closing Date for all purposes under the Agreement shall be August 24, 1995. 3. Addresses for Notices; Lending Office. The addresses and telecopier numbers of the Bank and the Borrower for notices, requests and other communications under the Agreement are set forth below, as contemplated in Section 8.01 of the Master Credit Agreement, and the address of the Bank set forth below is its Lending Office, in each case unless a different address hereafter is specified or designated pursuant to such Section 8.01. 66 14 Savannah Foods & Industries, Inc. August 22, 1995 Page 2 Borrower: Savannah Foods & Industries, Inc. 2 East Bryan Street Savannah, GA 31401 Attention: Mr. Greg Smith Facsimile: 912-232-3469 Telephone: 912-651-5050 Bank: The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza - 18th Fl. New York, NY 10081 Attention: Martine Castadot Facsimile: 212-344-0246 Telephone: 212-552-5051 4. Governing Law; Consent to Jurisdiction. The parties hereto acknowledge that for the purposes of interpreting each of Sections 8.10 and 8.12 of the Master Credit Agreement, the "state in which the bank has its principal office" is New York. If the terms hereof are acceptable, please execute and return a counterpart of this letter to the undersigned, whereupon this Letter Agreement shall be effective as of the Closing Date. Very truly yours, THE CHASE MANHATTAN BANK, N.A. By:____________________________________ Title:______________________________ ACCEPTED AND AGREED TO: SAVANNAH FOODS & INDUSTRIES, INC. By: ________________________________ Title: ________________________ 67 15 MASTER CREDIT AGREEMENT BETWEEN SAVANNAH FOODS & INDUSTRIES, INC. AND ANY BILATERAL LENDER WHICH BECOMES A PARTY HERETO BY LETTER AGREEMENT DATED AS OF THE CLOSING DATE ESTABLISHED BY THE LETTER AGREEMENT 68 16 TABLE OF CONTENTS MASTER CREDIT AGREEMENT
Page ---- ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.03. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.04. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 1.05. Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 2.01. Commitment to Make Available Conventional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 2.02. Method of Borrowing Conventional Rate Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 2.03. Offered Rate Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.04. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.05. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.06. Interest Rates; Accretion of Principal of Banker's Acceptances . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.07. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 2.08. Optional Termination or Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.09. Mandatory Reduction and Termination of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.10. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.11. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 2.12. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 2.13. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) 69 17 ARTICLE III CONDITIONS TO BORROWINGS . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 3.01. Conditions to First Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 3.02. Conditions to All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 29 SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 4.02. Corporate and Governmental Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 4.04. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 4.05. No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.07. Compliance with Laws; Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.09. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.10. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.11. Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.12. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.13. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.15. Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.16. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.17. Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.18. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(ii) 70 18 SECTION 5.02. Inspection of Property, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.03. Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.04. Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.05. Consolidations, Mergers and Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 5.06. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.07. Compliance with Laws; Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.08. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.09. Change in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.10. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.11. Environmental Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.12. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.13. Environmental Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.14. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.15. Subsidiary Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.16. Loans or Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.17. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.18. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.19. Ratio of Long-Term Debt to Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 5.20. Ratio of Adjusted Cash Flow to Interest and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 5.21. Ratio of Consolidated Current Assets to Consolidated Current Liabilities. . . . . . . . . . . . . . . 40 SECTION 5.22. Minimum Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 5.23. Ratio of Long-Term Debt to Consolidated Adjusted Cash Flow . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 5.24. Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE VI DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(iii) 71 19 ARTICLE VII CHANGE IN CIRCUMSTANCES; COMPENSATION . . . . . . . . . . . . . . . . . . 45 SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 7.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 7.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 7.04. Base Rate Loans or Other Fixed Rate Loans Substituted for Affected Fixed Rate Loans . . . . . . . . . . 47 SECTION 7.05. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.03. Expenses; Documentary Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 8.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 8.05. Setoff; Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 8.06. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 8.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 8.08. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 8.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 8.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 8.11. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 8.12. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 8.13. Waiver of Jury Trial; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
EXHIBIT A Form of Note EXHIBIT B Form of Opinion of Counsel for the Borrower EXHIBIT C Form of Assignment and Acceptance EXHIBIT D Form of Notice of Borrowing (iv) 72 20 EXHIBIT E Form of Compliance Certificate EXHIBIT F Form of Closing Certificate EXHIBIT G Form of Offered Rate Credit Quote Request EXHIBIT H Form of Offered Rate Credit Quote Schedule 4.05 Litigation Schedule 4.08 Subsidiaries Schedule 5.15 Existing Debt Schedule 5.18(a) Existing Liens (v) 73 21 MASTER CREDIT AGREEMENT MASTER CREDIT AGREEMENT dated as of the Closing Date established by a Letter Agreement between Savannah Foods & Industries, Inc. and each Bilateral Lender which becomes a party hereto pursuant to a Letter Agreement. This Master Credit Agreement is intended to serve, through incorporation by reference in a separate and independent Letter Agreement between the Borrower and each Bilateral Lender, as the basis for the definitive credit agreement between the Borrower and such Bilateral Lender, and through such means to constitute a separate and independent credit agreement between the Borrower, as the borrower, and such Bilateral Lender, as an individual lender and not as a co-lender with the other Bilateral Lenders, for the Facility provided by such Bilateral Lender, but with the credit agreement and the Facility with each Bilateral Lender being on substantially common terms and conditions with the credit agreement and Facility with each other Bilateral Lender. The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. Capitalized terms which are used in this Agreement and are not otherwise defined herein have the meanings given them in the Letter Agreement with the Bank. In addition, the terms as defined in this Section 1.01 shall, for all purposes of this Agreement and any amendment hereto (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings set forth herein: "Affiliate" of any relevant Person means (i) any Person that directly, or indirectly through one or more intermediaries, controls the relevant Person (a "Controlling Person"), (ii) any Person (other than the relevant Person or a Subsidiary of the relevant Person) which is controlled by or is under common control with a Controlling Person, or (iii) any Person (other than a Subsidiary of the relevant Person) of which the relevant Person owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" means this Master Credit Agreement, together with the Letter Agreement between the Borrower and the 1 74 22 Bank, and together with all amendments and supplements hereto or thereto. "Applicable Margin" means (i) for Base Rate Loans, 0.0%, and (ii) for Euro-Dollar Loans and Banker's Acceptances, 0.425%; provided, that if during any Fiscal Quarter the ratio of Consolidated Adjusted Cash Flow to Consolidated Interest Expense plus obligations of the Borrower and its Consolidated Subsidiaries with respect to operating leases shall be less than 3.0 to 1.0 but equal to or greater than 2.5 to 1.0, as permitted by Section 5.20, the Applicable Margin for Euro-Dollar Loans and Banker's Acceptances for the immediately succeeding Fiscal Quarter shall be 0.55%. "Assignee" has the meaning set forth in Section 8.07(c). "Assignment and Acceptance" means an Assignment and Acceptance executed in accordance with Section 8.07(c) in the form attached hereto as Exhibit C. "Authority" has the meaning set forth in Section 7.02. "Bank" means, as between the Borrower and any particular Bilateral Lender, and for all purposes under this Master Credit Agreement, such Bilateral Lender. "Banker's Acceptance" means a banker's acceptance (x) of a Draft (i) against the liability for which the Bank is not required to maintain reserves under Regulation D or any other Authority and (ii) which may or may not be (in the discretion of the Bank) eligible for discount by member banks of the Federal Reserve System and (y) which may be a Conventional Rate Banker's Acceptance or an Offered Rate Banker's Acceptance, and the term "Banker's Acceptance" may refer to any one, or more, or all of the Conventional Rate Banker's Acceptances or the Offered Rate Banker's Acceptances, as the context shall require. "Base Rate" means for any Base Rate Loan for any day, the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent above the Federal Funds Rate. For purposes of determining the Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change. "Base Rate Loan" means a Loan to be made as a Base Rate Loan pursuant to the applicable Notice of Borrowing, Section 2.02(f), or Article VIII, as applicable. "Bilateral Lender" means any lender which executes and delivers a Letter Agreement with the Borrower. 2 75 23 "Borrower" means Savannah Foods & Industries, Inc., a Delaware corporation, and its successors and its permitted assigns. "Borrowing" means a borrowing hereunder consisting of Loans or Banker's Acceptances made available to the Borrower by the Bank, and the term "Borrowing", when used in conjunction with a reference to a specific type of Loan or Banker's Acceptance, means a Borrowing of such type. "Capital Stock" means any capital stock of the Borrower or any Consolidated Subsidiary (to the extent issued to a Person other than the Borrower), whether common or preferred, other than Redeemable Preferred Stock. "Capitalization" means the sum of (i) Stockholder's Equity, plus (ii) Long-Term Debt. "CERCLA" means the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing regulations and amendments. "CERCLIS" means the Comprehensive Environmental Response Compensation and Liability Inventory System established pursuant to CERCLA. "Change of Law" shall have the meaning set forth in Section 7.02. "Closing Certificate" has the meaning set forth in Section 3.01(d). "Closing Date" means the Closing Date established by the Letter Agreement with the Bank. "Code" means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code. "Collateral Account" has the meaning specified in Section 6.01. "Commitment" means the amount set forth as such in the Letter Agreement with the Bank, as such amount may be (i) reduced from time to time pursuant to Sections 2.08 and 2.09 or (ii) increased from time to time pursuant to the Letter Agreement. "Compliance Certificate" has the meaning set forth in Section 5.01(c). "Consolidated Adjusted Cash Flow" means the sum of the following of the Borrower and its Consolidated Subsidiaries, on a consolidated basis: (i) Consolidated Net Income, plus (ii) Consolidated Interest Expense, plus (iii) obligations as lessee under operating leases, plus (iv) tax expense plus (v) 3 76 24 depreciation and amortization expense, plus (vi) to the extent included in determining Consolidated Net Income but not included in clause (iii) or (v), any non-cash charges or any non-recurring charges, less (vii) to the extent included in determining Consolidated Net Income but not included in clause (iii) or (v), any non-cash gains and non-recurring gains. "Consolidated Current Assets" and "Consolidated Current Liabilities" mean, at any time, all assets or liabilities (including contingent liabilities), respectively, of the Borrower and its Consolidated Subsidiaries that, in accordance with GAAP, should be classified (or, with respect to any contingent liabilities, would be classified if they were direct liabilities) as current assets or current liabilities, respectively, on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries. "Consolidated Interest Expense" for any period means interest expense, as reported in the income statement of the Borrower and its Consolidated Subsidiaries, in respect of Debt of the Borrower or any of its Consolidated Subsidiaries outstanding during such period. "Consolidated Net Income" means, for any period, the Net Income of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis, but excluding (i) extraordinary items and (ii) any equity interests of the Borrower or any Subsidiary in the unremitted earnings of any Person that is not a Subsidiary. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which, in accordance with GAAP, would be consolidated with those of the Borrower in its consolidated financial statements as of such date. "Consolidated Total Assets" means, at any time, the total assets of the Borrower and its Consolidated Subsidiaries, determined on a consolidated basis, as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in accordance with GAAP. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. "Conventional Rate" means, (i) with respect to a Conventional Rate Loan, the Base Rate or the Euro-Dollar Rate, and (ii) with respect to a Conventional Rate Banker's Acceptance, the Effective Discount Rate. 4 77 25 "Conventional Rate Banker's Acceptance" means a Banker's Acceptance made available at the Conventional Rate pursuant to Section 2.01. "Conventional Rate Credit" means any one, or more, or all, as the context shall require, of the Conventional Rate Loans and the Conventional Rate Banker's Acceptances. "Conventional Rate Loan" means a Loan made at a Conventional Rate pursuant to the terms and conditions set forth in Section 2.01. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all obligations of such Person to reimburse any bank or other Person in respect of amounts payable under a banker's acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event such Person is a corporation), (vii) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid or to be paid under a letter of credit or similar instrument, (viii) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed by such Person. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Default Rate" means, with respect to any Loan, on any day, the sum of 2% plus the then highest interest rate (including the Applicable Margin) which may be applicable to any Loans hereunder (irrespective of whether any such type of Loans are actually outstanding hereunder). "Dollars" or "$" means dollars in lawful currency of the United States of America. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in the state in which the Bank has its principal office are authorized by law to close. "Draft" means a draft in form and substance satisfactory to the Bank, relating to a Banker's Acceptance, and duly executed in blank by the Borrower or on its behalf by the Bank under a power of attorney, in favor of the Bank from the Borrower. 5 78 26 "Drawing Purchase Price" means: (i) with respect to Conventional Rate Banker's Acceptances, the difference between (A) the aggregate Face Amount of such Conventional Rate Banker's Acceptance and (B) the product (rounded to the nearest whole cent, with one-half of one cent being rounded up) of (x) the aggregate Face Amount multiplied by (y) the sum of the Effective Discount Rate plus Applicable Margin multiplied by (z) a fraction of the numerator of which is the term of maturity (from the date of creation of such Banker's Acceptance to the Stated Maturity Date) of such Banker's Acceptances and the denominator is 360; and (ii) with respect to Offered Rate Banker's Acceptances, the discounted net proceeds to be received by the Borrower upon the creation of such Banker's Acceptance, after taking into account the Offered Rate with respect thereto. "Effective Discount Rate" means, with respect to Conventional Rate Bankers' Acceptances, the rate offered by the Bank on the date of Borrowing in its sole discretion which is specific to the Bank's funding position for bankers' acceptances generally, and not tied to a verifiable market index, taking into account such factors as the Bank may deem appropriate in regard to the establishment of such rates, for banker's acceptances having a maturity approximately equal to the maturity (from the date of creation of the Banker's Acceptance to the Stated Maturity Date) of the relevant Bankers' Acceptance. "Environmental Authority" means any foreign, federal, state, local or regional government that exercises any form of jurisdiction or authority under any Environmental Requirement. "Environmental Authorizations" means all licenses, permits, orders, approvals, notices, registrations or other legal prerequisites for conducting the business of the Borrower or any Subsidiary required by any Environmental Requirement. "Environmental Judgments and Orders" means all judgments, decrees or orders arising from or in any way associated with any Environmental Requirements, whether or not entered upon consent, or written agreements with an Environmental Authority or other entity arising from or in any way associated with any Environmental Requirement, whether or not incorporated in a judgment, decree or order. "Environmental Liabilities" means any liabilities, whether accrued, contingent or otherwise, arising from and in any way associated with any Environmental Requirements. "Environmental Notices" means notice from any Environmental Authority or by any other person or entity, of possible or alleged noncompliance with or liability under any 6 79 27 Environmental Requirement, including without limitation any complaints, citations, demands or requests from any Environmental Authority or from any other person or entity for correction of any violation of any Environmental Requirement or any investigations concerning any violation of any Environmental Requirement. "Environmental Proceedings" means any judicial or administrative proceedings arising from or in any way associated with any Environmental Requirement. "Environmental Releases" means releases as defined in CERCLA or under any applicable state or local environmental law or regulation. "Environmental Requirements" means any legal requirement relating to health, safety or the environment and applicable to the Borrower, any Subsidiary or the Properties, including but not limited to any such requirement under CERCLA or similar state legislation and all federal, state and local laws, ordinances, regulations, orders, writs, decrees and common law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof. "Euro-Dollar Business Day" means any Domestic Business Day on which dealings in Dollar deposits are carried out in the London interbank market. "Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar Loan pursuant to the applicable Notice of Borrowing. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.06(b). "Event of Default" has the meaning set forth in Section 6.01. "Face Amount" means, in respect of a Draft or a Banker's Acceptance, the amount payable to the holder thereof on its maturity. "Facility" means the particular credit facility made available by a Bilateral Lender to the Borrower pursuant to the Letter Agreement between them. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic 7 80 28 Business Day immediately succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Domestic Business Day as so published on the immediately succeeding Domestic Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions, as determined by the Bank. "Fiscal Quarter" means any fiscal quarter of the Borrower. "Fiscal Year" means any fiscal year of the Borrower. "Fixed Rate Borrowing" means a Euro-Dollar Borrowing, an Offered Rate Borrowing, a Banker's Acceptance Borrowing, or any or all of them, as the context shall require. "Fixed Rate Loans" means Euro-Dollar Loans or Offered Rate Loans, or any or all of them, as the context shall require. "GAAP" means generally accepted accounting principles applied on a consistent basis as used by the Borrower it its annual audited financial statements submitted to the Securities and Exchange Commission. Such principles, in accordance with Section 1.02, are to be used in making the calculations for purposes of determining compliance with the terms of this Agreement. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hazardous Materials" includes, without limitation, (a) solid or hazardous waste, as defined in the Resource Conservation and Recovery Act of 1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations and amendments, or in any applicable state or local law or regulation, (b) "hazardous substance", 8 81 29 "pollutant", or "contaminant" as defined in CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or any other petroleum product or by-product, including, crude oil or any fraction thereof, or (d) pesticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable state or local law or regulation, as each such Act, statute or regulation may be amended from time to time. "Interest Period" means: (1) with respect to each Euro-Dollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the first, second, third or sixth month thereafter, as the Borrower may elect in the applicable Notice of Borrowing; provided that: (a) any Interest Period (subject to paragraph (c) below) which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the immediately succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall, subject to paragraph (c) below, end on the last Euro-Dollar Business Day of the appropriate subsequent calendar month; and (c) no Interest Period may be selected which begins before the Termination Date and would otherwise end after the Termination Date. (2) with respect to each Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; provided that: (a) any Interest Period (subject to paragraph (b) below) which would otherwise end on a day which is not a Domestic Business Day shall be extended to the immediately succeeding Domestic Business Day; and (b) no Interest Period which begins before the Termination Date and would otherwise end after the Termination Date may be selected. (3) with respect to each Conventional Rate Banker's Acceptance Borrowing, the period commencing on the date of such Borrowing and ending not less than 30 days nor more than 180 days thereafter; provided that: (a) any Interest Period (subject to paragraph (b) below) which would otherwise end on a day which is not a 9 82 30 Domestic Business Day shall be extended to the immediately succeeding Domestic Business Day; and (b) no Interest Period which begins before the Termination Date and would otherwise end after the Termination Date may be selected. (4) with respect to each Offered Rate Borrowing, the period commencing on the date of such Borrowing and ending on the Stated Maturity Date or such other date or dates as may be specified in the applicable Offered Rate Quote; provided that: (a) any Interest Period (subject to clause (b) below) which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the immediately succeeding Euro-Dollar Business Day; and (b) no Interest Period may be selected which begins before the Termination Date and would otherwise end after the Termination Date. "Investment" means any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise. "Lending Office" means the office of the Bank located at its address set forth or identified as its Lending Office in the Letter Agreement with the Bank or such other office as the Bank may hereafter designate as its Lending Office by notice to the Borrower. "Letter Agreement" means a letter agreement between the Borrower and a Bilateral Lender establishing a Facility and incorporating by reference therein the terms of this Master Credit Agreement, so that the Master Credit Agreement, together with such Letter Agreement, constitutes the definitive credit agreement for such Facility. "Lien" means, with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, security interest, security title, preferential arrangement which has the practical effect of constituting a security interest or encumbrance, or encumbrance or servitude of any kind in respect of such asset to secure or assure payment of a Debt or a Guarantee, whether by consensual agreement or by operation of statute or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any 10 83 31 conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a Conventional Rate Loan or Offered Rate Loan (but not a Banker's Acceptance), and "Loans" means Conventional Rate Loans or Offered Rate Loans, or any or all of them, as the context shall require. "Loan Documents" means this Agreement, the Note, the Banker's Acceptances, any other document evidencing, relating to or securing the Loans or the Banker's Acceptances, and any other document or instrument delivered from time to time in connection with this Agreement, the Note, the Loans or the Banker's Acceptances, as such documents and instruments may be amended or supplemented from time to time. "London Interbank Offered Rate" has the meaning set forth in Section 2.06(b). "Long-Term Debt" means at any date the amount of Debt reported as long-term on the Borrower's consolidated financial statements in accordance with GAAP and any other Debt of the Borrower or the Consolidated Subsidiaries which has a maturity date more than one year from the date of measurement. "Margin Stock" means "margin stock" as defined in Regulations G, T, U or X. "Material Adverse Effect" means, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon (as a result of such event, act, condition or occurrence) any of (a) the financial condition, operations, business, properties or prospects of the Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the Bank under the Loan Documents, or the ability of the Borrower to perform its obligations under the Loan Documents to which it is a party, as applicable, or (c) the legality, validity or enforceability of any Loan Document. "Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of ERISA. "Net Income" means, as applied to any Person for any period, the aggregate amount of net income of such Person, after taxes, for such period, as determined in accordance with GAAP. "Net Proceeds of Capital Stock" means any proceeds received by the Borrower or a Consolidated Subsidiary in respect of the issuance of Capital Stock, after deducting therefrom all 11 84 32 reasonable and customary costs and expenses incurred by the Borrower or such Consolidated Subsidiary directly in connection with the issuance of such Capital Stock. "Note" means the promissory note of the Borrower, substantially in the form of Exhibit A, evidencing the obligation of the Borrower to repay Loans, together with all amendments, consolidations, modifications, renewals and supplements thereto. "Notice of Borrowing" has the meaning set forth in Section 2.02. "Offered Rate" has the meaning specified in Section 2.03(c)(ii)(C). "Offered Rate Banker's Acceptance" means a Banker's Acceptance made available at an Offered Rate pursuant to Section 2.03. "Offered Rate Credit" means any one, or more, or all, as the context shall require, of the Offered Rate Loans and the Offered Rate Banker's Acceptances. "Offered Rate Credit Borrowing Date" has the meaning specified in Section 2.03(b)(i). "Offered Rate Credit Quote" has the meaning specified in Section 2.03(c)(i). "Offered Rate Credit Quote Request" has the meaning specified in Section 2.03(b). "Offered Rate Loans" means Loans made pursuant to the terms and conditions set forth in Section 2.03. "Participant" has the meaning set forth in Section 8.07(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, a limited liability company, an unincorporated association, a trust or any other entity or organization, including, but not limited to, a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any 12 85 33 other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding 5 plan years made contributions. "Prime Rate" refers to that interest rate so denominated and set by the Bank from time to time as an interest rate basis for borrowings. The Prime Rate is but one of several interest rate bases used by the Bank. The Bank lends at interest rates above and below the Prime Rate. "Properties" means all real property owned, leased or otherwise used or occupied by the Borrower or any Subsidiary, wherever located. "Redeemable Preferred Stock" of any Person means any preferred stock issued by such Person which is at any time prior to the Termination Date either (i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or (ii) redeemable at the option of the holder thereof. "Refunding Loan" means a new Conventional Rate Loan made on the day on which an outstanding Conventional Rate Loan is maturing or a Base Rate Borrowing is being converted to a Fixed Rate Borrowing, if and to the extent that the proceeds thereof are used entirely for the purpose of paying such maturing Loan or Loan being converted, excluding any difference between the amount of such maturing Loan or Loan being converted and any greater amount being borrowed on such day and actually either being made available to the Borrower pursuant to Section 2.02(c) or remitted to the Bank as provided in Section 2.12, in each case as contemplated in Section 2.02(d). "Regulation G" means Regulation G of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. 13 86 34 "Related Investments" mean equity Investments by the Borrower or any Subsidiary in any business related to the ongoing business lines of the Borrower as of the Closing Date. "Reported Net Income" means, for any period, the Net Income of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis in accordance with GAAP and reported quarterly to the Securities and Exchange Commission. "Senior Note Agreement" means, collectively, the Note Agreements relating ot the $50,000,000 8.35% Series A Senior Notes Due November 1, 2002 and the $20,000,000 7.15% Series Senior notes Due November 1, 2002 of the Borrower. "Stated Maturity Date" means, (i) with respect to any Conventional Rate Banker's Acceptance, the last day of the Interest Period related thereto, and (ii) with respect to any Offered Rate Credit, the Stated Maturity Date therefor specified by the Bank in the applicable Offered Rate Credit Quote. "Stockholders' Equity" means, at any time, the shareholders' equity of the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable Preferred Stock of the Borrower or any of its Consolidated Subsidiaries. Shareholders' equity generally would include, but not be limited to (i) the par or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various deductions such as (A) purchases of treasury stock, (B) valuation allowances, (C) receivables due from an employee stock ownership plan, (D) employee stock ownership plan debt guarantees, and (E) translation adjustments for foreign currency transactions. "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Borrower. "Taxes" has the meaning set forth in Section 2.12(c). "Termination Date" means January 1, 1999, unless such date is otherwise extended by the Bank pursuant to Section 2.05(b), in its sole and absolute discretion. "Third Parties" means all lessees, sublessees, licensees and other users of the Properties, excluding those users of the Properties in the ordinary course of the Borrower's business and on a temporary basis. 14 87 35 "Transferee" has the meaning set forth in Section 8.07(d). "Unfunded Vested Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested nonforfeitable benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. "Unrelated Investments" means equity Investments by the Borrower or any Subsidiary in any Person, which Investments are not Related Investments. "Unused Commitment" means at any date an amount equal to the Commitment less the aggregate outstanding principal amount of Loans and the aggregate Face Amount of Banker's Acceptances. "Westway Stock" shall mean two hundred fifty shares of common stock of Westway Trading Corporation currently owned by Borrower. SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants or otherwise required by a change in GAAP) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Bank unless with respect to any such change concurred in by the Borrower's independent public accountants or required by GAAP, in determining compliance with any of the provisions of this Agreement or any of the other Loan Documents: (i) the Borrower shall have objected to determining such compliance on such basis at the time of delivery of such financial statements, or (ii) the Bank shall so object in writing within 30 days after the delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 5.01 hereof, shall mean the financial statements referred to in Section 4.04). SECTION 1.03. References. Unless otherwise indicated, references in this Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other Subdivisions are references to articles, exhibits, schedules, sections and other subdivisions hereof. 15 88 36 SECTION 1.04. Use of Defined Terms. All terms defined in this Agreement shall have the same defined meanings when used in any of the other Loan Documents, unless otherwise defined therein or unless the context shall require otherwise. SECTION 1.05. Terminology. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and the plural shall include the singular. Titles of Articles and Sections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. ARTICLE II THE CREDITS SECTION 2.01. Commitment to Make Available Conventional Rate Credits. The Bank agrees, on the terms and conditions set forth herein, to make available Conventional Rate Credits to the Borrower from time to time before the Termination Date; provided that (i) notwithstanding any other provision of this Master Credit Agreement to the contrary, if the Letter Agreement with the Bank expressly excludes the availability of Conventional Rate Banker's Acceptances, then unless and until the Bank subsequently notifies the Borrower in writing that Conventional Rate Banker's Acceptances shall be available, no Conventional Rate Banker's Acceptances shall be available hereunder, and any provisions in this Master Credit Agreement to the contrary shall be null and void (but each Bilateral Lender agrees that it will not so exclude Conventional Rate Banker's Acceptances unless not to do so would be to the material disadvantage of such Bilateral Lender), and (ii) immediately after each such Conventional Rate Credit is made available, the aggregate principal amount of Loans outstanding and the aggregate Face Amount of Banker's Acceptances outstanding shall not exceed the amount of the Commitment. Each Conventional Rate Borrowing under this Section shall be in a minimum principal amount of $1,000,000 (with respect to Loans) or Face Amount (with respect to Banker's Acceptances) or any larger multiple of $500,000 (except that any such Conventional Rate Borrowing may be in the amount of the Unused Commitment). Within the foregoing limits, the Borrower may borrow under this Section, repay or, to the extent permitted by Section 2.09, prepay Conventional Rate Loans and reborrow under this Section at any time before the Termination Date. SECTION 2.02. Method of Borrowing Conventional Rate Credits. (a) The Borrower shall give the Bank notice (a "Notice of Borrowing"), which may be given by telephone or, at the request of the Bank, shall be in writing in substantially in the form of Exhibit D, prior to 11:00 A.M. (prevailing Eastern time) on the same Domestic Business Day as each Base Rate Borrowing or 16 89 37 Banker's Acceptance Borrowing and at least 2 Euro-Dollar Business Days before each Euro-Dollar Borrowing, specifying: (i) the date of such Conventional Rate Borrowing, which shall be a Domestic Business Day, in the case of a Base Rate Borrowing or Banker's Acceptance Borrowing, or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (ii) the aggregate principal amount (with respect to Loans) or Face Amount (with respect to Banker's Acceptances) of such Conventional Rate Borrowing, (iii) whether the Conventional Rate Borrowing is to be a Base Rate Loan, a Euro-Dollar Loan or a Banker's Acceptance, and (iv) in the case of a Fixed Rate Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. (b) Once a Notice of Borrowing is received by the Bank, it shall not thereafter be revocable by the Borrower without either (i) the consent of the Bank or (ii) the payment of compensation for any loss which the Bank may incur, in accordance with the provisions of Section 7.05. (c) Not later than 3:00 P.M. (prevailing Eastern time) on the date of each Conventional Rate Borrowing, unless the Bank determines that any applicable condition specified in Article III has not been satisfied, the Bank will make such Borrowing available to the Borrower at the Bank's aforesaid address. (d) If the Bank makes a new Conventional Rate Loan hereunder on a day on which the Borrower is to repay all or any part of an outstanding Conventional Rate Loan, the Bank shall apply the proceeds of its new Conventional Rate Loan to make such repayment as a Refunding Loan and only an amount equal to the difference (if any) between the amount being borrowed and the amount of such Refunding Loan shall be made available by the Bank to the Borrower as provided in paragraph (c) of this Section, or remitted by the Borrower to the Bank as provided in Section 2.12, as the case may be. (e) Notwithstanding anything to the contrary contained in this Agreement, no Fixed Rate Borrowing may be made if there shall have occurred a Default or an Event of Default, which Default or Event of Default shall not have been cured or waived, and all Refunding Loans shall be made as Base Rate Loans (but shall bear interest at the Default Rate, if applicable). (f) In the event that a Notice of Borrowing fails to specify whether the Conventional Rate Loan comprising such Conventional Rate Borrowing is to be a Base Rate Loan or a 17 90 38 Euro-Dollar Loan, such Conventional Rate Loan shall be made as a Base Rate Loan. If the Borrower is otherwise entitled under this Agreement to repay any Conventional Rate Loan maturing at the end of an Interest Period applicable thereto with the proceeds of a new Borrowing, and the Borrower fails to repay such Conventional Rate Loan using its own moneys and fails to give a Notice of Borrowing in connection with such new Conventional Rate Borrowing, a new Conventional Rate Borrowing shall be deemed to be made on the date such Conventional Rate Loan matures in an amount equal to the principal amount of the Conventional Rate Loan so maturing, and the Conventional Rate Loan comprising such new Conventional Rate Borrowing shall be a Base Rate Loan. (g) Notwithstanding anything to the contrary contained herein, there shall not be more than 5 Fixed Rate Borrowings outstanding at any given time. (h) With respect to each Conventional Rate Banker's Acceptance to be made available by the Bank, the Borrower agrees to (x) promptly furnish (and in any event not later than 11:00 A.M., prevailing Eastern time, on the date such Conventional Rate Banker's Acceptance is to be made available) to the Bank such documentation as the Bank shall reasonably request in connection with such Conventional Rate Banker's Acceptance, and (y) promptly execute and deliver to the Bank such instruments, agreements and other documents as the Bank shall reasonably request in connection with such Conventional Rate Banker's Acceptance, including such Drafts and other documentation as the Bank usually requires in connection with its banker's acceptances; provided, that, such documentation shall not contain any provisions which are inconsistent with the terms of this Agreement (e.g. cash collateral provisions). SECTION 2.03. Offered Rate Credits. (a) In addition to making Conventional Rate Borrowings, the Borrower may, as set forth in this Section 2.03, request the Bank to make an offer to make Offered Rate Borrowings available to the Borrower. The Bank may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2.03, provided that: (i) the number of Fixed Rate Borrowings which may be outstanding at any given time is subject to the provisions of Section 2.02(g); and (ii) immediately after each such Offered Rate Credit is made available, the aggregate principal amount of Loans outstanding and the aggregate Face Amount of Banker's Acceptances outstanding shall not exceed the amount of the Commitment at such time. (b) When the Borrower wishes to request an offer to make available an Offered Rate Credit, it shall give the Bank 18 91 39 notice, which may be given by telephone or, at the request of the Bank, in writing, substantially in the form of Exhibit G hereto (an "Offered Rate Credit Quote Request") so as to be received no later than 10:00 A.M. (prevailing Eastern time) on the day of the Offered Rate Borrowing proposed therein (or such other time and date as the Borrower and the Bank may agree), specifying: (i) the proposed date of such Offered Rate Borrowing, which shall be a Domestic Business Day (the "Offered Rate Credit Borrowing Date"); (ii) the maturity date (or dates) (each a "Stated Maturity Date") for repayment of the Offered Rate Credit to be made as part of such Offered Rate Borrowing (which Stated Maturity Date shall be that date occurring not less than 1 day (in the case of Loans) or 30 days (in the case of Banker's Acceptances) but not greater than 180 days from the date of such Offered Rate Borrowing); provided that the Stated Maturity Date for any Offered Rate Credit Loan may not extend beyond the Termination Date (as in effect on the date of such Offered Rate Credit Quote Request); and (iii) the aggregate amount of principal or, if such Offered Rate Credit is made available as a Banker's Acceptance, the Face Amount requested by the Borrower for such Offered Rate Borrowing, subject to the limits specified in Section 2.03(a). The Borrower may request offers to make Offered Rate Credits having up to 3 different Stated Maturity Dates in a single Offered Rate Credit Quote Request; provided that the request for each separate Stated Maturity Date shall be deemed to be a separate Offered Rate Credit Quote Request for a separate Offered Rate Borrowing. (c) (i) The Bank may, but shall have no obligation to, submit to the Borrower a response containing an offer to make an Offered Rate Credit, which may be given by telephone or, in the discretion of the Bank, in writing, substantially in the form of Exhibit H hereto (an "Offered Rate Credit Quote") in response to any Offered Rate Credit Quote Request; provided that, if the Borrower's request under Section 2.03(b) specified more than 1 Stated Maturity Date, the Bank may, but shall have no obligation to, make a single submission to the Borrower containing a separate offer for each such Stated Maturity Date and each such separate offer shall be deemed to be a separate Offered Rate Credit Quote. Each Offered Rate Credit Quote must be submitted to the Borrower not later than 11:00 A.M. (prevailing Eastern time) on the Offered Rate Credit Borrowing Date. Subject to Section 6.01, any Offered Rate Credit Quote so made shall be irrevocable except with the written consent of the Borrower. 19 92 40 (ii) Each Offered Rate Quote shall specify: (A) the proposed Offered Rate Credit Borrowing Date and the Stated Maturity Date therefor; (B) whether such offer is to make available an Offered Rate Loan or a Banker's Acceptance; and (C) (x) with respect to each Offered Rate Loan, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) offered for such Offered Rate Loan and (y) with respect to each Offered Rate Banker's Acceptance, such all in rate (including anycommissions, discounts and yields to maturity) which shall be applicable to such Offered Rate Banker's Acceptance (such amounts being hereinafter referred to as the "Offered Rate"). Unless otherwise agreed by the Bank and the Borrower, no Offered Rate Credit Quote shall contain qualifying, conditional or similar language or propose terms other than or in addition to those set forth in the applicable Offered Rate Credit Quote Request. (d) Not later than 12:00 P.M. (prevailing Eastern time) on the Offered Rate Credit Borrowing Date, the Borrower shall notify the Bank of its acceptance or nonacceptance of the offers so notified to it pursuant to Section 2.03(c)(i). In the case of acceptance, such notice shall specify the offers (for each Stated Maturity Date) that are accepted. (e) If any offer to make available any Offered Rate Credit has been accepted, the Bank shall, not later than 3:00 P.M. (prevailing Eastern time) on the Offered Rate Credit Borrowing Date, make the appropriate amount of such Offered Rate Credit available to the Borrower on such date. (f) By its acceptance of an Offered Rate Credit Quote of the Bank to make available an Offered Rate Banker's Acceptance, the Borrower shall be deemed to have agreed to (x) promptly furnish (and in any event not later than 1:00 P.M., prevailing Eastern time, on the acceptance date of such Offered Rate Banker's Acceptance) to the Bank such documentation as the Bank shall reasonably request in connection with such Banker's Acceptance, and (y) promptly execute and deliver to the Bank such instruments, agreements and other documents as the Bank shall reasonably request in connection with such Offered Rate Banker's Acceptance, including such Drafts and other documentation as the Bank usually requires in connection with its banker's acceptances; provided, that, such documentation shall not contain any provisions which are inconsistent with the terms of this Agreement (e.g. cash collateral provisions). 20 93 41 SECTION 2.04. Note. (a) The Loans of the Bank shall be evidenced by a single Note payable to the order of the Bank for the account of its Lending Office in an amount equal to the original principal amount of the Commitment. (b) The Bank shall record, and prior to any transfer of its Note shall endorse on the schedules forming a part thereof appropriate notations to evidence, the date, amount and maturity of, and effective interest rate and type of Loan for, each Loan made by it, the date and amount of each payment of principal made by the Borrower with respect thereto, and such schedules of the Note shall constitute rebuttable presumptive evidence of the respective principal amounts owing and unpaid on the Note; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligation of the Borrower hereunder or under the Note or the ability of the Bank to assign its Note. The Bank is hereby irrevocably authorized by the Borrower to endorse its Note in accordance with the foregoing and to attach to and make a part of the Note a continuation of any such schedule as and when required. SECTION 2.05. Maturity of Loans. (a) Each Loan and Banker's Acceptance included in any Borrowing shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to such Borrowing. (b) Notwithstanding the foregoing, the outstanding principal amount of the Loans, if any, together with all accrued but unpaid interest thereon, if any, and the Face Amount of the outstanding Banker's Acceptances, shall be due and payable on the Termination Date; provided, that the Facility provided by the Bank shall be automatically extended on each anniversary of the Closing Date for an additional 12 months unless the Bank, in its sole discretion, notifies the Borrower at least 30 days prior to the applicable anniversary date that it will not be so extended, in which event no such extension shall become effective. SECTION 2.06. Interest Rates; Accretion of Principal of Banker's Acceptances. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day plus the Applicable Margin. Such interest shall be payable for each Interest Period on the last day thereof. Any overdue principal of and, to the extent permitted by applicable law, overdue interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the Default Rate. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Margin plus the applicable Adjusted London Interbank Offered Rate for such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if 21 94 42 such Interest Period is longer than 3 months, at intervals of 3 months after the first day thereof. Any overdue principal of and, to the extent permitted by law, overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the Default Rate. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the Euro-Dollar Reserve Percentage. The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan, the rate per annum determined on the basis of the offered rate for deposits in Dollars of amounts equal or comparable to the principal amount of such Euro-Dollar Loan offered for a term comparable to such Interest Period, which rates appear on the Reuters Screen LIBO Page effective as of 11:00 A.M., London time, 2 Euro-Dollar Business Days prior to the first day of such Interest Period, provided that (i) if more than one such offered rate appears on the Reuters Screen LIBO Page, the "London Interbank Offered Rate" will be the offered rate which is used in the majority of such quotations, if there is a majority, otherwise the arithmetic average (rounded upward, if necessary, to the next higher 1/100th of 1%) of such offered rates; (ii) if no such offered rates appear on such page, the "London Interbank Offered Rate" for such Interest Period will be the arithmetic average (rounded upward, if necessary, to the next higher 1/100th of 1%) of rates quoted by not less than 2 major banks in New York City, selected by the Bank, at approximately 10:00 A.M., New York City time, 2 Euro-Dollar Business Days prior to the first day of such Interest Period, for deposits in Dollars offered to leading European banks for a period comparable to such Interest Period in an amount comparable to the principal amount of such Euro-Dollar Loan. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirement for the Bank in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. (c) Each Offered Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date 22 95 43 such Offered Rate Loan is made until it becomes due, at a rate per annum equal to the applicable Offered Rate set forth in the relevant Offered Rate Credit Quote. Such interest shall be payable on the Stated Maturity Date thereof, and, if the Stated Maturity Date occurs more than 90 days after the date of the relevant Offered Rate Loan, at intervals of 90 days after the first day thereof. Any overdue principal of and, to the extent permitted by law, overdue interest on any Offered Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the Default Rate. (d) The Drawing Purchase Price of each Offered Rate Banker's Acceptance shall accrete thereon at a rate per annum equal to the relevant Offered Rate applicable thereto for the period from the date such Banker's Acceptance was created to the Stated Maturity Date thereof, for the actual number of days elapse on the basis of a 360 day year, and the Drawing Purchase Price of each Conventional Rate Banker's Acceptance shall accrete at a rate per annum equal to the product, expressed as a percentage, of (i) a fraction, the numerator of which is the difference between the Face Amount thereof and the Drawing Purchase Price thereof, and the denominator of which is the Drawing Purchase Price thereof, multiplied by (ii) a fraction, the numerator of which is 360 and the denominator of which is the term of maturity (from the date such Banker's Acceptance was created to the Stated Maturity Date) thereof. . (e) The Bank shall determine each interest rate applicable to the Loans hereunder and give prompt notice to the Borrower by telephone or telecopier of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (f) After the occurrence and during the continuance of a Default, the principal amount of the Loans and the Face Amount of the Banker's Acceptances (and, to the extent permitted by applicable law, all accrued interest thereon) may, at the election of the Bank, bear interest at the Default Rate. SECTION 2.07. Fees. (a) The Borrower shall pay to the Bank a commitment fee, calculated on the average daily amount of Unused Commitment, at the rate of 0.125% per annum. Such commitment fee shall accrue from and including the Closing Date to but excluding the Termination Date and shall be payable in arrears on each March 31, June 30, September 30 and December 31 and on the Termination Date. (b) The Borrower shall pay to the Bank a facility fee, calculated on the aggregate amount of the Bank's Commitment (without taking into account the amount of the outstanding Loans made or Banker's Acceptances created by such Bank), at the rate of 0.075% per annum. Such facility fees shall accrue from and including the Closing Date to but excluding the Termination Date 23 96 44 and shall be payable in arrears on each March 31, June 30, September 30 and December 31 and on the Termination Date. SECTION 2.08. Optional Termination or Reduction of Commitment. The Borrower may, upon at least 3 Domestic Business Days' notice to the Bank, terminate at any time, or proportionately reduce the Unused Commitment from time to time by an aggregate amount of at least $5,000,000 or any larger multiple of $1,000,000. If the Commitment is terminated in its entirety, all accrued fees (as provided under Section 2.07) shall be due and payable on the effective date of such termination. SECTION 2.09. Mandatory Reduction and Termination of Commitment. The Commitment shall terminate on the Termination Date and any Loans (together with accrued interest thereon) and Banker's Acceptances then outstanding shall be due and payable on such date. SECTION 2.10. Optional Prepayments. (a) The Borrower may, on any Domestic Business Day, prepay any Base Rate Borrowing in whole at any time, or from time to time in part in an aggregate amount of at least $1,000,000 or any larger multiple of $500,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. (b) Except as provided in Section 7.02, the Borrower may prepay all or any portion of the principal amount of any Fixed Rate Loan or Banker's Acceptance prior to the maturity thereof only upon payment of amounts required by Section 7.05, or upon other terms mutually acceptable to the Bank and the Borrower. (c) After receipt by the Bank of notice of prepayment pursuant to this Section 2.10, such notice shall not thereafter be revocable by the Borrower. SECTION 2.11. Mandatory Prepayments. On each date on which the Commitments are reduced pursuant to Section 2.08 or Section 2.09, the Borrower shall repay or prepay such principal amount of the outstanding Loans, if any (together with interest accrued thereon), as may be necessary so that after such payment the aggregate unpaid principal amount of the Loans and the aggregate Face Amount of all of the Banker's Acceptances does not exceed the amount of the Commitment as then reduced. Each such payment or prepayment shall be applied ratably to the Loans outstanding on the date of payment or prepayment in the following order of priority: (i) first, to Base Rate Loans; (ii) secondly, to Euro-Dollar Loans; and (iii) lastly, to Offered Rate Credits, and any such payment applied to a Euro-Dollar Loan or Offered Rate Credit shall be accompanied by payment of amounts required by Section 7.05, or such other amount as may be mutually acceptable to the Bank and the Borrower. 24 97 45 SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of the Bank's fees hereunder, not later than 1:00 P.M. (prevailing Eastern time) on the date when due, in federal or other funds immediately available at the place where payment is due, to the Bank at its address set forth in the Letter Agreement with the Bank. (b) Whenever any payment of principal of, or interest on, the Base Rate Loans or of fees hereunder shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the immediately succeeding Domestic Business Day. Whenever any payment of principal of or interest on, the Euro-Dollar Loans or Offered Rate Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the immediately succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the immediately preceding Euro-Dollar Business Day. (c) All payments of principal, interest and fees and all other amounts to be made by the Borrower pursuant to this Agreement with respect to any Loan or fee relating thereto shall be paid without deduction for, and free from, any tax, imposts, levies, duties, deductions, or withholdings of any nature now or at anytime hereafter imposed by any governmental authority or by any taxing authority thereof or therein excluding in the case of the Bank, taxes imposed on or measured by its net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which the Bank (as the case may be) is organized or any political subdivision thereof and, in the case of the Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of the Bank's applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, imposts, levies, duties, deductions or withholdings of any nature being "Taxes"). In the event that the Borrower is required by applicable law to make any such withholding or deduction of Taxes with respect to any Loan or fee or other amount, the Borrower shall pay such deduction or withholding to the applicable taxing authority, shall promptly furnish to the Bank in respect of which such deduction or withholding is made all receipts and other documents evidencing such payment and shall pay to the Bank additional amounts as may be necessary in order that the amount received by the Bank after the required withholding or other payment shall equal the amount such Bank would have received had no such withholding or other payment been made. If no withholding or deduction of Taxes are payable in respect to any Loan or fee relating thereto, the Borrower shall furnish any, at the Bank's request, a certificate from each applicable taxing authority or an opinion of counsel acceptable to such, in either case stating that such payments are exempt from or not subject to withholding or deduction of Taxes. If the Borrower fails to provide such original or certified copy of a receipt evidencing 25 98 46 payment of Taxes or certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to compensate the Bank for, and indemnify them with respect to, the tax consequences of the Borrower's failure to provide evidence of tax payments or tax exemption. The Bank agrees, if it is not organized under the laws of the United States or any state thereof agree, as soon as practicable after receipt by it of a request by the Borrower to do so, to file all appropriate forms and take other appropriate action to obtain a certificate or other appropriate document from the appropriate governmental authority in the jurisdiction imposing the relevant Taxes, establishing that it is entitled to receive payments of principal and interest under this Agreement and the Note without deduction and free from withholding of any Taxes imposed by such jurisdiction; provided that if it is unable, for any reason, to establish such exemption, or to file such forms and, in any event, during such period of time as such request for exemption is pending, the Borrower shall nonetheless remain obligated under the terms of the immediately preceding paragraph. In the event the Bank receives a refund of any Taxes paid by the Borrower pursuant to this Section 2.12(c), it will pay to the Borrower the amount of such refund promptly upon receipt thereof; provided that if at any time thereafter it is required to return such refund, the Borrower shall promptly repay to it the amount of such refund. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower and the Bank contained in this Section 2.12(c) shall be applicable with respect to any Participant, Assignee or other Transferee, and any calculations required by such provisions (i) shall be made based upon the circumstances of such Participant, Assignee or other Transferee, and (ii) constitute a continuing agreement and shall survive the termination of this Agreement and the payment in full or cancellation of the Note. SECTION 2.13. Computation of Interest and Fees. Interest on all Loans and accretion of principal on all Banker's Acceptances shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Commitment fees and any other fees payable hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). 26 99 47 ARTICLE III CONDITIONS TO BORROWINGS SECTION 3.01. Conditions to First Borrowing. The obligation of the Bank to make a Loan or create a Banker's Acceptance on the occasion of the first Borrowing is subject to the satisfaction of the conditions set forth in Section 3.02 and receipt by the Bank of the following: (a) a duly executed counterpart of the Letter Agreement with the Bank, signed by the Borrower; (b) a duly executed Note complying with the provisions of Section 2.04; (c) an opinion letter (together with any opinions of local counsel relied on therein) of counsel for the Borrower, dated as of the Closing Date, substantially in the form of Exhibit B and covering such additional matters relating to the transactions contemplated hereby as the Bank may reasonably request; (d) a certificate (the "Closing Certificate") substantially in the form of Exhibit F), dated as of the Closing Date, signed by a principal financial officer of the Borrower, to the effect that (i) no Default has occurred and is continuing on the date of the first Borrowing and (ii) the representations and warranties of the Borrower contained in Article IV are true on and as of the date of the first Borrowing hereunder; (e) all documents which the Bank may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Note, and any other matters relevant hereto, all in form and substance satisfactory to the Bank, including, without limitation, a certificate of incumbency of the Borrower, signed by the Secretary or an Assistant Secretary of the Borrower, certifying as to the names, true signatures and incumbency of the officer or officers of the Borrower authorized to execute and deliver the Loan Documents, and certified copies of the following items: (i) the Borrower's Certificate of Incorporation, (ii) the Borrower's Bylaws, (iii) a certificate of the Secretary of State of the State of Delaware as to the good standing of the Borrower as a Delaware corporation, and (iv) the action taken by the Board of Directors of the Borrower authorizing the Borrower's execution, delivery and performance of this Agreement, the Note and the other Loan Documents to which the Borrower is a party; (f) a Notice of Borrowing or notification pursuant to Section 2.03(d) of acceptance of one or more Offered Rate 27 100 48 Credit Quotes, as applicable, together with, if such Borrowing is a Banker's Acceptance Borrowing, the instruments, agreements and other documents required by Section 2.03(f); and (g) cancellation and termination of the Credit Agreement dated as of October 1, 1993, as amended, between and among the Borrower, NationsBank of Georgia, National Association, as Documentation Agent, and the Lenders parties thereto. In addition, if the Borrower desires funding of a Fixed Rate Loan on the Closing Date, the Bank shall have received, the requisite number of days prior to the Closing Date, a funding indemnification letter satisfactory to it, pursuant to which (i) the Bank and the Borrower shall have agreed upon the interest rate, amount of Borrowing and Interest Period for such Fixed Rate Loan, and (ii) the Borrower shall indemnify the Bank from any loss or expense arising from the failure to close on the anticipated Closing Date identified in such letter or the failure to borrow such Fixed Rate Loan on such date. SECTION 3.02. Conditions to All Borrowings. The obligation of the Bank to make a Loan or create a Banker's Acceptance on the occasion of each Borrowing is subject to the satisfaction of the following conditions, except as expressly provided in the last sentence of this Section 3.02: (a) receipt by the Bank of a Notice of Borrowing or notification pursuant to Section 2.03(e) of acceptance of one or more Offered Rate Credit Quotes, as applicable, together with, if such Borrowing is a Banker's Acceptance Borrowing, the instruments, agreements and other documents required by Section 2.03(f). (b) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; (c) the fact that the representations and warranties of the Borrower contained in Article IV of this Agreement shall be true on and as of the date of such Borrowing; and (d) the fact that, immediately after such Borrowing, the aggregate principal amount of Loans outstanding and the aggregate Face Amount of Banker's Acceptances outstanding shall not exceed the amount of the Commitment at such time. Each Borrowing shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the truth and accuracy of the facts specified in paragraphs (b), (c) and (d) of this Section; provided that if such Borrowing consists solely of a Refunding Loan, such Borrowing shall not be deemed to be such a representation and warranty to the effect set forth in Section 4.04(b) as to any event, act or condition having a 28 101 49 Material Adverse Effect which has theretofore been disclosed in writing by the Borrower to the Bank. ARTICLE IV REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants that: SECTION 4.01. Corporate Existence and Power. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all corporate powers and all governmental licenses, authorizations, consents and approvals, and all permits, trademarks, patents and other rights required to carry on its business as now conducted. SECTION 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Borrower of this Agreement, the Note and the other Loan Documents (i) are within the Borrower's corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of or filing with, any governmental body, agency or official, (iv) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or any of its Subsidiaries, and (v) do not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding agreement of the Borrower enforceable in accordance with its terms, and the Note and the other Loan Documents, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower enforceable in accordance with their respective terms, provided that the enforceability hereof and thereof is subject in each case to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors' rights generally. SECTION 4.04. Financial Information. (a) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of October 3, 1994 and the related consolidated statements of income, shareholders' equity and cash flows for the Fiscal Year then ended, reported on by Price Waterhouse, LLP, copies of which have been delivered to the Bank, and the unaudited consolidated financial statements of the Borrower for the interim period ended July 2, 1995, copies of which have been delivered to the Bank, fairly present, in conformity with GAAP, 29 102 50 the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such dates and their consolidated results of operations and cash flows for such periods stated. (b) Since October 3, 1994, there has been no event, act, condition or occurrence having a Material Adverse Effect. SECTION 4.05. No Litigation. There is no action, suit or proceeding pending, or to the knowledge of the Borrower threatened, against or affecting the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could have a Material Adverse Effect or which in any manner draws into question the validity of or could impair the ability of the Borrower to perform its obligations under, this Agreement, the Note or any of the other Loan Documents. All litigation threatened, against or affecting the Borrower is set forth on Schedule 4.05. SECTION 4.06. Compliance with ERISA. (a) The Borrower and each member of the Controlled Group have fulfilled their obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or a Plan under Title IV of ERISA. (b) Neither the Borrower nor any member of the Controlled Group is or ever has been obligated to contribute to any Multiemployer Plan. SECTION 4.07. Compliance with Laws; Payment of Taxes. The Borrower and its Subsidiaries are in compliance with all applicable laws, regulations and similar requirements of governmental authorities, except where such compliance is being contested in good faith through appropriate proceedings. There have been filed on behalf of the Borrower and its Subsidiaries all Federal, state and local income, excise, property and other tax returns which are required to be filed by them and all taxes due pursuant to such returns or pursuant to any assessment received by or on behalf of the Borrower or any Subsidiary have been paid. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Borrower, adequate. United States income tax returns of the Borrower and its Subsidiaries have been examined and closed through December 31, 1991. SECTION 4.08. Subsidiaries. Each of the Borrower's Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all corporate powers and all governmental licenses, authorizations, consents and approvals 30 103 51 required to carry on its business as now conducted. The Borrower has no Subsidiaries except for those Subsidiaries listed on Schedule 4.08, which accurately sets forth each such Subsidiary's complete name and jurisdiction of incorporation. SECTION 4.09. Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4.10. Public Utility Holding Company Act. Neither the Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. SECTION 4.11. Ownership of Property; Liens. Each of the Borrower and its Consolidated Subsidiaries has title to its properties sufficient for the conduct of its business, and none of such property is subject to any Lien except as permitted in Section 5.18. SECTION 4.12. No Default. Neither the Borrower nor any of its Consolidated Subsidiaries is in default under or with respect to any agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound which could have or cause a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. SECTION 4.13. Full Disclosure. All information heretofore furnished by the Borrower to the Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to the Bank will be, true, accurate and complete in every material respect or based on reasonable estimates on the date as of which such information is stated or certified. The Borrower has disclosed to the Bank in writing any and all facts which could have or cause a Material Adverse Effect. SECTION 4.14. Environmental Matters. (a) Neither the Borrower nor any Subsidiary is subject to any Environmental Liability which could have or cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has been designated as a potentially responsible party under CERCLA or under any state statute similar to CERCLA. None of the Properties has been identified on any current or proposed (i) National Priorities List under 40 C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a state statute similar to CERCLA. (b) No Hazardous Materials have been or are being used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed or otherwise handled at, 31 104 52 or shipped or transported to or from the Properties or are otherwise present at, on, in or under the Properties, or, to the best of the knowledge of the Borrower, at or from any adjacent site or facility that could have or cause a Material Adverse Effect, except for Hazardous Materials, such as cleaning solvents, pesticides and other materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed, or otherwise handled in minimal amounts in the ordinary course of business in compliance with all applicable Environmental Requirements. (c) The Borrower, and each of its Subsidiaries and Affiliates, has procured all Environmental Authorizations necessary for the conduct of its business, and is in compliance with all Environmental Requirements in connection with the operation of the Properties and the Borrower's, and each of its Subsidiary's and Affiliate's, respective businesses. SECTION 4.15. Capital Stock. All Capital Stock, debentures, bonds, notes and all other securities of the Borrower and its Subsidiaries presently issued and outstanding are validly and properly issued in accordance with all applicable laws, including, but not limited to, the "Blue Sky" laws of all applicable states and the federal securities laws. The issued shares of Capital Stock of the Borrower's Subsidiaries are owned by the Borrower free and clear of any Lien or adverse claim. At least a majority of the issued shares of capital stock of each of the Borrower's other Subsidiaries is owned by the Borrower free and clear of any Lien or adverse claim. SECTION 4.16. Margin Stock. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of purchasing or carrying any Margin Stock, and no part of the proceeds of any Loan or Banker's Acceptance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or be used for any purpose which violates, or which is inconsistent with, the provisions of Regulation X. SECTION 4.17. Insolvency. After giving effect to the execution and delivery of the Loan Documents and the making of the Loans and the creating of Banker's Acceptances under this Agreement: (i) the Borrower will not (x) be "insolvent," within the meaning of such term as used in O.C.G.A. Section 18-2-22 or as defined in Section 101 of the "Bankruptcy Code", or Section 2 of either the "UFTA" or the "UFCA", or as defined or used in any "Other Applicable Law" (as those terms are defined below), or (y) be unable to pay its debts generally as such debts become due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the UFCA, or (z) have an unreasonably small capital to engage in any business or transaction, whether current or contemplated, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA; 32 105 53 and (ii) the obligations of the Borrower under the Loan Documents and with respect to the Loans will not be rendered avoidable under any Other Applicable Law. For purposes of this Section 4.17, "Bankruptcy Code" means Title 11 of the United States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means any other applicable state law pertaining to fraudulent transfers or acts voidable by creditors, in each case as such law may be amended from time to time. SECTION 4.18. Insurance. The Borrower and each of its Subsidiaries has (either in the name of the Borrower or in such Subsidiary's own name), with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or similar business. ARTICLE V COVENANTS The Borrower agrees that, so long as the Bank has any Commitment hereunder or any amount payable hereunder or under the Note remains unpaid: SECTION 5.01. Information. The Borrower will deliver to the Bank beginning with the Fiscal Year ending October 1, 1995, and beginning with the Fiscal Quarter ending before each Closing Date thereafter: (a) as soon as available and in any event within 90 days after the end of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of income, shareholders' equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous fiscal year, all certified by Price Waterhouse, LLP or other independent public accountants of nationally recognized standing, with such certification to be free of exceptions and qualifications not acceptable to the Bank; (b) as soon as available and in any event within 45 days after the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related statement of income and statement of cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of the previous Fiscal Year, all 33 106 54 certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer, the treasurer or the chief accounting officer of the Borrower; (c) simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b) above, a certificate, substantially in the form of Exhibit E (a "Compliance Certificate"), of the chief financial officer or the chief accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 5.16 through 5.24, inclusive on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (d) simultaneously with the delivery of each set of annual financial statements referred to in paragraph (a) above, a statement of the firm of independent public accountants which reported on such statements to the effect that, in the course of their examination in connection with such annual financial statements (without performing any special procedures in order to give such statement) nothing has come to their attention to cause them to believe that any Default existed on the date of such financial statements; (e) within 5 Domestic Business Days after the Borrower becomes aware of the occurrence of any Default, a certificate of the chief financial officer, the treasurer or the chief accounting officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (f) promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed; (g) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Borrower shall have filed with the Securities and Exchange Commission; (h) if and when any member of the Controlled Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows 34 107 55 that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such notice; and (i) from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Bank may reasonably request. SECTION 5.02. Inspection of Property, Books and Records. The Borrower will (i) keep, and cause each Subsidiary to keep, proper books of record and account in which full, true and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and activities; and (ii) permit, and cause each Subsidiary to permit, representatives of any Bank at such Bank's expense prior to the occurrence of a Default and at the Borrower's expense after the occurrence of a Default to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants. The Borrower agrees to cooperate and assist in such visits and inspections, in each case at such reasonable times and as often as may reasonably be desired. SECTION 5.03. Maintenance of Existence. The Borrower shall, and shall cause each Subsidiary to, maintain its corporate existence and carry on its business in substantially the same manner and in substantially the same fields as such business is now carried on and maintained. SECTION 5.04. Dissolution. Neither the Borrower nor any of its Subsidiaries shall suffer or permit dissolution or liquidation either in whole or in part or redeem or retire any shares of its own stock or that of any Subsidiary, except through corporate reorganization to the extent permitted by Section 5.05. SECTION 5.05. Consolidations, Mergers and Sales of Assets. The Borrower will not, nor will it permit any Subsidiary to, consolidate or merge with or into, or sell, lease or otherwise transfer all or any substantial part of its assets to, any other Person, or discontinue or eliminate any business line or segment, provided that (a) the Borrower may merge with another Person if (i) such Person was organized under the laws of the United States of America or one of its states, (ii) the Borrower is the corporation surviving such merger and (iii) immediately after giving effect to such merger, no Default shall have occurred and be continuing, (b) Subsidiaries of the Borrower may merge with one another, and (c) the foregoing limitation on the 35 108 56 sale, lease or other transfer of assets and on the discontinuation or elimination of a business line or segment shall not prohibit 1) the sale of Westway Stock, or 2) a transfer of assets or the discontinuance or elimination of a business line or segment (in a single transaction or in a series of related transactions) unless the aggregate assets to be so transferred or utilized in a business line or segment to be so discontinued, when combined with all other assets transferred (excluding Westway Stock), and all other assets utilized in all other business lines or segments discontinued, since the Closing Date, constituted more than 10% of Consolidated Total Assets at the end of the Fiscal Quarter just ended. SECTION 5.06. Use of Proceeds. No portion of the proceeds of the Loans will be used by the Borrower or any Subsidiary (i) in connection with, whether directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation, unless such tender offer or other acquisition is to be made on a negotiated basis with the approval of the Board of Directors of the Person to be acquired, and the provisions of Section 5.17 would not be violated, (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose in violation of any applicable law or regulation. SECTION 5.07. Compliance with Laws; Payment of Taxes. The Borrower will, and will cause each of its Subsidiaries and each member of the Controlled Group to, comply with applicable laws (including but not limited to ERISA), regulations and similar requirements of governmental authorities (including but not limited to PBGC), except where the necessity of such compliance is being contested in good faith through appropriate proceedings. The Borrower will, and will cause each of its Subsidiaries to, pay promptly when due all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become a lien against the property of the Borrower or any Subsidiary, except liabilities being contested in good faith and against which, if requested by the Bank, the Borrower will set up reserves in accordance with GAAP. SECTION 5.08. Insurance. The Borrower will maintain, and will cause each of its Subsidiaries to maintain (either in the name of the Borrower or in such Subsidiary's own name), with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or similar business. SECTION 5.09. Change in Fiscal Year. The Borrower will not change its Fiscal Year without the consent of the Bank. 36 109 57 SECTION 5.10. Maintenance of Property. The Borrower shall, and shall cause each Subsidiary to, maintain all of its properties and assets in good condition, repair and working order, ordinary wear and tear excepted. SECTION 5.11. Environmental Notices. The Borrower shall furnish to the Bank prompt written notice of all material Environmental Liabilities, pending, threatened or anticipated Environmental Proceedings, Environmental Notices, Environmental Judgments and Orders, and Environmental Releases at, on, in, under or in any way affecting the Properties or any adjacent property, and all facts, events, or conditions that could lead to any of the foregoing. SECTION 5.12. Environmental Matters. The Borrower and its Subsidiaries will not, and will not permit any Third Party to, use, produce, manufacture, process, treat, recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or transport to or from the Properties any Hazardous Materials except for Hazardous Materials such as cleaning solvents, pesticides and other similar materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed, managed, or otherwise handled in minimal amounts in the ordinary course of business in compliance with all applicable Environmental Requirements. SECTION 5.13. Environmental Release. The Borrower agrees that upon the occurrence of an Environmental Release at or on any of the Properties it will act immediately to investigate the extent of, and to take appropriate remedial action to eliminate, such Environmental Release, whether or not ordered or otherwise directed to do so by any Environmental Authority. SECTION 5.14. Transactions with Affiliates. Neither the Borrower nor any of its Subsidiaries shall enter into, or be a party to, any transaction with any Affiliate of the Borrower or such Subsidiary (which Affiliate is not the Borrower or a Subsidiary), except as permitted by law and in the ordinary course of business and pursuant to reasonable terms which are fully disclosed in writing by the Bank, and are no less favorable to Borrower or such Subsidiary than would be obtained in a comparable arm's length transaction with a Person which is not an Affiliate. SECTION 5.15. Subsidiary Debt. Attached as Schedule 5.15 is a list of all Debt of the Borrower and its Subsidiaries in existence on the Closing Date. The Borrower shall not permit any Subsidiary to incur or permit to exist any Debt not in existence on the Closing Date, and extensions or renewals thereof, other than (i) Debt of the types described in clause (vii) of the definition of Debt which is incurred in the ordinary course of business in connection with the sale or purchase of goods or to assure performance of an obligation to a utility or a governmental entity or a worker's compensation obligation; 37 110 58 (ii) Debt permitted by clause (iii) of Section 5.16, and (iii) Debt secured by Liens permitted by Section 5.18. SECTION 5.16. Loans or Advances. Neither the Borrower nor any of its Subsidiaries shall make loans or advances to any Person except as permitted by Section 5.17 and except: (i) loans or advances to employees, in each case made in the ordinary course of business and consistent with practices existing on July 2, 1995; (ii) deposits required by government agencies or public utilities; and (iii) loans or advances to Subsidiaries; provided that after giving effect to the making of any loans, advances or deposits permitted by this Section, the Borrower will be in full compliance with all the provisions of this Agreement. SECTION 5.17. Investments. Neither the Borrower nor any of its Subsidiaries shall make Investments in any Person except as permitted by Section 5.16 and except in (i) direct obligations of the United States Government maturing within one year, (ii) certificates of deposit issued by a commercial bank whose credit is satisfactory to the Bank, (iii) commercial paper rated A1 or the equivalent thereof by Standard & Poor's Corporation or P1 or the equivalent thereof by Moody's Investors Service, Inc. and in either case maturing within 6 months after the date of acquisition, (iv) tender bonds the payment of the principal of and interest on which is fully supported by a letter of credit issued by a United States bank whose long-term certificates of deposit are rated at least AA or the equivalent thereof by Standard & Poor's Corporation and Aa or the equivalent thereof by Moody's Investors Service, Inc., (v) Related Investments in an amount not exceeding the sum of 30% of Capitalization, minus the amount of Unrelated Investments at the time outstanding, and/or (vi) Unrelated Investments in an amount not exceeding the lesser of (A) $20,000,000 and (B) the sum of 30% of Capitalization, minus the amount of Related Investments at the time outstanding provided however, immediately after giving effect to the making of any Investment, no Default shall have occurred and be continuing. In valuing any Investments for the purpose of applying the limitations set forth in this Section, such Investments shall be taken at the original cost thereof, without allowance for any subsequent write-offs or appreciation or depreciation therein, but less any amount repaid or recovered on account of capital or principal. SECTION 5.18. Negative Pledge. Neither the Borrower nor any Consolidated Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement and specified on Schedule 5.18(a), including any renewals, extensions or refundings (but not increases) of the Debt incurred in connection therewith to the extent of the principal amount thereof outstanding on the Closing Date; 38 111 59 (b) any Lien existing on any specific fixed asset of any corporation at the time such corporation becomes a Consolidated Subsidiary and not created in contemplation of such event; (c) any Lien on any specific fixed asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such asset concurrently with or within 18 months after the acquisition or completion of construction thereof; (d) any Lien on any specific fixed asset of any corporation existing at the time such corporation is merged or consolidated with or into the Borrower or a Consolidated Subsidiary and not created in contemplation of such event; (e) any Lien existing on any specific fixed asset prior to the acquisition thereof by the Borrower or a Consolidated Subsidiary and not created in contemplation of such acquisition; (f) Liens securing Debt owing by any Subsidiary to the Borrower; (g) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing paragraphs of this Section, provided that (i) such Debt is not secured by any additional assets, and (ii) the amount of such Debt secured by any such Lien is not increased; (h) Liens incidental to the conduct of its business or the ownership of its assets which (i) do not secure Debt and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (i) any Lien on Margin Stock; and (j) Liens on inventories of the Borrower consisting of sugar processed from sugar beets and sugarcane securing current liabilities of the Borrower or any Subsidiary to the United States Commodity Credit Corporation, provided that the amount of the current liabilities so secured by a Lien in favor of the United states Commodity Credit Corporation shall be less than the fair market value of the related seasonal sugar inventories of the Borrower. SECTION 5.19. Ratio of Long-Term Debt to Capitalization. The ratio of Long-Term Debt to Capitalization will not at any time exceed 0.45 to 1.00. SECTION 5.20. Ratio of Adjusted Cash Flow to Interest and Leases. The ratio of (i) Consolidated Adjusted Cash Flow to 39 112 60 (ii) Consolidated Interest Expense plus obligations of the Borrower and its Consolidated Subsidiaries with respect to operating leases shall be equal to or greater than 3.0 to 1.0 as of the end of each Fiscal Quarter, for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters; provided, that the Borrower shall be deemed to be in compliance with this covenant if, at the end of no more than 2 out of any 6 consecutive Fiscal Quarters, such ratio for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters is less than 3.0 to 1.0 but is equal to or greater than 2.5 to 1.0. SECTION 5.21. Ratio of Consolidated Current Assets to Consolidated Current Liabilities. The ratio of Consolidated Current Assets to Consolidated Current Liabilities will not at any time be less than 1.15 to 1.00. SECTION 5.22. Minimum Stockholders' Equity. Stockholder' Equity will at no time be less than $150,000,000 plus the sum of (i) 50% of the cumulative Reported Net Income of the Borrower and its Consolidated Subsidiaries during any period after July 2, 1995 (taken as one accounting period), calculated quarterly at the end of each Fiscal Quarter but excluding from such calculations of Reported Net Income for purposes of this clause (i), any quarter in which the Reported Net Income of the Borrower and its Consolidated Subsidiaries is negative, (ii) 100% of the cumulative Net Proceeds of Capital Stock received during any period after July 2, 1995, calculated quarterly at the end of each Fiscal Quarter, and (iii) 100% of the amount of any equity resulting from conversion of Debt to equity at any time after July 2, 1995. SECTION 5.23. Ratio of Long-Term Debt to Consolidated Adjusted Cash Flow. At the end of each Fiscal Quarter, the ratio of Long-Term Debt to Consolidated Adjusted Cash Flow for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters shall not have been greater than 4.0 to 1.00. SECTION 5.24. Intangibles. The Borrower shall not, without the prior consent of the Bank, acquire or cause to exist, at any time, intangible assets (as determined in accordance with GAAP), net of amortization, in an aggregate amount greater than 25% of Stockholders' Equity for the Fiscal Quarter just ended. ARTICLE VI DEFAULTS SECTION 6.01. Events of Default. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) the Borrower shall fail to pay when due any principal of any Loan or Banker's Acceptance or shall fail to pay any interest on any Loan within 5 Domestic Business 40 113 61 Days after such interest shall become due, or shall fail to pay any fee or other amount payable hereunder within 5 Domestic Business Days after such fee or other amount becomes due; or (b) the Borrower shall fail to observe or perform any covenant contained in Sections 5.01(e), 5.02(ii), 5.03 through 5.06, inclusive, Sections 5.15 or 5.16, or Sections 5.18 through 5.24, inclusive; or (c) the Borrower shall fail to observe or perform any covenant or agreement contained or incorporated by reference in this Agreement (other than those covered by paragraph (a) or (b) above) and such failure shall not have been cured within 30 days after the earlier to occur of (i) written notice thereof has been given to the Borrower by the Bank or (ii) the date the Borrower is required to notify the Bank of any such failure pursuant to Section 5.01(e); or (d) any representation, warranty, certification or statement made by the Borrower in Article IV of this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect or misleading in any material respect when made (or deemed made); or (e) the Borrower or any Subsidiary shall fail to make any payment in respect of Debt outstanding (other than the Note) when due or within any applicable grace period; or (f) any event or condition shall occur which results in the acceleration of the maturity of Debt (or any obligation under any interest rate protection agreement), outstanding of the Borrower or any Subsidiary (including, without limitation, any required mandatory prepayment or "put" of such Debt to the Borrower or any Subsidiary) or enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Debt or commitment or interest rate protection agreement or any Person acting on such holders' behalf to accelerate the maturity thereof or terminate any such commitment (including, without limitation, any required mandatory prepayment or "put" of such Debt to the Borrower or any Subsidiary); provided, that no Event of Default shall be deemed to have occurred solely by reason of a default under any of Sections 5.6 through 5.9, inclusive, of the Senior Note Agreement which occurs within one year after the Closing Date, unless the maturity of such Debt has been accelerated; provided, further, that any amendment to the Senior Note Agreement which would have the effect of making the Senior Note Agreement more restrictive than this Agreement as in effect on the Closing Date must be acceptable to the Bank; or 41 114 62 (g) the Borrower or any Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or (h) an involuntary case or other proceeding shall be commenced against the Borrower or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Subsidiary under the federal bankruptcy laws as now or hereafter in effect; or (i) the Borrower or any member of the Controlled Group shall fail to pay when due any material amount which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be filed under Title IV of ERISA by the Borrower, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or (j) one or more judgments or orders for the payment of money in an aggregate amount in excess of $500,000 shall be rendered against the Borrower or any Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or (k) a federal tax lien shall be filed against the Borrower or any Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be filed against the Borrower or 42 115 63 any Subsidiary under Section 4068 of ERISA and in either case such lien shall remain undischarged for a period of 25 days after the date of filing; or (l) (i) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of the voting stock of the Borrower; or (ii) as of any date a majority of the Board of Directors of the Borrower consists of individuals who were not either (A) directors of the Borrower as of the corresponding date of the previous year, (B) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A), or (C) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A) and individuals described in clause (B) then, and in every such event, (i) the Bank may, by notice to the Borrower, terminate the Commitment and it shall thereupon terminate, (ii) the Bank may refuse to make available any Borrowing which has been requested but not yet funded, and (iii) the Bank may, by notice to the Borrower, declare the Note (together with accrued interest thereon) to be, and the Note shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower together with (x) in the case of Loans, interest at the Default Rate accruing on the principal amount thereof from and after the date of such Event of Default and (y) in the case of Banker's Acceptances, a 2.0% per annum fee on the Face Amount of all Banker's Acceptances shall be paid by the Borrower to the Bank from and after the date of any such Event of Default until such date as such Banker's Acceptances are collateralized in full pursuant to the immediately succeeding paragraph; provided that if any Event of Default specified in paragraph (g) or (h) above occurs with respect to the Borrower, without any notice to the Borrower or any other act by the Bank, the Commitment shall thereupon terminate and the Note (together with accrued interest thereon) and the Banker's Acceptances shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower together with (x) in the case of Loans, interest thereon at the Default Rate accruing on the principal amount thereof from and after the date of such Event of Default and (y) in the case of Banker's Acceptances, a 2.0% per annum fee on the Face Amount of all Banker's Acceptances shall be paid by the Borrower to the Bank from and after the date of any such Event of Default until such date as such Banker's Acceptances are collateralized in full pursuant to the immediately succeeding paragraph. Notwithstanding the foregoing, the Bank shall have available to it all other remedies at law or equity. 43 116 64 In addition to the provisions contained in the immediately preceding paragraph, the Borrower agrees that upon the occurrence of an Event of Default and the acceleration of the maturity of the Notes pursuant to clause (iii) above, the Borrower will establish a deposit account (the "Collateral Account") to be maintained by the Bank, and the Borrower will promptly pay to the Bank for deposit in the Collateral Account, in immediately available funds, an amount equal to the aggregate of the then outstanding Face Amounts of Banker's Acceptances. As security for the payment of the Note and the Borrower's other obligations set forth in any of the other Loan Documents, the Borrower shall grant, convey, assign and pledge and create in the Bank's favor a Lien on all monies, instruments and securities at any time held in or acquired in connection with the Collateral Account, together with all proceeds thereof. The Collateral Account shall be at all times under the sole dominion and control of the Bank. The Bank shall (i) apply any funds in the Collateral Account on account of Banker's Acceptances when the same become due and payable if and to the extent that the Borrower shall fail directly to pay such Banker's Acceptances and (ii) after the Termination Date and the date on which all Banker's Acceptances shall have expired and all of the Borrower's obligations to the Bank in respect thereof shall have been paid in full, apply any proceeds remaining in the Collateral Account first to pay the Note and the Borrower's other obligations set forth in any of the Loan Documents (in such order as the Bank shall, in its sole discretion, determine) and then to refund any remaining amount to the Borrower. The Bank shall invest the funds held in the Collateral Account in one or more certificates of deposit issued by the Bank with maturities not to exceed 30 days, unless the aggregate amount of such funds which are not then otherwise invested is less than the smallest certificate of deposit offered by the Bank, in which case the Bank shall have no obligation to invest such funds. The Borrower recognizes that any losses or taxes with respect to such investments shall be borne solely by the Borrower, and the Borrower agrees to hold the Bank harmless from any such losses or taxes. The Bank may liquidate any investment held in the Collateral Account in order to apply the proceeds of such investment on account of the Note and the Borrower's other obligations set forth in any of the Loan Documents without regard to whether such investment has matured and without liability for any penalty or other fee incurred (with respect to which the Borrower hereby agrees to reimburse the Bank) as a result of such application. Upon the establishment of the Collateral Account, the Borrower shall pay to the Bank the fees customarily charged by it with respect to the maintenance of accounts similar to the Collateral Account. 44 117 65 ARTICLE VII CHANGE IN CIRCUMSTANCES; COMPENSATION SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period: (a) the Bank determines that deposits in Dollars (in the applicable amounts) are not being offered in the relevant market for such Interest Period, or (b) the Bank determines that the London Interbank Offered Rate will not adequately and fairly reflect the cost to the Bank of funding the relevant type of Fixed Rate Loans for such Interest Period, the Bank shall forthwith give notice thereof to the Borrower, whereupon until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of the Bank to make the type of Fixed Rate Loans specified in such notice shall be suspended. Unless the Borrower notifies the Bank at least 2 Domestic Business Days before the date of any Borrowing of such type of Fixed Rate Loans for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, such Borrowing shall instead be made as a Base Rate Borrowing. SECTION 7.02. Illegality. If, after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof (any such agency being referred to as an "Authority" and any such event being referred to as a "Change of Law"), or compliance by the Bank (or its Lending Office) with any request or directive (whether or not having the force of law) of any Authority shall make it unlawful or impossible for the Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar Loans and the Bank shall so notify the Borrower, then until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of the Bank to make Euro-Dollar Loans shall be suspended. Before giving any notice to the Borrower pursuant to this Section, the Bank shall designate a different Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to the Bank. If the Bank shall determine that it may not lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower shall immediately prepay in full the then outstanding principal amount of each Euro-Dollar Loan of the Bank, together with accrued interest thereon. Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in 45 118 66 an equal principal amount from the Bank, and the Bank shall make such a Base Rate Loan. SECTION 7.03. Increased Cost and Reduced Return. (a) If after the date hereof, a Change of Law or compliance by any Bank (or its Lending Office) with any request or directive (whether or not having the force of law) of any Authority: (i) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, the Bank (or its Lending Office); or (ii) shall impose on the Bank (or its Lending Office) or the London interbank market any other condition affecting its Fixed Rate Borrowings, its Note or its obligation to make available Fixed Rate Borrowings; and the result of any of the foregoing is to increase the cost to the Bank (or its Lending Office) of making or maintaining any Loan, or to reduce the amount of any sum received or receivable by the Bank (or its Lending Office) under this Agreement or under its Note or Banker's Acceptances with respect thereto, by an amount deemed by the Bank to be material, then, within 15 days after demand by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased cost or reduction. (b) If the Bank shall have determined that after the date hereof the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof, or compliance by the Bank (or its Lending Office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any Authority, has or would have the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction. (c) The Bank will promptly notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Lending Office if such 46 119 67 designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of the Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Bank may use any reasonable averaging and attribution methods. (d) The provisions of this Section 7.03 shall be applicable with respect to any Participant, Assignee or other Transferee, and any calculations required by such provisions shall be made based upon the circumstances of such Participant, Assignee or other Transferee. SECTION 7.04. Base Rate Loans or Other Fixed Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of the Bank to make or maintain any type of Fixed Rate Loans has been suspended pursuant to Section 7.02 or (ii) any Bank has demanded compensation under Section 7.03, and the Borrower shall, by at least 5 Euro-Dollar Business Days' prior notice to the Bank, have elected that the provisions of this Section shall apply to the Bank, then, unless and until the Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply: (a) all Loans which would otherwise be made by the Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans, and (b) after each of the Euro-Dollar Loans has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay the Base Rate Loans instead. SECTION 7.05. Compensation. Upon the request of the Bank, the Borrower shall pay to the Bank such amount or amounts as shall compensate the Bank for any loss, cost or expense incurred by the Bank as a result of: (a) any payment or prepayment (pursuant to Section 2.10, 2.11, 6.01, 7.02 or otherwise) of a Fixed Rate Borrowing on a date other than the last day of an Interest Period for such Borrowing; or (b) any failure by the Borrower to prepay a Fixed Rate Borrowing on the date for such prepayment specified in the relevant notice of prepayment hereunder ; or (c) any failure by the Borrower to borrow a Fixed Rate Loan on the date for the Fixed Rate Borrowing of which such Fixed Rate Loan is a part specified in the applicable Notice of Borrowing delivered pursuant to Section 2.02 or notification of 47 120 68 acceptance of Offered Rate Credit Quotes pursuant to Section 2.03(e); such compensation to include (except where a different amount has been agreed to pursuant to Section 2.10(b)), without limitation, an amount equal to the excess, if any, of (x) the amount of interest which would have accrued (or amount of principal which would have accreted on a Banker's Acceptance) on the amount so paid or prepaid or not prepaid or borrowed for the period from the date of such payment, prepayment or failure to prepay or borrow to the last day of the then current Interest Period for such Fixed Rate Borrowing (or, in the case of a failure to prepay or borrow, the Interest Period for such Fixed Rate Borrowing which would have commenced on the date of such failure to prepay or borrow) at the applicable rate of interest for such Fixed Rate Borrowing (or amount of principal which would have accreted on a Banker's Acceptance) provided for herein over (y) the amount of interest (as reasonably determined by such Bank) such Bank would have paid on (i) deposits in Dollars of comparable amounts having terms comparable to such period placed with it by leading banks in the London interbank market (if such Fixed Rate Borrowing is a Euro-Dollar Loan or an Offered Rate Loan based on such deposits). ARTICLE VIII MISCELLANEOUS SECTION 8.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telecopier or similar writing) and shall be given to such party at its address or telecopier number set forth in the Letter Agreement or such other address or telecopier number as such party may hereafter specify for the purpose by notice to each other party. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and the appropriate confirmation is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Bank under Article II shall not be effective until received. SECTION 8.02. No Waivers. No failure or delay by the Bank in exercising any right, power or privilege hereunder or under the Note or other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 48 121 69 SECTION 8.03. Expenses; Documentary Taxes. The Borrower shall pay (i) all out-of-pocket expenses of the Bank, including fees and disbursements of special counsel for the Bank, in connection with the preparation of any waiver or consent hereunder or under any other Loan Documents or any amendment hereof or thereof or any Default or alleged Default hereunder or thereunder and (ii) if a Default occurs, all out-of-pocket expenses incurred by the Bank, including fees and disbursements of counsel, in connection with such Default and collection and other enforcement proceedings resulting therefrom, including out-of-pocket expenses incurred in enforcing this Agreement and the other Loan Documents. The Borrower shall indemnify the Bank against any transfer taxes, documentary taxes, assessments or charges made by any Authority by reason of the execution and delivery of this Agreement or the other Loan Documents. SECTION 8.04. Indemnification. The Borrower shall indemnify the Bank and each Affiliate thereof and its directors, officers, employees and agents from, and hold each of them harmless against, any and all losses, liabilities, claims or damages to which any of them may become subject, insofar as such losses, liabilities, claims or damages arise out of or result from any actual or proposed use by the Borrower of the proceeds of any extension of credit by the Bank hereunder or breach by the Borrower of this Agreement or any other Loan Document or from any investigation, litigation (including, without limitation, any actions taken by the Bank to enforce this Agreement or any of the other Loan Documents) or other proceeding (including, without limitation, any threatened investigation or proceeding) relating to the foregoing, and the Borrower shall reimburse the Bank, and each Affiliate thereof and their its directors, officers, employees and agents, upon demand for any expenses (including, without limitation, legal fees) incurred in connection with any such investigation or proceeding; but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or wilful misconduct of the Person to be indemnified. SECTION 8.05. Setoff; Sharing of Setoffs. (a) The Borrower agrees that each Bilateral Lender shall have a lien for all indebtedness and obligations owing to it from the Borrower upon all deposits or deposit accounts, of any kind, or any interest in any deposits or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned to such Bilateral Lender or otherwise in the possession or control of such Bilateral Lender for any purpose for the account or benefit of the Borrower and including any balance of any deposit account or of any credit of the Borrower with such Bilateral Lender, whether now existing or hereafter established hereby authorizing such Bilateral Lender at any time or times with or without prior notice to apply such balances or any part thereof to such of the indebtedness and obligations owing by the Borrower to such Bilateral Lender then past due and in such amounts as it may elect, and whether or not the collateral, if any, or the 49 122 70 responsibility of other Persons primarily, secondarily or otherwise liable may be deemed adequate. For the purposes of this paragraph, all remittances and property shall be deemed to be in the possession of such Bilateral Lender as soon as the same may be put in transit to it by mail or carrier or by other bailee. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note or Banker's Acceptance, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. (b) Each Bilateral Lender agrees that if it shall, by exercising any right of setoff or counterclaim or resort to collateral security or otherwise, receive payment of a proportion of the aggregate amount of principal and interest owing with respect to the Note and Banker's Acceptances held by it which is greater than the proportion received by any other Bilateral Lender in respect of the aggregate amount of all principal and interest owing with respect to the Note and Banker's Acceptances held by such other Bilateral Lender, the Bilateral Lender receiving such proportionately greater payment shall purchase such participations in the Notes and Banker's Acceptances held by the other Bilateral Lender owing to such other Bilateral Lenders, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes and Banker's Acceptances held by the Banks owing to such other Bilateral Lenders shall be shared by the Bilateral Lenders pro rata; provided that (i) nothing in this Section shall impair the right of any Bilateral Lender to exercise any right of setoff or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness under the Notes and Banker's Acceptances, and (ii) if all or any portion of such payment received by the purchasing Bilateral Lender is thereafter recovered from such purchasing Bilateral Lender, such purchase from each other Bilateral Lender shall be rescinded and such other Bilateral Lender shall repay to the purchasing Bilateral Lender the purchase price of such participation to the extent of such recovery together with an amount equal to such other Bilateral Lender's ratable share (according to the proportion of (x) the amount of such other Bilateral Lender's required repayment to (y) the total amount so recovered from the purchasing Bilateral Lender) of any interest or other amount paid or payable by the purchasing Bilateral Lender in respect of the total amount so recovered. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note or Banker's Acceptance, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the 50 123 71 amount of such participation. The foregoing covenants are intended for the mutual benefit of the Bank and each other Bilateral Lender, and the Borrower and the Bank agree, with respect to the Agreement, that each other Bilateral Lender shall be a third party beneficiary of, and shall have the right to enforce, the foregoing covenants. (c) In furtherance of the provisions of this Section 8.05, the Borrower agrees to furnish in writing to each Bilateral Lender, with respect to each other Bilateral Lender, the name, address, telephone number, facsimile number and name of a contact person, and promptly upon any change in any of the foregoing, or upon the addition or deletion of any Bilateral Lender, or upon any increase or decrease in the Commitment of any Bilateral Lender, to notify each other Bilateral Lender thereof in writing. (d) The provisions of this Section 8.05 are for the benefit of, and may be enforced against the Borrower and each other Bilateral Lender by, each Bilateral Lender, as a third party beneficiary. SECTION 8.06. Amendments and Waivers. Any provision of this Agreement, the Note or any other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Bank. SECTION 8.07. Successors and Assigns. (a) The Borrower may not assign or otherwise transfer any of its rights under this Agreement. (b) The Bank may at any time sell to one or more Persons (each a "Participant") participating interests in any Loan owing to the Bank, the Note held by the Bank, the Commitment hereunder or any other interest of the Bank hereunder. In the event of any such sale by the Bank of a participating interest to a Participant, the Bank's obligations under this Agreement shall remain unchanged, the Bank shall remain solely responsible for the performance thereof, the Bank shall remain the holder of the Note for all purposes under this Agreement, and the Borrower shall continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations under this Agreement. In no event shall the Bank, in selling a participation, be obligated to the Participant to take or refrain from taking any action hereunder except that the Bank may agree that it will not (except as provided below), without the consent of the Participant, agree to (i) the change of any date fixed for the payment of principal of or interest on the related loan or loans, (ii) the change of the amount of any principal, interest or fees due on any date fixed for the payment thereof with respect to the related loan or loans, (iii) the change of the principal of the related loan or loans, (iv) any change in the 51 124 72 rate at which either interest is payable thereon or (if the Participant is entitled to any part thereof) fee is payable hereunder from the rate at which the Participant is entitled to receive interest or fee (as the case may be) in respect of such participation, (v) the release or substitution of all or any substantial part of the collateral (if any) held as security for the Loans and the Banker's Acceptances, or (vi) the release of any Guarantee given to support payment of the Loans and the Banker's Acceptances. The Borrower agrees that each Participant shall be entitled to the benefits of Article VII with respect to its participation in Loans and Banker's Acceptances outstanding from time to time. (c) The Bank may at any time assign to one or more banks or financial institutions (each an "Assignee") all, or in the case of its Loans, Banker's Acceptances and Commitments, a proportionate part of all its Loans, Banker's Acceptances and Commitments, of its rights and obligations under this Agreement, the Note, the Banker's Acceptances and the other Loan Documents, and such Assignee shall assume all such rights and obligations, pursuant to an Assignment and Acceptance, executed by such Assignee and, subject to clause (iii) below, by the Borrower; provided that (i) no interest may be sold by the Bank pursuant to this paragraph (c) unless the Assignee shall agree to assume ratably equivalent portions of the Commitment, (ii) if the Bank is assigning only a portion of its Commitment, then, the amount of the Commitment being assigned (determined as of the effective date of the assignment) shall be in an amount not less than $10,000,000, (iii) except during the continuance of a Default, no interest may be sold by the Bank pursuant to this paragraph (c) to any Assignee that is not then a Bilateral Lender (or an Affiliate of a Bilateral Lender) without the consent of the Borrower, which consent shall be deemed to have been given unless the Borrower provides the Bank written notice of its refusal to consent to the assignment within 5 Domestic Business Days from the date the request was made. Upon (A) execution of the Assignment and Acceptance by the Bank and such Assignee, and (if applicable) the Borrower, (B) delivery of an executed copy of the Assignment and Acceptance to the Borrower, (C) payment by such Assignee to the Bank of an amount equal to the purchase price agreed between the Bank and such Assignee, and (D) execution by the Assignee and the Borrower of a Letter Agreement, such Assignee shall for all purposes become a Bilateral Lender, with a separate and independent credit agreement with the Borrower, rather than a party to this Agreement, with a Commitment as set forth in such instrument of assumption and in such Letter Agreement, and the Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by the Borrower shall be required. Upon the consummation of any transfer to an Assignee pursuant to this paragraph (c), the Bank and the Borrower shall make appropriate arrangements so that, if required, a new Note is issued and, if applicable, new Banker's Acceptances are issued, to the Bank hereunder and a new 52 125 73 note is issued and, if applicable, new banker's acceptances are issued, to such Assignee under such separate credit agreement. (d) Subject to the provisions of Section 8.09, the Borrower authorizes the Bank to disclose to any Participant, Assignee or other transferee (each a "Transferee") and any prospective Transferee any and all financial information in the Bank's possession concerning the Borrower which has been delivered to the Bank by the Borrower pursuant to this Agreement or which has been delivered to such Bank by the Borrower in connection with the Bank's credit evaluation prior to entering into this Agreement. (e) No Participant shall be entitled to receive any greater payment under Section 7.03 than the transferor Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower's prior written consent or by reason of the provisions of Section 7.02 or 7.03 requiring such Bank to designate a different Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. (f) Anything in this Section 8.08 to the contrary notwithstanding, the Bank may assign and pledge all or any portion of the Loans, Banker's Acceptances and/or obligations owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Loans, Banker's Acceptances and/or obligations made by the Borrower to the assigning and/or pledging Bank in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect of such assigned Loans, Banker's Acceptances and/or obligations to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder. SECTION 8.08. Confidentiality. The Bank agrees to exercise commercially reasonable efforts to keep any information delivered or made available by the Borrower to it which is clearly indicated to be confidential information, confidential from anyone other than persons employed or retained by the Bank who are or are expected to become engaged in evaluating, approving, structuring or administering the Loans and Banker's Acceptances; provided that nothing herein shall prevent the Bank from disclosing such information (i) to any other Bilateral Lender, (ii) upon the order of any court or administrative agency, (iii) upon the request or demand of any regulatory agency or authority having jurisdiction over the Bank, (iv) which has been publicly disclosed, or which was in the Bank's possession prior to the Borrower's disclosure to the Bank and, to the Bank's knowledge, not subject to any other obligation, whether express or implied, of confidentiality, (v) to the extent reasonably required in connection with any litigation to which the Bank or 53 126 74 its Affiliates may be a party, (vi) to the extent reasonably required in connection with the exercise of any remedy hereunder, (vii) to the Bank's legal counsel and independent auditors and (viii) to any actual or proposed Participant, Assignee or other Transferee of all or part of its rights hereunder which has agreed in writing to be bound by the provisions of this Section 8.09; provided that should disclosure of any such confidential information be required by virtue of clause (ii) of the immediately preceding sentence, the Bank shall promptly notify the Borrower of same so as to allow the Borrower to seek a protective order or to take any other appropriate action; provided, further, that, the Bank shall not be required to delay compliance with any directive to disclose any such information so as to allow the Borrower to effect any such action. SECTION 8.09. Governing Law. This Agreement, the Letter Agreement, the Note and each Banker's Acceptance shall be construed in accordance with and governed by the law of the state in which the Bank has its principal office. SECTION 8.10. Severability. In case any one or more of the provisions contained in this Agreement, the Note, the Banker's Acceptances or any of the other Loan Documents should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby and shall be enforced to the greatest extent permitted by law. SECTION 8.11. Interest. In no event shall the amount of interest (and for purposes of this Section, accreted principal with respect to a Banker's Acceptance shall be included in all references to "interest"), and all charges, amounts or fees contracted for, charged or collected pursuant to this Agreement, the Letter Agreement, the Notes, the Banker's Acceptances or the other Loan Documents and deemed to be interest under applicable law (collectively, "Interest") exceed the highest rate of interest allowed by applicable law (the "Maximum Rate"), and in the event any such payment is inadvertently received by the Bank, then the excess sum (the "Excess") shall be credited as a payment of principal, unless the Borrower shall notify the Bank in writing that it elects to have the Excess returned forthwith. It is the express intent hereof that the Borrower not pay and the Bank not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Borrower under applicable law. The right to accelerate maturity of any of the Loans and the Banker's Acceptances does not include the right to accelerate any interest that has not otherwise accrued on the date of such acceleration, and the Bank does not intend to collect any unearned interest in the event of any such acceleration. All monies paid to the Bank hereunder or under the Note, the Banker's Acceptances or the other Loan Documents, whether at maturity or by prepayment, shall be subject to rebate of unearned interest as and to the extent required by 54 127 75 applicable law. By the execution of this Agreement, the Borrower covenants that (i) the credit or return of any Excess shall constitute the acceptance by the Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any other remedy, legal or equitable, against the Bank, based in whole or in part upon contracting for charging or receiving any Interest in excess of the Maximum Rate. For the purpose of determining whether or not any Excess has been contracted for, charged or received by the Bank, all interest at any time contracted for, charged or received from the Borrower in connection with this Agreement, the Letter Agreement, the Note, the Banker's Acceptances or any of the other Loan Documents shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Commitment. The Borrower and the Bank shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as Interest and (ii) exclude voluntary prepayments and the effects thereof. The provisions of this Section shall be deemed to be incorporated into the Note and each Banker's Acceptance and each of the other Loan Documents (whether or not any provision of this Section is referred to therein). All such Loan Documents and communications relating to any Interest owed by the Borrower and all figures set forth therein shall, for the sole purpose of computing the extent of obligations hereunder and under the Note, the Banker's Acceptances and the other Loan Documents be automatically recomputed by the Borrower, and by any court considering the same, to give effect to the adjustments or credits required by this Section. SECTION 8.12. Interpretation. No provision of this Agreement or any of the other Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision. SECTION 8.13. Waiver of Jury Trial; Consent to Jurisdiction. The Borrower (a) and the Bank irrevocably waive, to the fullest extent permitted by law, any and all right to trial by jury in any legal proceeding arising out of this Agreement, any of the other Loan Documents, or any of the transactions contemplated hereby or thereby, (b) submits to the nonexclusive personal jurisdiction in the state in which the Bank has its principal office, the courts thereof and the United States District Courts sitting therein, for the enforcement of this Agreement, the Note, the Banker's Acceptances and the other Loan Documents, (c) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the state in which the Bank has its principal office for the purpose of litigation to enforce this Agreement, the Note, the Banker's Acceptances or the other Loan Documents, and (d) agrees that service of process may be made upon it in the 55 128 76 manner prescribed in Section 8.01 for the giving of notice to the Borrower. Nothing herein contained, however, shall prevent the Bank from bringing any action or exercising any rights against any security and against the Borrower personally, and against any assets of the Borrower, within any other state or jurisdiction. 56 129 77 EXHIBIT A NOTE ___________________, 19____ For value received, ________________, a ___________ corporation (the "Borrower"), promises to pay to the order of __________________________________________________, a ____________________ (the "Bank"), for the account of its Lending Office, the principal sum of ___________________________________ AND NO/100 DOLLARS ($____________), or such lesser amount as shall equal the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, on the dates and in the amounts provided in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of this Note on the dates and at the rate or rates provided for in the Credit Agreement. Interest on any overdue principal of and, to the extent permitted by law, overdue interest on the principal amount hereof shall bear interest at the Default Rate, as provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of the Bank located at _________________________ ______________________________, or such other address as may be specified from time to time pursuant to the Letter Agreement. All Loans made by the Bank, the respective maturities thereof, the interest rates from time to time applicable thereto, and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof, endorsed by the Bank on the relevant schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This Note is the Note referred to in the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement between the Bank and the Borrower dated __________(the Master Credit Agreement and the Letter Agreement, as the same may be amended and modified from time to time, being the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the optional and mandatory prepayment and the repayment hereof and the acceleration of the maturity hereof. 57 130 78 IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. SAVANNAH FOODS & INDUSTRIES, INC. (SEAL) By: __________________________ Title: 58 131 79 Note (cont'd)
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59 132 80
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60 133 81 EXHIBIT B OPINION OF COUNSEL FOR THE BORROWER [Dated as provided in Section 3.01 of the Credit Agreement] To ___________________________________ ______________________________________ ______________________________________ ______________________________________ Attn: _______________________________ Dear Sirs: We have acted as counsel for Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") in connection with the Letter Agreement dated as of ________, 19____, between the Borrower and you and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (collectively, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. We have assumed for purposes of our opinions set forth below that the execution and delivery of the Credit Agreement by the Bank have been duly authorized by the Bank. Upon the basis of the foregoing, we are of the opinion that: 1. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has all corporate powers required to carry on its business as now conducted. 2. The execution, delivery and performance by the Borrower of the Credit Agreement, the Note and the Banker's Acceptances (i) are within the Borrower's corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of, or filing with, any governmental body, agency or official, (iv) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree 61 134 82 or other instrument which to our knowledge is binding upon the Borrower and (v) to our knowledge, except as provided in the Credit Agreement, do not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. 3. The Credit Agreement constitutes a valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, and the Note and the Banker's Acceptances constitute valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as such enforceability may be limited by: (i) bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity. 4. To our knowledge (after due inquiry), there is no action, suit or proceeding pending, or threatened, against or affecting the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner questions the validity or enforceability of the Credit Agreement, the Note or any Banker's Acceptance. 5. Each of the Borrower's Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 6. Neither the Borrower nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 7. Neither the Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. [8. The choice of ____________ law to govern the Agreement, the Note and each Banker's Acceptance in which such choice is stipulated is a valid and effective choice of law under the laws of the State of, and adherence to existing judicial precedents generally would require a court sitting in the State of New York to abide by such choice of law, unless a fundamental policy of the State of Georgia would be violated. We are not aware of any provision of the Agreement or the Note which would violate a fundamental policy of the State of Georgia.][USE IF BANK'S PRINCIPAL OFFICE IS NOT IN GEORGIA.] 62 135 83 We are qualified to practice in the State of Georgia and do not purport to be experts on any laws other than the laws of the United States, the State of Georgia and the General Corporate Law of the State of Delaware and this opinion is rendered only with respect to such laws. We have made no independent investigation of the laws of any other jurisdiction. This opinion is delivered to you in connection with the transaction referenced above and may only be relied upon by you, any Assignee or Participant Transferee and your counsel without our prior written consent. Very truly yours, 63 136 84 EXHIBIT C ASSIGNMENT AND ACCEPTANCE Dated __________ __, ____ Reference is made to the Letter Agreement dated as of ________, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and ___________________________________________ (the "Assignor") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Assignor and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meaning. The Assignor and ________________________________________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, without recourse to the Assignor, and the Assignee hereby purchases and assumes from the Assignor, a ______% interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the Effective Date (as defined below) (including, without limitation, a ____% interest (which on the Effective Date hereof is $__________) in the Assignor's Commitment and a ______ interest (which on the Effective Date hereof is $_______________) in the Conventional Rate Credits [and Offered Rate Credits] owing to the Assignor and a ___% interest in the Note [and Banker's Acceptances] held by the Assignor (which on the Effective Date hereof is $__________). 2. The Assignor (i) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder, that such interest is free and clear of any adverse claim and that as of the date hereof its Commitment (without giving effect to assignments thereof which have not yet become effective) is $__________ and the aggregate outstanding principal amount of Conventional Rate Credits [and Offered Rate Credits] owing to it (without giving effect to assignments thereof which have not yet become effective) is $_________________; (ii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) attaches the Note [and Banker's Acceptances] referred to in paragraph 1 above and 64 137 85 requests that the Borrower exchange such Note for [a new Note dated _____________, ____ in the principal amount of $__________ payable to the order of the Assignor and new Banker's Acceptances in the following Face Amounts and dated the following dates:_____________________________________] and execute a Letter Agreement with and issue a new Note to the Assignee [and new Banker's Acceptances] in accordance herewith, with the effect set forth in Section 8.07(c) of the Credit Agreement. 3. The Assignee (i) confirms that it has received a copy of the Master Credit Agreement, together with copies of the financial statements referred to in Section 4.04(a) thereof (or any more recent financial statements of the Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Master Credit Agreement; (iii) confirms that it is a bank or financial institution; (iv) agrees that it will execute a Letter Agreement incorporating the terms and provisions of the Master Credit Agreement and (v) represents and warrants that the execution, delivery and performance of this Assignment and Acceptance are within its corporate powers and have been duly authorized by all necessary corporate action, and (viii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Master Credit Agreement with it and its Note and Banker's Acceptances or such other documents as are necessary to indicate that all such payments are subject to such taxes at a rate reduced by an applicable tax treaty. 4. The Effective Date for this Assignment and Acceptance shall be __________, ____ (the "Effective Date"). Following the execution of this Assignment and Acceptance, it will be delivered to the Borrower for execution by the Borrower. 5. Upon such execution and acceptance by the Borrower [IF REQUIRED BY THE MASTER CREDIT AGREEMENT] and execution of a Letter Agreement by the Assignee and the Borrower, from and after the Effective Date, (i) the Assignee shall be a Bilateral Lender party to a separate and independent credit agreement with the Borrower and, to the extent rights and obligations have been transferred to it by this Assignment and Acceptance, have the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent its rights and obligations have been transferred to the Assignee by this Assignment and Acceptance, relinquish its rights (other than under Sections 7.03, 8.03 and 8.04 of the Credit Agreement) and be released from its obligations under the Credit Agreement. 65 138 86 6. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the state in which the Assignor has its principal office. [NAME OF ASSIGNOR] By: --------------------------- Title: [NAME OF ASSIGNEE] By: --------------------------- Title: SAVANNAH FOODS & INDUSTRIES, INC. IF REQUIRED BY THE MASTER CREDIT AGREEMENT By: -------------------------- Title: 66 139 87 EXHIBIT D NOTICE OF BORROWING _____________________, _____ ____________________________ ____________________________ ____________________________ Attention: ________________ Re: Letter Agreement dated as of ________, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and ___________________________________________ (the "Bank") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Bank and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"). Gentlemen: Unless otherwise defined herein, capitalized terms used herein shall have the meanings attributable thereto in the Credit Agreement. This Notice of Borrowing is delivered to you pursuant to Section 2.02 of the Credit Agreement. The Borrower hereby requests a [Euro-Dollar Borrowing] [Base Rate Borrowing] [Conventional Rate Banker's Acceptance] in the aggregate principal amount of $___________ to be made on ______________, 199__, and for interest to accrue thereon at the rate established by the Credit Agreement for [Euro-Dollar Loans] [Base Rate Loans] [Conventional Rate Banker's Acceptances]. The duration of the Interest Period with respect thereto shall be [1 month] [2 months] [3 months] [6 months] [30 days][__ days]. The Borrower has caused this Notice of Borrowing to be executed and delivered by its duly authorized officer this _____ day of ___________, _____. SAVANNAH FOODS & INDUSTRIES, INC. By: ------------------------------- Title: 67 140 88 EXHIBIT E COMPLIANCE CERTIFICATE Reference is made to the Letter Agreement dated as of ________, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and ___________________________________________ (the "Bank") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Bank and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"). Capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement. Pursuant to Section 5.01(c) of the Credit Agreement, _______________, the duly authorized ________________ ___ of Savannah Foods & Industries, Inc. hereby (i) certifies to the Bank that the information contained in the Compliance Check List attached hereto is true, accurate and complete as of ________, ___, and that no Defaults or Events of Default exist and (ii) restates and reaffirms that the representations and warranties contained in Article IV of the Credit Agreement are true on and as of the date hereof as though restated on and as of this date. By: --------------------------- Title: 68 141 89 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ 1. Investments (Section 5.17) Neither the Borrower nor any of its Subsidiaries shall make Investments in any Person except as permitted by Section 5.16 and except in [. . .] (v) Related Investments in an amount not exceeding the sum of 30% of Capitalization, minus the amount of Unrelated Investments at the time outstanding, and/or (vi) Unrelated Investments in an amount not exceeding the lesser of (A) $20,000,000 and (B) the sum of 30% of Capitalization, minus the amount of Related Investments at the time outstanding. Related Investments (a) Aggregate amount of Related Investments $ ------------- (b) Stockholders' Equity $ ------------- (c) Aggregate amount of Long-Term Debt --Schedule 1 $ ------------- (d) sum of (b) and (c) $ ------------- (e) 30% of (d) $ ------------- (f) Aggregate amount of Unrelated Investments $ ------------- (g) (e) minus (f) $ ------------- Limitation--(a) not to exceed (g) Unrelated Investments (h) (e) minus (a) $ ------------- (i) lesser of $20,000,000 and (h) $ ------------- Limitation--(f) not to exceed (i)
69 142 90 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ 2. Negative Pledge (Section 5.18) Neither the Borrower nor any Consolidated Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: [ . . .] (j) Liens on inventories of the Borrower consisting of sugar processed from sugar beets and sugarcane securing current liabilities of the Borrower or any Subsidiary to the United States Commodity Credit Corporation, provided that the amount of the current liabilities so secured by a Lien in favor of the United States Commodity Credit Corporation shall be less than the fair market value of the related seasonal sugar inventories of the Borrower. (a) aggregate amount of current liabilities to United States Commodity Credit Corporation secured by Liens on inventories consisting of sugar processed from sugar beets and sugarcane $ ------------- (b) fair market value of such inventories $ ------------- Limitation (a) must be less than (b)
3. Ratio of Long-Term Debt to Capitalization (Section 5.19) The ratio of Long-Term Debt to Capitalization will not at any time exceed 0.45 to 1.00. (a) Long-Term Debt Schedule - 1 $ ---------- (b) Stockholder's Equity $ ---------- (c) sum of (a) plus (b) $ ---- ---------- Actual Ratio of (a) to (c) ---------- Maximum Ratio < 0.45 to 1.0
70 143 91 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ 4. Ratio of Consolidated Adjusted Cash Flow to Interest and Leases (Section 5.20) The ratio of (i) Consolidated Adjusted Cash Flow to (ii) Consolidated Interest Expense plus obligations of the Borrower and its Consolidated Subsidiaries with respect to operating leases shall be equal to or greater than 3.0 to 1.0 as of the end of each Fiscal Quarter, for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters; provided, that the Borrower shall be deemed to be in compliance with this covenant if, at the end of no more than 2 out of any 6 consecutive Fiscal Quarters, such ratio for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters is less than 3.0 to 1.0 but is equal to or greater than 2.5 to 1.0. (a) Consolidated Adjusted Cash Flow, Schedule - 2 $ ---------- (b) (i) Consolidated Interest Expense, Schedule - 2, plus (ii) Aggregate operating lease obligations, Schedule- 2 $ ---------- Actual ratio of (a) to (b) ---------- Required ratio [greater than or equal to 3.0 to 1.0] [greater than or equal to 2.5 to 1.0]
5. Ratio of Consolidated Current Assets to Consolidated Current Liabilities (Section 5.21) The ratio of Consolidated Current Assets to Consolidated Current Liabilities will not at any time be less than 1.15 to 1.0. (a) Consolidated Current Assets $ ---------- (b) Consolidated Current Liabilities $ ---------- Actual ratio of (a) to (b) ---------- Required ratio greater than or equal to 1.15 to 1.0
71 144 92 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ 6. Minimum Stockholder's Equity (Section 5.22) Stockholder' Equity will at no time be less than $150,000,000 plus the sum of (i) 50% of the cumulative Reported Net Income of the Borrower and its Consolidated Subsidiaries during any period after July 2, 1995 (taken as one accounting period), calculated quarterly at the end of each Fiscal Quarter but excluding from such calculations of Reported Net Income for purposes of this clause (i), any quarter in which the Reported Net Income of the Borrower and its Consolidated Subsidiaries is negative, (ii) 100% of the cumulative Net Proceeds of Capital Stock received during any period after July 2, 1995, calculated quarterly at the end of each Fiscal Quarter, and (iii) 100% of the amount of any equity resulting from conversion of Debt to equity at any time after July 2, 1995. (a) Stockholder's Equity $ ---------- (b) Reported Net Income since July 2, 1995 $ ---------- (c) Aggregate of any Reported Net Income which was negative during any Fiscal Quarter $ ---------- (d) Aggregate Net Proceeds of Capital Stock received after July 2, 1995 $ ---------- (e) Aggregate of equity from conversion of Debt to equity after July 2, 1995 $ ---------- (f) Sum of (b) less (c) less (d) less (e) $ ---------- (g) 50% of (f) $ ---------- (h) sum of (g) and $150,000,000 $ ---------- Limitation--(a) not to be less than (h)
72 145 93 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ 7. Ratio of Long-Term Debt to Consolidated Adjusted Cash Flow (Section 5.23) At the end of each Fiscal Quarter, the ratio of Long-Term Debt to Consolidated Adjusted Cash Flow for the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters shall not have been greater than 4.0 to 1.00. (a) Long-Term Debt Schedule - 1 $ ---------- (b) Consolidated Adjusted Cash Flow Schedule - 2 $ ---------- Actual ratio of (a) to (b) ---------- Required ratio less than or equal to 4.0 to 1.0
8. Intangibles (Section 5.24) The Borrower shall not, without the prior consent of the Bank, acquire or cause to exist, at any time, net intangible assets (as determined in accordance with GAAP) in an aggregate amount greater than 25% of Stockholders' Equity for the Fiscal Quarter just ended. (a) Intangible assets $ --------- (b) Stockholder's Equity $ --------- (c) 25% of (b) $ --------- Limitation--(a) not to exceed (c)
73 146 94 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____
Schedule - 1 ------------ Long-Term Debt - -------------- INTEREST RATE MATURITY TOTAL ------------------------- ----- Secured - ------- $ ---------------------------------------------------------------- -------------- $ ---------------------------------------------------------------- ------------- $ ---------------------------------------------------------------- ------------- Total Secured $ ------------- Unsecured - --------- $ ---------------------------------------------------------------- ------------- $ ---------------------------------------------------------------- ------------- $ ---------------------------------------------------------------- ------------- Total Unsecured $ ------------- Redeemable Preferred Stock $ - -------------------------- ------------- Total Preferred Stock $ ------------- Other Long-Term Debt - -------------------- $ ---------------------------------------------------------------- ------------- $ ---------------------------------------------------------------- ------------- Total Other Long-Term Debt $ ------------- TOTAL LONG-TERM DEBT $ =============
74 147 95 COMPLIANCE CHECK LIST (Savannah Foods & Industries, Inc.) __________________________ _____________, _____ Schedule - 2
Consolidated Adjusted Cash Flow - ------------------------------- (a) Consolidated Net Income quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (b) Consolidated Interest Expense quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (c) operating lease obligations quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (d) tax expense quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (e) depreciation quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (f) amortization quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- -----------
75 148 96 (g) other non-cash or non-recurring charges deducted from Consolidated Net Income quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- (h) other non-cash or non-recurring gain included in Consolidated Net Income quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- quarter - $ --- ---- -------- ----------- Consolidated Adjusted Cash Flow (a) plus (b) plus (c) plus (d) plus (e) plus (f) plus (g) minus (h) $ =========== Description of Operating Leases - ------------------------------- Annual Lessor Property Leased Term Rental ------ --------------- ---- ------ $ - --------------- --------------------- --------- --------- $ - --------------- --------------------- --------- --------- $ - --------------- --------------------- --------- --------- $ - --------------- --------------------- --------- --------- Description of other non-cash charges deducted from operating income: - -------------------------------------------------------------------- - ---------------------------------------------------------------- - ---------------------------------------------------------------- - ---------------------------------------------------------------- Description of other non-cash charges included in operating income: - ------------------------------------------------------------------ - ---------------------------------------------------------------- - ---------------------------------------------------------------- - ----------------------------------------------------------------
76 149 97 EXHIBIT F [NAME OF BORROWER] CLOSING CERTIFICATE Reference is made to the Letter Agreement dated as of ________, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and ___________________________________________ (the "Bank") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Bank and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"). Capitalized terms used herein have the meanings ascribed thereto in the Credit Agreement. Pursuant to Section 3.01(e) of the Credit Agreement, ______________________________, the duly authorized _________ __________ of the Borrower hereby certifies to the Bank that (i) no Default has occurred and is continuing as of the date hereof, and (ii) the representations and warranties contained in Article IV of the Credit Agreement are true on and as of the date hereof. Certified as of this _____ day of _______________, ____. By: --------------------------- Printed Name: -------------- Title: --------------------- 77 150 98 EXHIBIT G OFFERED RATE CREDIT QUOTE REQUEST _________________________________ _________________________________ _________________________________ Attention: _____________________ Re: Offered Rate Credit Quote Request This Offered Rate Credit Quote Request is given in accordance with the Letter Agreement dated as of ____ ___, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and _____________________ _____________________ (the "Bank") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Bank and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"), and pursuant to Section 2.03 thereof. Terms defined in the Credit Agreement are used herein as defined therein. The Borrower hereby requests that the Bank issue a quote for an Offered Rate Borrowing based upon the following: 1. The proposed date of the Offered Rate Borrowing shall be ______________, _____ (the "Offered Rate Credit Borrowing Date").1* 2. The aggregate amount (or, if the Bank makes a quote based on a Banker's Acceptance, the Face Amount) of the Offered Rate Borrowing shall be $____________.2 3. The Stated Maturity Date(s) applicable to the Offered Rate Borrowing shall be ______ days.3 ________________________ * All numbered footnotes appear on the last page of this Exhibit G. 78 151 99 Very truly yours, SAVANNAH FOODS & INDUSTRIES, INC. By: ---------------------------------- Title: - ------------------------ (1) The date must be a Domestic Business Day. (2) The amount of the Offered Rate Borrowing is subject to Section 2.03(a) and (b). (3) The Stated Maturity Dates are subject to Section 2.03(b)(ii). The Borrower may request that up to 3 different Stated Maturity Dates be applicable to any Offered Rate Borrowing, provided that (i) each such Stated Maturity Date shall be deemed to be a separate Offered Rate Credit Quote Request and (ii) the Borrower shall specify the amounts of such Offered Rate Borrowing to be subject to each such different Stated Maturity Date. 79 152 100 EXHIBIT H OFFERED RATE CREDIT QUOTE __________________________________ __________________________________ __________________________________ Attention: ______________________ Re: Offered Rate Credit Quote to Savannah Foods & Industries, Inc. This Offered Rate Credit Quote is given in accordance with the Letter Agreement dated as of ________, 19____, between Savannah Foods & Industries, Inc., a Delaware corporation (the "Borrower") and __________________________ ________________ (the "Bank") and the Master Credit Agreement referred to in and incorporated by reference into the Letter Agreement (the "Master Credit Agreement") (the Letter Agreement with the Bank and the Master Credit Agreement collectively, together with all amendments and modifications thereto, being the "Credit Agreement"), and pursuant to Section 2.03(c)(ii) thereof. Terms defined in the Credit Agreement are used herein as defined therein. In response to the Borrower's Offered Rate Credit Quote Request dated ____________, ____, we hereby make the following Offered Rate Credit Quote on the following terms: 1. Person to contact at Bank: 2. Date of Offered Rate Borrowing:1* 3. We hereby offer to make Offered Rate [Loan(s)] [Banker's Acceptances] in the following maximum [principal amounts] [Face Amount] for the following Interest Periods and at the following rates: Maximum Principal Amount Stated or Face Maturity Amount(2) Date (3) Rate Per Annum(4) - -------- -------- ---- --- ----- ________________________ * All numbered footnotes appear on the last page of this Exhibit H. 80 153 101 We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Credit Agreement, irrevocably obligate(s) us to make the Offered Rate Borrowings(s) for which any offer(s) [is] [are] accepted, in whole or in part (subject to the last sentence of Section 2.03(c)(i) of the Credit Agreement). Very truly yours, [Name of Bank] Dated: By: --------------------------- Authorized Officer - --------------------------- ________________________ (1) As specified in the related Offered Rate Credit Quote Request. (2) The principal amount bid for each Stated Maturity Date may not exceed the principal amount requested. Offered Rate Credit Quotes must be made for at least a principal amount (or, with respect to Banker's Acceptances, Face Amount) of $1,000,000 or a larger multiple of $500,000. (3) The Stated Maturity Dates are subject to Section 2.03(b)(ii). (4) Subject to Section 2.03(c)(ii)(C). 81 154 102 SCHEDULE 4.05 LITIGATION In May 1992, the United States Customs Service (Customs) issued a bill to the Company for approximately $7,500,000 seeking reimbursement for certain drawback claims filed by the Company with Customs during the period 1984 through 1988. The Company disputes Customs' findings and is vigorously protesting the decision of Customs. As of July 1995, approximately $5,000,000 of the claim has been dismissed. Based upon the facts known to the Company at this time, the ultimate resolution of this matter is not expected to have a materially adverse effect on the Company's financial position or results of operations. In July 1991, National Utility Service, Inc. (NUS) filed a complaint against the Company in the United States District Court for the District of New Jersey seeking compensation and damages arising from a contract between the Company and NUS for energy cost saving recommendations. On September 12, 1994, summary judgment was entered against the Company in the amount of $2,973,000 in this case. On December 19, 1994, the judgment was amended to add $1,343,000 prejudgment interest. The United States Court of Appeals for the Third Circuit has affirmed the judgment subject to an insignificant reduction in the prejudgment interest. The Company is considering an appeal to the Supreme Court. Reserves were established for this claim in previous fiscal years, and the ultimate resolution of this matter is not expected to have a materially adverse effect on the Company's financial position or results of operations. 82 155 103 SCHEDULE 4.08 SAVANNAH FOODS & INDUSTRIES, INC. SUBSIDIARIES
NAME JURISDICTION OF INCORPORATION ----- ----------------------------- *BIOMASS CORPORATION A Delaware Corporation A Research Facility - non operational *CHATHAM SUGAR COMPANY A Delaware Corporation Holds real estate - non operational *COLONIAL SUGARS, INC. A Delaware Corporation A sugar refinery *DIXIE CRYSTALS BRANDS, INC. A Delaware Corporation (Dixie Crystals Foodservice, Inc.) (King Packaging Co., Inc.) *EVERGLADES SUGAR REFINERY, INC. A Florida Corporation A sugar refinery *FOOD CARRIER, INC. A Georgia Corporation Trucking *MICHIGAN SUGAR CO. A Michigan Corporation (Great Lakes) (Pioneer Trading Co.) A beet sugar refinery *PHOENIX PACKAGING A Delaware Corporation A packaging operation *RACELAND SUGARS, INC. A Delaware Corporation A cane operation *REFINED SUGAR TRADING INSTITUTE A Delaware Corporation A non-profit corporation owned jointly with Amstar *SAVANNAH FOODS INDUSTRIAL, INC. A Delaware Corporation An operation engaged in the refining and selling of cane sugar *SAVANNAH INTERNATIONAL COMPANY A Delaware Corporation (Savannah Packaging Company) (Savannah Total Invert Company) *SAVANNAH INTERNATIONAL SERVICES, INC Delaware Corporation Non operational *SAVANNAH INVESTMENT CO. A Delaware Corporation An investment company
-Continued- 83 156 104 *SAVANNAH MOLASSES & SPECIALTIES CO. A Delaware Corporation Non-operational *SAVANNAH SUGAR REFINING CORP. A Georgia Corporation Non-operational *SOUTH COAST SUGARS, INC. A Delaware Corporation Non-operational
*Savannah Foods owns 100% of this subsidiary 84 157 105 SCHEDULE 4.08 SAVANNAH FOODS & INDUSTRIES, INC. SUBSIDIARIES [Savannah Foods & Industries, Inc.] | |_____________________________________________________________________________________________________________ | | | | | | | | |___ [Colonial Sugar [Michigan Sugar [Dixie Crystals | | Refinery] (1) Company] Brands] | | _________|_________ _______|________ [Savannah International | | | | | Company] |___ [Everglades [Pioneer [Great Lakes [King [Dixie Crystals | | Sugar Refinery] (1) Trading Co.] Sugar Co.] Packaging] Foodservices] _________|__________ | | | | [Savannah Total [Savannah |___ [Savannah Foods Invert Company] Packaging | Industrial, Inc.] Company] | | |___ [Savannah Sugar | Refining Corp.] | | |___ [Raceland | Sugars, Inc.] (2) | | |___ [South Coast | Sugars, Inc.] | | |___ [Savannah Molasses & | Specialties Co.] | | |___ [Food Carrier, | Inc.] | | |___ [Phoenix | Packaging] (2) | | |___ [Chatham Sugar | Company] (1) | | |___ [Savannah | Investment Co.] (1) In connection with our announced reorganization, to be merged into | Savannah Foods Industrial, Inc. during 1995 - 1996. | |___ [Savannah International | Services, Inc.] (2) In connection with our announced reorganization, to be a subsidiary of | Savannah Foods Industrial, Inc. during 1995 - 1996. | |___ [Biomass] | | | |___ [Refined Sugar Trading Institute]
85 158 106 SCHEDULE 5.15 LONG TERM DEBT AS OF JULY 30, 1995(1)
SUBSIDIARY AMOUNT DESCRIPTION EXPIRATION DATE - ---------------------------------------------------------------------------------------------------------------------- Savannah Foods $47,857,143 Series A - 8.35%. 11/1/98 $ 6,250,000 & Industries, Inc. Senior Note 11/1/99 $12,500,000 11/1/00 $12,500,000 11/1/01 $12,232,143 11/1/02 $ 4,375,000 Savannah Foods $12,142,857 Series B - 7.15% 11/1/98 $ 2,500,000 & Industries, Inc. Senior Note 11/1/99 $ 4,803,571 11/1/00 $ 3,250,000 11/1/01 $ 1,589,286 Savannah Foods $ 480,000 Pollution Control 8/1/95 $ 100,000 & Industries, Inc. Bond - 6.60% 8/1/96 $ 115,000 8/1/97 $ 125,000 8/1/98 $ 130,000 Savannah Foods $ 1,330,000 Pollution Control Bond $190,000 Due 11/1/95 to & Industries, Inc. 75% of CD rate 11/1/2001 Savannah Foods $ 4,100,000 ESOP Loan-85% of $500,000 due 10/25/97 to & Industries, Inc. LIBOR 10/25/04 SFII ESOP Loans: $ 3,000,000 Loan 86% of LIBOR $100,000 Due 10/25/05 $ 1,285,000 78% of Prime, Due 03/07/96 $ 3,500,000 or 90% of CD Rate Due 10/09/97 $ 2,215,000 Due 06/30/98 Michigan Sugar Co. $ 4,500,000 MS Tax-Free Bond: Due 9/1/2000 Sebewaing-Var.Rate Michigan Sugar Co. $ 4,500,000 MS Tax-Free Bond: Due 12/1/2000 Croswell-Var. Rate Michigan Sugar Co. $ 3,500,000 MS Tax-Free Bond: Due 11/1/2003 Caro - Var. Rate Michigan Sugar Co. $ 6,000,000 MS Tax-Free Bond: Due 6/1/07 Carrollton - Var. Rate Dixie Crystals Brands $ 2,500,000 SFI Industrial Revenue Due 6/1/05 Bonds-Visalia, CA Project -Var. Rate Dixie Crystals Brands $ 60,000 Covenant not to compete Due 05/01/96 Everglades Sugar $ 1,500,000 SFI Industrial Revenue Due 3/1/17 Refinery, Inc. Bonds-Hendry County ESRI -Var. Rate King Packaging $ 3,368,000 Covenant not to compete Due through June 1998 - ----------------------------------------------------------------------------------------------------------------------
(1) $10,000,000 of long term debt is drawn under the existing revolving credit agreement 86 159 107 SCHEDULE 5.18(a) SAVANNAH FOODS & INDUSTRIES, INC. EXISTING LIENS The following Industrial Revenue Bond issues are secured by various equipment and buildings financed by the issue:
Expiration Amount Description Date -------------- --------------------------- --------------------------- $4,500,000 Michigan Sugar Total due Tax-free Bond September 1, 2000 Sebewaing Project - Variable rate $4,500,000 Michigan Sugar Total due Tax-free Bond December 1, 2000 Croswell Project - Variable rate $3,500,000 Michigan Sugar Total due Tax-free Bond November 1, 2003 Caro Project - Variable rate $6,000,000 Michigan Sugar $1,000,000 due Tax-free Bond June 1, 2002 - 2007 Carrollton Project - Variable rate $2,500,000 SFII - Industrial $500,000 due Revenue Bonds - June 1, 2002 - 2006 Visalia Project Variable rate $1,500,000 SFII - Industrial March 1, 2017 Revenue Bonds - Hendry County/ESRI Variable rate $1,330,000 SFII - Pollution Control $190,000 due Bonds - Variable rate November 1, 1996 - November 1, 2002 $ 480,000 SFII - Pollution Control $115, 000 due Aug 1,1996 Bonds - 6.60% $125, 000 due Aug 1,1997 $130, 000 due Aug 1,1998
87 160 EX-10.9 5 EMPLOYMENT AGREEMENT 1 [LOGO] SAVANNAH FOODS & INDUSTRIES, INC. WILLIAM W. SPRAGUE III EXHIBIT 10-9 PRESIDENT AND TELEPHONE (912) 234-1261 CHIEF EXECUTIVE OFFICER FAX (912) 232-3469 May 19, 1995 Mr. David H. Roche Vice President Savannah Foods & Industries, Inc. c/o Michigan Sugar, Inc. Post Office Box 1348 Saginaw, Michigan 48605 Dear Mr. Roche: Savannah Foods & Industries, Inc. (the "Company") considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Company's Board of Directors has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company. In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the 161 2 Company agrees will be provided to you in the event your employment with the Company is terminated subsequent to a "change in control of the Company" (as defined in Section 2 hereof) under the circumstances described below. 1. TERM. This Agreement shall commence on the date hereof and shall continue until END OF YEAR DATED ABOVE; provided, however, that commencing on January 1, 1995, and each January 1st thereafter, the terms of this Agreement shall automatically be extended for one additional year unless at least thirty (30) days prior to such January 1st date, the Company shall have given notice that it does not wish to extend this Agreement. In the event of a change in control, as referred to in Section 2 of this Agreement, your rights thereafter under this Agreement shall become permanent, are not terminable, and cannot be affected by any corporate action without your consent, except as is provided for in Section 3 of this Agreement with respect to death or normal retirement, termination by the Company for cause, or your disability. 2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there shall have been a change in control of the Company, as set forth below, and your employment by the Company shall thereafter have been terminated in accordance with Section 3 below. For purposes of this Agreement, a "change in control of the Company" shall mean a change in control of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that, without 162 3 limitation, such a change in control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (the "Board") cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's shareholders, of each new Director was approved by a vote of at least two-thirds of the Directors then still in office who were Directors at the beginning of the period. 3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events described in Section 2 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon the subsequent termination of your employment unless such termination is (a) because of your death or retirement, (b) by the Company for cause or disability, or (c) by you other than for good reason. (i) DISABILITY; RETIREMENT. (A) If, as a result of your incapacity due to physical or mental illness, you have been absent from your duties with the Company on a full-time basis for 180 consecutive days, and within thirty (30) days after written notice of termination is given you shall not have returned to the full-time performance of your 163 4 duties, the Company may terminate this Agreement for "disability." (B) Termination by the Company or by you of your employment based on "retirement" shall mean termination in accordance with the Company's retirement policy, including early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you. (ii) CAUSE. The Company may terminate your employment for cause. For the purposes of this Agreement, the Company shall have "cause" to terminate your employment hereunder upon (A) the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (B) the willful engaging by you in gross misconduct materially and demonstrably injurious to the Company. For purposes of this paragraph, no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at 164 5 a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in good faith opinion of the Board you were guilty of conduct set forth in clauses (A) or (B) of the first sentence of this paragraph and specifying the particulars thereof in detail. (iii) GOOD REASON. You may terminate your employment for good reason. For purposes of this Agreement "good reason" shall mean: (A) without your express written consent, the assignment to you of any duties inconsistent with your positions, duties, responsibilities and status with the Company immediately prior to a change in control, or a change in your reporting responsibilities, titles or offices as in effect immediately prior to a change in control, or any removal of you from or any failure to re-elect you to any of such positions, except in connection with the termination of your employment for cause, disability or retirement, or as a result of your death, or by you other than for good reason; (B) a reduction by the Company in your base salary as in effect on the date hereof or as the same may be increased from time to time; or the failure by the Company to increase such base salary each year after 1988 by an amount which at least equals, on a percentage basis, the mean average percentage increase in base salary for all officers of the Company during the two full calendar years immediately preceding a change in control of the Company (the 165 6 "annual salary adjustment"); (C) The Company's requiring you to be based anywhere other than the executive offices in Saginaw County, Michigan, except for required travel on the Company's business to an extent substantially consistent with your present business travel obligations, or, in the event you consent to a relocation of your place of employment, the failure by the Company to pay (or reimburse you for) all reasonable moving expenses incurred by you relating to a change of your principle residence in connection with such relocation and to indemnify you against any loss (defined as the difference between the actual sales price of such residence and the higher of (a) your aggregate investment in such residence or (b) the fair market value of such residence as determined by a real estate appraiser designated by you and reasonably satisfactory to the Company) realized in the sale of your principal residence in connection with any such change of residence; (D) the failure of the Company to continue in effect any benefit or compensation plan, pension plan, life insurance plan, health-and-accident plan, 401(k) plan, Employee Stock Ownership Plan, Supplemental Employee Retirement Plan, and Deferred Compensation Plan for Key Employees, or disability plan in which you are participating at the time of a change in control of the Company (or plans providing you with substantially similar benefits), the taking of any action by the Company which would adversely affect your participating in or materially reduce your benefits under any of such plans or deprive you of a material 166 7 fringe benefit enjoyed by you at the time of the change in control, or the failure by the Company to provide you with the number of paid vacation days to which you are then entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy in effect on the date hereof; (E) the failure of the Company to obtain the assumption of the agreement to perform this Agreement by any successor as contemplated in paragraph 5 hereof; or (F) any purported termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of subparagraph (iv) below (and, if applicable, subparagraph (ii) above); and for purposes of this Agreement, no such purported termination shall be effective. (iv) NOTICE OF TERMINATION. Any termination by the Company pursuant to subparagraphs (i) or (ii) above or by you pursuant to subparagraph (iii) above shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. (v) DATE OF TERMINATION. "Date of Termination" shall mean (A) if this Agreement is terminated for disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time 167 8 basis during such thirty (30) day period), (B) if your employment is terminated pursuant to subparagraph (iii) above, the date specified in the Notice of Termination, and (C) if your employment is terminated for any other reason, the date on which a Notice of Termination is given; provided that if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, or by a final judgment, order or decree of a Court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 4. COMPENSATION UPON TERMINATION OR DURING DISABILITY (i) During any period that you fail to perform your duties hereunder as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary at the rate then in effect and any other compensation then payable to you until this Agreement is terminated pursuant to paragraph 3(i) hereof. Thereafter, your benefits shall be determined in accordance with the Company's disability plan then in effect. (ii) If your employment shall be terminated for cause, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligation to you under this Agreement. 168 9 (iii) If the Company shall terminate your employment other than pursuant to paragraph 3(i) or 3(ii) hereof or if you shall terminate your employment for good reason, then the Company shall pay to you as severance pay in a lump sum on the fifth day following the Date of Termination, the following amounts: (A) your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given; (B) in lieu of any further salary payments to you for periods subsequent to the Date of Termination an amount equal to the product of 2.99 times your average annual compensation paid by the Company and included in your gross income for federal income tax purposes for the most recent 5 taxable years ending before the date on which a change in control occurs (or such portion of such period during which you performed personal services for the Company, if less than 5 years); such amount shall be less than the amount defined as a parachute payment by 280G(b)(2) of the Internal Revenue Code of 1986; (C) the Company shall pay other damages to which you may be entitled as a result of the Company's termination of your employment under this Agreement, including damages for any and all loss of benefits to you under the Company's employee benefit plans which you would have received if the Company had not breached this Agreement and had your employment continued for the full term provided in this Agreement (including specifically but without limitation the benefits which you would have been entitled to 169 10 receive pursuant to the Company's Pension Plan had your employment continued for the full term provided herein at the rate of compensation specified herein), and including all legal fees and expenses incurred by you as a result of such termination. (iv) Unless you are terminated for cause, the Company shall maintain in full force and effect for the continued benefit of you for three years after the Date of Termination, the equivalent of all employee benefit plans and programs or arrangements in which you were entitled to participate immediately prior to the Date of Termination provided that your continued participation is possible under the general terms and provisions of such plans and programs. In the event that your participation in any such plan or program is barred, the Company shall arrange to provide you with benefits substantially similar to those which you are entitled to receive under such plans and programs. (v) Upon your termination for any reason, the Company shall enable you to purchase the automobile, if any, which the Company was providing for your use at the time Notice of Termination was given at the wholesale value of such automobile at such time. (vi) You shall not be required to mitigate the amount of any payment provided for in this paragraph 4 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this paragraph 4 be reduced by any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. 170 11 5. SUCCESSORS: BINDING AGREEMENT (i) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession has taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you terminated your employment for good reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this paragraph 5 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (ii) This Agreement shall insure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts would still be payable to you hereunder if you had continued to live, all such 171 12 amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your designee or, if there be no such designee, to your estate. 6. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Chief Executive Officer of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 7. MISCELLANEOUS. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officer as may be specifically designated by the Board of Directors of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any time prior to subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter 172 13 hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Georgia. 8. VALIDITY. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this Matter. Sincerely, SAVANNAH FOODS & INDUSTRIES, INC. By: /s/ William W. Sprague, III ------------------------------------- William W. Sprague, III President and Chief Executive Officer Agreed to this 24th day of May, 1995. /s/ D.L.H. Roche - ----------------- Employee
173 EX-21.1 6 SUBSIDIARIES OF REGISTRANT 1 Exhibit 21-1 SAVANNAH FOODS & INDUSTRIES, INC. LIST OF SUBSIDIARIES
JURISDICTION OF --------------- NAME OF SUBSIDIARY INCORPORATION - ------------------ ------------- Biomass Corporation Delaware Dixie Crystals Brands, Inc. Delaware Subsidiary of Dixie Crystals Brands, Inc. King Packaging Company, Inc. Georgia Food Carrier, Inc. Georgia Michigan Sugar Company Michigan Subsidiaries of Michigan Sugar Company Great Lakes Sugar Company Ohio Pioneer Trading Corporation Virgin Islands Refined Sugar Trading Institute Delaware Savannah Foods Industrial, Inc. Delaware Subsidiaries of Savannah Foods Industrial, Inc. Phoenix Packaging Corporation Delaware Raceland Sugars, Inc. Delaware Savannah International Company Subsidiaries of Savannah International Company Savannah Packaging Company Delaware Savannah Total Invert Company Delaware Savannah International Services, Inc. Delaware Savannah Investment Company Delaware Savannah Molasses & Specialties Company Delaware Savannah Sugar Refining Corporation Georgia South Coast Sugars, Inc. Delaware
174 EX-23.1 7 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23-1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference (i) the Registration Statement on Form S-8 (No. 2-63448), as amended April 3, 1992 pertaining to the Monthly Investment Plan for Employees of Savannah Foods & Industries, Inc., and (ii) the Registration Statement of Form S-8 (No. 2-94678), as amended October 18, 1994, pertaining to the Employee Retirement Savings Account Plan of Savannah Foods & Industries, Inc., of our report dated November 17, 1995, appearing on page 14 of this Form 10-K. PRICE WATERHOUSE LLP Savannah, Georgia December 29, 1995 175 EX-27.1 8 FINANCIAL DATA SCHEDULE
5 SAVANNAH FOODS & INDUSTRIES, INC. FINANCIAL DATA SCHEDULES THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SAVANNAH FOODS & INDUSTRIES, INC. FOR THE YEAR ENDED OCTOBER 1, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR OCT-01-1996 OCT-01-1995 11,574 0 66,991 0 103,121 197,802 436,991 206,100 476,507 114,740 106,864 0 0 17,365 152,284 476,507 1,098,544 1,098,544 1,005,914 1,005,914 28,314 0 14,847 (6,078) (2,585) (3,493) 0 0 0 (3,493) (.13) 0
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