FOR VALUE
RECEIVED, the sufficiency of which is hereby acknowledged, and in
consideration of the credit to be extended to THE FOLGERS COFFEE
COMPANY, a Delaware corporation (the “ Borrower
”) pursuant to the Credit Agreement (as defined below), the
undersigned (each a “ Guarantor ” and,
collectively, the “ Guarantors ”) hereby furnish
this guaranty of the Guaranteed Obligations (as defined below) for
the benefit of the Guaranteed Parties (as defined below) as
follows:
1. Guaranty. Subject to Section 21 below, each
Guarantor jointly and severally hereby absolutely and
unconditionally guarantees, as a guaranty of payment and
performance and not merely as a guaranty of collection, prompt
payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all
times thereafter, of any and all existing and future indebtedness
and liabilities of every kind, nature and character, direct or
indirect, absolute or contingent, liquidated or unliquidated,
voluntary or involuntary and whether for principal, interest,
premiums, fees indemnities, damages, costs, expenses or otherwise,
of the Borrower to the Guaranteed Parties arising under the Credit
Agreement or the other Loan Documents (including all renewals,
extensions, amendments and other modifications thereof and all
costs, attorneys’ fees and expenses incurred by a Guaranteed
Party in connection with the collection or enforcement thereof),
and whether recovery upon such indebtedness and liabilities may be
or hereafter become unenforceable or shall be an allowed or
disallowed claim under any proceeding or case commenced by or
against such Guarantor or the Borrower under the Bankruptcy Code
(Title 11, United States Code), any successor statute or any other
liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time
in effect and affecting the rights of creditors generally
(collectively, “ Debtor Relief Laws ”), and
including interest that accrues after the commencement by or
against the Borrower of any proceeding under any Debtor Relief Laws
(collectively, the “ Guaranteed Obligations ”).
The Guaranteed Parties’ books and records showing the amount
of the Guaranteed Obligations shall be admissible in evidence in
any action or proceeding, and, absent manifest error, shall be
binding upon the Guarantors and conclusive for the purpose of
establishing the amount of the Guaranteed Obligations. This
Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any
instrument or agreement evidencing any Guaranteed Obligations, or
by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact
or circumstance relating to the Guaranteed Obligations (other than
the indefeasible payment in full of the Guaranteed Obligations)
which might otherwise constitute a defense to the obligations of
the Guarantors under this Guaranty, and each Guarantor hereby
irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to any or all of the
foregoing.
2. No
Setoff or Deductions; Taxes; Payments. Each Guarantor
represents and warrants that it is organized and resident in the
United States of America. Each Guarantor shall make all payments
hereunder to the extent permitted by applicable law without setoff
or counterclaim and free and clear of and without deduction for any
Taxes unless such Guarantor is compelled by law to make such
deduction or withholding. If any such obligation (other than one
arising with respect to Excluded Taxes) is imposed upon either
Guarantor with respect to any amount payable by it hereunder, such
Guarantor will pay to the Guaranteed Parties, on the date on which
such amount is due and payable hereunder, the full amount of any
Indemnified Taxes. Each Guarantor will deliver promptly to the
Guaranteed Parties certificates or other valid vouchers for all
taxes or other charges deducted from or paid with respect to
payments made by such Guarantor hereunder. The obligations of each
Guarantor under this paragraph shall survive the payment in full of
the Guaranteed Obligations and termination of this
Guaranty.
3. Rights
of Lender. Each Guarantor consents and agrees that the
Guaranteed Parties may, at any time and from time to time, without
notice or demand, and without affecting the enforceability or
continuing effectiveness hereof: (a) amend, extend, renew,
compromise, discharge, accelerate or otherwise change the time for
payment or the terms of the Guaranteed Obligations or any part
thereof; (b) take, hold, exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any security for the
payment of this Guaranty or any Guaranteed Obligations;
(c) apply such security and direct the order or manner of sale
thereof as the Guaranteed Parties in their sole discretion may
determine; and (d) release or substitute one or more of any
endorsers or other guarantors of any of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Guarantor
consents to the taking of, or failure to take, any action which
might in any manner or to any extent vary the risks of such
Guarantor under this Guaranty or which, but for this provision,
might operate as a discharge of such Guarantor.
4. Certain Waivers. Each Guarantor waives (a) any
defense arising by reason of any disability or other defense of the
Borrower or any other guarantor, or the cessation from any cause
whatsoever (including any act or omission of the Lender) of the
liability of the Borrower; (b) any defense based on any claim
that such Guarantor’s obligations exceed or are more
burdensome than those of the Borrower; (c) the benefit of any
statute of limitations affecting such Guarantor’s liability
hereunder; (d) any right to require the Guaranteed Parties to
proceed against the Borrower, proceed against or exhaust any
security for the Indebtedness, or pursue any other remedy in the
Guaranteed Parties’ power whatsoever; (e) any benefit of
and any right to participate in any security now or hereafter held
by the Guaranteed Parties; and (f) to the fullest extent
permitted by law, any and all other defenses or benefits that may
be derived from or afforded by applicable law limiting the
liability of or exonerating guarantors or sureties. Each Guarantor
expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of
nonpayment or nonperformance, protests, notices of protest, notices
of dishonor and all other notices or demands of any kind or nature
whatsoever with respect to the Guaranteed Obligations, and all
notices of acceptance of this Guaranty or of the existence,
creation or incurrence of new or additional Guaranteed
Obligations.
5. Obligations Independent; Joint and Several . The
obligations of each Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor,
and a separate action may be brought against either Guarantor to
enforce this Guaranty whether or not the Borrower or any other
person or entity is joined as a party. All obligations and
undertakings of the Guarantors herein shall be the joint and
several obligations and undertakings of each Guarantor.
6. Subrogation. The Guarantors shall not exercise any
right of subrogation, contribution, indemnity, reimbursement or
similar rights with respect to any payments it makes under this
Guaranty until all of the Guaranteed Obligations and any amounts
payable under this Guaranty have been indefeasibly paid and
performed in full and any commitments of the Guaranteed Parties or
facilities provided by the Guaranteed Parties with respect to the
Guaranteed Obligations are terminated. If any amounts are paid to
the Guarantors in violation of the foregoing limitation, then such
amounts shall be held in trust for the benefit of the Guaranteed
Parties and shall forthwith be paid to the Guaranteed Parties to
reduce the amount of the Guaranteed Obligations, whether matured or
unmatured.
7. Termination; Reinstatement. This Guaranty is a
continuing and irrevocable guaranty of all Guaranteed Obligations
now or hereafter existing and shall remain in full force and effect
until all Guaranteed Obligations and any other amounts payable
under this Guaranty are indefeasibly paid in full in cash and any
commitments of the Guaranteed Parties or facilities provided by the
Guaranteed Parties with respect to the Guaranteed Obligations are
terminated. Notwithstanding the foregoing, this Guaranty shall
continue in full force and effect or be revived, as the case may
be, if any payment by or on behalf of the Borrower or either
Guarantor is made, or the Guaranteed Parties exercise their right
of setoff, in
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respect of the
Guaranteed Obligations and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Guaranteed Parties
in their good faith, reasonable business judgment) to be repaid to
a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Laws or otherwise, all as if
such payment had not been made or such setoff had not occurred and
whether or not the Guaranteed Parties are in possession of or have
released this Guaranty and regardless of any prior revocation,
rescission, termination or reduction. The obligations of the
Guarantors under this paragraph shall survive termination of this
Guaranty.
8. Subordination. Each Guarantor hereby subordinates
the payment of all obligations and indebtedness of the Borrower
owing to such Guarantor, whether now existing or hereafter arising,
including but not limited to any obligation of the Borrower to such
Guarantor as subrogee of the Guaranteed Parties or resulting from
such Guarantor’s performance under this Guaranty, to the
indefeasible payment in full in cash of all Guaranteed Obligations.
If the Guaranteed Parties so request, any such obligation or
indebtedness of the Borrower to either Guarantor shall be enforced
and performance received by such Guarantor as trustee for the
Guaranteed Parties and the proceeds thereof shall be paid over to
the Guaranteed Parties on account of the Guaranteed Obligations,
but without reducing or affecting in any manner the liability of
such Guarantor under this Guaranty.
9. Stay
of Acceleration. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed, in
connection with any case commenced by or against either Guarantor
or the Borrower under any Debtor Relief Laws, or otherwise, all
such amounts shall nonetheless be payable by such Guarantor
immediately upon demand by the Guaranteed Parties.
10. Expenses . The Guarantors shall pay on demand all
out-of-pocket expenses (including reasonable attorneys’ fees
and expenses) relating to the enforcement or protection of the
Guaranteed Parties’ rights under this Guaranty or in respect
of the Guaranteed Obligations, including any incurred during any
“workout” or restructuring in respect of the Guaranteed
Obligations and any incurred in the preservation, protection or
enforcement of any rights of the Guaranteed Parties in any
proceeding any Debtor Relief Laws. The obligations of the
Guarantors under this paragraph shall survive the payment in full
of the Guaranteed Obligations and termination of this
Guaranty.
11. Miscellaneous. No provision of this Guaranty may be
waived, amended, supplemented or modified, except by a written
instrument executed by the Administrative Agent (with the consent
of the Required Lenders (or, if so required by Section 10.01
of the Credit Agreement, all the Lenders)) and the Guarantors. No
failure by the Guaranteed Parties to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or in equity. The
unenforceability or invalidity of any provision of this Guaranty
shall not affect the enforceability or validity of any other
provision herein. Unless otherwise agreed by the Guaranteed Parties
and the Guarantors in writing, this Guaranty is not intended to
supersede or otherwise affect any other guaranty now or hereafter
given by the Guarantors for the benefit of the Guaranteed Parties
or any term or provision thereof.
12. Condition of Borrower. Each Guarantor acknowledges
and agrees that it has the sole responsibility for, and has
adequate means of, obtaining from the Borrower and any other
guarantor such information concerning the financial condition,
business and operations of the Borrower and any such other
guarantor as such Guarantor requires, and that the Guaranteed
Parties have no duty, and such Guarantor is not relying on the
Guaranteed Parties at any time, to disclose to such Guarantor any
information relating to the business, operations or financial
condition of the Borrower or any other
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guarantor (the
guarantor waiving any duty on the part of the Guaranteed Parties to
disclose such information and any defense relating to the failure
to provide the same).
13. Setoff. If and to the extent any payment is not
made when due hereunder, the Guaranteed Parties may setoff and
charge from time to time any amount so due against any or all of
the Guarantors’ accounts or deposits with the Guaranteed
Parties.
14. Representations and Warranties. Each Guarantor
represents and warrants that (a) it is duly organized and in
good standing under the laws of the jurisdiction of its
organization and has the requisite power and authority to make and
perform this Guaranty, and all necessary corporate (or the
equivalent) authority has been obtained; (b) this Guaranty
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms; (c) the making and performance of
this Guaranty does not and will not violate the provisions of any
applicable law, regulation or order, and does not and will not
result in the breach of, or constitute a default or require any
consent under, (i) the Note Purchase Agreement (as defined in
the Smucker Credit Agreement) or (ii) any other material
agreement, instrument, or document to which it is a party or by
which it or any of its property may be bound or affected, except,
with respect to the foregoing sub-clause (ii), to the extent any
such conflict or violation could not reasonably be expected to have
a Smucker Material Adverse Effect; and (d) all consents,
approvals, licenses and authorizations of, and filings and
registrations with, any governmental authority required under
applicable law and regulations for the making and performance of
this Guaranty have been obtained or made and are in full force and
effect.
15. Covenants. Each Guarantor covenants and agrees with
the Guaranteed Parties that, so long as this Guaranty is in effect,
(a) it will not permit the Smucker Interest Coverage Ratio
determined as of the last day of any fiscal quarter, commencing on
the last day of the fiscal quarter ending January 31, 2009, to
be less than 3.50 to 1.00; (b) it will not permit the Smucker
Consolidated Leverage Ratio, determined as of the last day of any
fiscal quarter, commencing on the last day of the fiscal quarter
ending January 31, 2009, to be greater than 3.00 to 1.00 and
(c) at the times required by the Smucker Credit Agreement it
shall deliver (or cause to be made available as provided therein)
to the Administrative Agent and the Lenders the financial
statements and other materials required to be delivered by Smucker
pursuant to Section 5.3 thereof (except that (i) in lieu
of the “Compliance Certificate” required thereby
Smucker shall deliver a compliance certificate in the form of
Exhibit A hereto and (ii) references in
Section 5.3(e) of the Smucker Credit Agreement to
“Agent” and “Lenders” shall, for purposes
hereof, be deemed references to the Administrative Agent and the
Lenders).
16. Guarantor Event of Default. Each of the following
shall constitute a “Guarantor Event of Default”:
(a)&
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