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Master Loan Participation Agreement

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MASTER LOAN PARTICIPATION AGREEMENT
dated as of
August 2, 2000
among
The DF Participants Party Hereto,
The Participating Banks Party Hereto,
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent


Relating to Loans Made


by the


Participating Banks


to


Vlasic Foods International Inc. 2
TABLE OF CONTENTS


PAGE
----
ARTICLE 1 DEFINITIONS


SECTION 1.01. Definitions ........................................................ 2


ARTICLE 2 THE PARTICIPATIONS


SECTION 2.01. Purchase Obligations ............................................... 6 SECTION 2.02. Notice and Funding ................................................. 6 SECTION 2.03. Participations ..................................................... 8 SECTION 2.04. Repayments of Loans and Terminations of Revolving Credit Commitments 10 SECTION 2.05. Obligations Absolute ............................................... 11 SECTION 2.06. Obligations Several and Not Joint .................................. 12 SECTION 2.07. Reinstatement in Certain Circumstances ............................. 12 SECTION 2.08. Additional Conditions to Lending ................................... 13


ARTICLE 3 RIGHTS TO AND PRIORITIES OF PAYMENTS


SECTION 3.01. Rights to Payments; Priority ....................................... 13 SECTION 3.02. Interest ........................................................... 14 SECTION 3.03. Facility Fees ...................................................... 14 SECTION 3.04. Tranche B Additional Fees .......................................... 15 SECTION 3.05. Principal .......................................................... 15 SECTION 3.06. DF Participants' Compensation ...................................... 16 SECTION 3.07. Payments to DF Participants ........................................ 16 SECTION 3.08. Certain Other Amounts .............................................. 17 SECTION 3.09. Indirect Recoveries, Etc ........................................... 17 SECTION 3.10. Bankruptcy, Etc .................................................... 17


ARTICLE 4 AS AMONG THE PARTIES HERETO


SECTION 4.01. Non-reliance ....................................................... 18 SECTION 4.02. No Duties .......................................................... 18 SECTION 4.03. Nature of Arrangements ............................................. 19 SECTION 4.04. Certain Actions .................................................... 20 SECTION 4.05. Assignment Upon Bank Payout ........................................ 21 SECTION 4.06. Participating Bank Assignments, Etc ................................ 21 SECTION 4.07. Administrative Agent ............................................... 22 3
ARTICLE 5 VOTING, ETC


SECTION 5.01. Voting Matters ..................................................... 22 SECTION 5.02. Maximum Amount; Extension of Waiver Expiry Date .................... 23 SECTION 5.03. Principal Amount ................................................... 23 SECTION 5.04. Unrestricted Voting ................................................ 23 SECTION 5.05. Collateral Proceeds ................................................ 24


ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE DF PARTICIPANTS


SECTION 6.01. Purchase for Investment ............................................ 24 SECTION 6.02. This Agreement, Etc ................................................ 24 SECTION 6.03. Suitability of Investment .......................................... 25 SECTION 6.04. Familiarity with the Company ....................................... 25 SECTION 6.05. Withholding Taxes .................................................. 25


ARTICLE 7 MISCELLANEOUS


SECTION 7.01. Notices ............................................................ 25 SECTION 7.02. Descriptive Headings ............................................... 26 SECTION 7.03. Specific Performance ............................................... 26 SECTION 7.04. GOVERNING LAW ...................................................... 26 SECTION 7.05. Counterparts; Effectiveness ........................................ 27 SECTION 7.06. Severability ....................................................... 27 SECTION 7.07. Entire Agreement ................................................... 27 SECTION 7.08. Amendment and Waiver ............................................... 27 SECTION 7.09. No Third Party Beneficiaries ....................................... 28 SECTION 7.10. Binding Effect ..................................................... 28 SECTION 7.11. No Partnership ..................................................... 29 SECTION 7.12. Shareholder Capacity ............................................... 29 SECTION 7.13. Termination; Certain Notices ....................................... 29 SECTION 7.14. Waiver of Jury Trial ............................................... 29 4
MASTER LOAN PARTICIPATION AGREEMENT


AGREEMENT dated as of August 2, 2000 among the DF PARTICIPANTS listed on the signature pages hereof, the PARTICIPATING BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent under the Credit Agreement referred to below (the "ADMINISTRATIVE AGENT").


W I T N E S S E T H :


WHEREAS, Vlasic Foods International Inc. (the "COMPANY"), the Participating Banks, The Chase Manhattan Bank, as Syndication Agent (the "SYNDICATION AGENT"), and the Administrative Agent are parties to an Amended and Restated Credit Agreement dated as of September 30, 1998 (as amended to the date hereof and from time to time hereafter, the "CREDIT AGREEMENT");


WHEREAS, at the Company's request the Participating Banks have waived certain defaults by the Company under the Credit Agreement and have also made certain amendments to the Credit Agreement, all as set forth in Amendment No. 2 and Waiver No. 5 dated as of June 28, 2000 under the Credit Agreement ("WAIVER NO. 5");


WHEREAS, pursuant to Waiver No. 5, the Participating Banks also agreed, subject to the conditions set forth therein, to permit the Company to borrow additional Revolving Loans in excess of the aggregate principal amount of Revolving Loans outstanding under the Credit Agreement on the date of Waiver No. 5 up to an aggregate principal amount of $35,000,000;


WHEREAS, it is a condition precedent to the ability of the Company to borrow such additional Revolving Loans that the DF Participants enter into this Agreement, pursuant to which they will fund a portion of such additional Revolving Loans, if any, pursuant to the terms set forth herein;


NOW, THEREFORE, the parties hereto agree as follows: 5
ARTICLE 1


DEFINITIONS


SECTION 1.1. Definitions. Terms used herein and not otherwise defined herein that are defined in Waiver No. 5 have the meanings assigned to them in Waiver No. 5 and terms used herein and not otherwise defined herein or in Waiver No. 5 that are defined in the Credit Agreement have the meanings assigned to them in the Credit Agreement. References to the masculine gender include the feminine gender as appropriate. The following additional terms, as used herein, have the following respective meanings:


"ADDITIONAL FEES PAYMENT DATE" means any date upon which the Administrative Agent receives from the Company or otherwise realizes funds to be applied in respect of Tranche B Additional Fees owing pursuant to the Credit Agreement.


"AGGREGATE PARTICIPATED AMOUNT" means, at any date, the aggregate Participated Amounts of all the DF Participants on such date.


"BANK DEBT" means (a) all principal of and interest (including any interest which accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company (or that would accrue but for the operation of applicable bankruptcy or insolvency laws), whether or not allowed or allowable as a claim in any such proceeding) on all Loans outstanding from time to time under the Credit Agreement and (b) all other amounts now or hereafter payable by the Company to any Lender Party under the Credit Agreement or under any other Financing Document.


"BANK PAYOUT" occurs when no Bank Debt other than a principal amount of the Revolving Loans equal to the Aggregate Participated Amount (and any interest and Facility Fees attributable thereto) remains unpaid and the Revolving Credit Commitments have been either terminated or reduced to an amount not exceeding the Aggregate Participated Amount on such date (determined after giving effect to any repayment of New Revolving Loans made on such date and any related payment to the DF Participants pursuant to Section 3.05).


"BASE REVOLVING LOANS" means at any date Revolving Loans that were outstanding on the Participation Effective Date or that were made thereafter but did not constitute New Revolving Loans.


2 6
"BASE TRUE-UP AMOUNT" means on any date the amount, if any, by which the Borrowing Limit on such date exceeds the outstanding principal amount of Base Revolving Loans on such date.


"BORROWING LIMIT" has the meaning set forth in the Credit Agreement, provided that if on any day on which an amount of additional Revolving Loans are made the Base True-up Amount, determined before giving effect to such Revolving Loans, is zero, but such amount of Revolving Loans (or a portion thereof, such amount in any case being referred to as the "ADDITIONAL PERMITTED AMOUNT") are not New Revolving Loans because of the proviso to the definition of New Revolving Loans (a circumstance that could occur only if, pursuant to Section 3(b) of Waiver No. 5, the Required Banks subsequently permitted the Company to make a Borrowing of Revolving Loans that would result in the aggregate outstanding principal amount of Revolving Loans exceeding the sum of the Borrowing Limit on such day (as so defined in the Credit Agreement) plus $35,000,000), then for purposes of all calculations and determinations hereunder, the Borrowing Limit shall be increased by the Additional Permitted Amount and that portion of such Revolving Loans shall be Base Revolving Loans.


"COLLATERAL" has the meaning set forth in the Security Agreement.


"DF ESCROW AGENT" means Wells Fargo Bank Minnesota, National Association ("WELLS FARGO"), as the DF Escrow Agent (or its successor as such) pursuant to the Escrow Agreement.


"DF ESCROW AGREEMENT" means the Escrow Agreement dated as of August 2, 2000 among the DF Participants, Wells Fargo, as the DF Escrow Agent, the Company and certain of its Subsidiaries and the Administrative Agent, as such agreement may be amended from time to time.


"DF INTEREST AMOUNT" means, with respect to any Interest Payment Date, the aggregate amount of interest being paid by the Company on such date that is allocable to the Aggregate Participated Amount as determined pursuant to Section 2.03(e).


"DF PARTICIPANT" means each individual listed on the signature pages hereof and identified as such, acting severally in accordance with his Percentage Share and not jointly, and his heirs, legal representatives, successors and permitted assigns.


"DF PARTICIPANT EXPOSURE" means, with respect to each DF Participant, his Percentage Share of $17,500,000.


3 7
"DF PARTICIPANT COMPENSATION LETTER" has the meaning set forth in Section 3.06.


"FACILITY FEE PAYMENT DATE" means any date upon which the Administrative Agent receives from the Company or otherwise realizes funds to be applied in respect of Facility Fees owing pursuant to the Credit Agreement.


"INTEREST PAYMENT DATE" means any date upon which the Administrative Agent receives from the Company or otherwise realizes funds to be applied in respect of interest due on the Loans.


"LENDER PARTY" means each Participating Bank and the Administrative Agent.


"MAJORITY DF PARTICIPANTS" means at any time at least eight out of the nine DF Participants at such time.


"MAJORITY PARTICIPATING BANKS" means at any time Participating Banks having more than 50% of the aggregate Credit Exposures of the Participating Banks at such time.


"NEW REVOLVING LOANS" means, with respect to any date on which the Company is making a Borrowing of Revolving Loans, an amount of such Revolving Loans equal to the amount by which the amount of such Borrowing exceeds the Base True-up Amount on such date, provided that the aggregate amount of New Revolving Loans may not exceed $35,000,000.


"NEW TRUE-UP AMOUNT" has the meaning set forth in the definition of "Purchase Price."


"PARTICIPATED AMOUNT" means, with respect to any DF Participant at any date, the aggregate outstanding amount of Participations held on such date by such DF Participant.


"PARTICIPATING BANKS" means the banks listed on the signature pages hereto and identified as such, and their successors and assigns (including any Assignee as contemplated by Section 4.06).


"PARTICIPATION" means, with respect to any DF Participant on any date, a participation in the New Revolving Loans of the Participating Banks purchased by such DF Participant on such date pursuant to Section 2.01 (subject to re-allocation pursuant to Section 2.03(b)).


4 8
"PARTICIPATION EFFECTIVE DATE" means the date that this Master Participation Agreement becomes effective as provided in Section 7.05.


"PARTICIPATION TERMINATION DATE" has the meaning set forth in Section 2.01(b).


"PERCENTAGE SHARE" means, with respect to each DF Participant, the percentage set forth opposite his name on the signature pages hereto.


"PRINCIPAL PAYMENT DATE" means any date upon which the Administrative Agent receives from the Company or otherwise realizes funds to be applied in respect of principal due on the Loans.


"PROCEEDS REPAYMENT" means a repayment of Loans by the Company pursuant to Section 2.12 of the Credit Agreement.


"PURCHASE DATE" means any date upon which a Borrowing requested by the Company in a Notice of Committed Borrowing, all or any portion of which will constitute New Revolving Loans, is to be made.


"PURCHASE PRICE" means, with respect to any New Revolving Loans to be made on any Purchase Date, an amount equal to 50% of that portion, if any, of the requested Borrowing of Loans set forth in the related Notice of Committed Borrowing that will constitute New Revolving Loans as is specified by the Administrative Agent pursuant to Section 2.02(a), provided that if the Aggregate Participated Amount on such Purchase Date is more than 50% of the outstanding principal amount of New Revolving Loans (determined in each case without giving effect to the requested Borrowing and any related purchase of Participations, the amount of such excess being referred to as the "New True-up Amount"), such Purchase Price shall be either such lesser amount as will, after giving effect to such Borrowing and purchase, result in the Aggregate Participated Amount equaling 50% of the outstanding principal amount of New Revolving Loans or, if an amount equal to double the New True-up Amount equals or exceeds the amount of the requested Borrowing that constitutes New Revolving Loans, zero.


"SPECIFIED EVENT OF DEFAULT" means an Event of Default described in clause (a), (e) or (f) of Section 6.01 of the Credit Agreement.


"SUBSIDIARY GUARANTOR" means each Subsidiary that is a party to the Subsidiary Guaranty Agreement.


5 9
"WORKING CAPITAL REPAYMENT" means a repayment of Loans by the Company pursuant to Section 2.11 of the Credit Agreement or Section 3(d) of Waiver No. 5.


ARTICLE 2


THE PARTICIPATIONS


SECTION 2.1. Purchase Obligations. (a) Subject to the terms and conditions set forth herein, each DF Participant agrees that on each Purchase Date such DF Participant shall purchase from the Participating Banks, pro rata in proportion to the Revolving Credit Commitments of the Participating Banks and without recourse to the Participating Banks (but without prejudice to the rights of the DF Participants hereunder), undivided participations in the New Revolving Loans of the Participating Banks (subject to Section 2.03(b)) in an aggregate amount equal to his Percentage Share of the Purchase Price of the New Revolving Loans being made on such Purchase Date, provided that no DF Participant shall be required to purchase any Participation on any Purchase Date (1) to the extent that, after giving effect thereto and such New Revolving Loans, (i) his Participated Amount would exceed his DF Participant Exposure, (i) the Aggregate Participated Amount would exceed 50% of the outstanding principal amount of New Revolving Loans or (iii) the aggregate amount of all Participations being purchased on such Purchase Date would exceed 50% of the New Revolving Loans being made on such date or (2) if the Company has violated Section 7(c) of the Escrow Agreement and the Participating Banks have waived the provisions of Section 2.08 without the consent of the Majority DF Participants. Also, no DF Participant shall be obligated to make any purchase of a Participation in respect of any amount of Revolving Loans made on any date to the extent that, after giving effect to such Revolving Loans, the aggregate principal amount of outstanding Revolving Loans would (i) exceed the sum of $35,000,000 plus the Borrowing Limit on such date or (ii) be equal to or less than the Borrowing Limit on such date, provided that all such Revolving Loans shall be entitled to the benefits of the priorities of payment and other provisions set forth in Article 3.


(b) The obligations of the DF Participants to purchase Participations pursuant hereto shall automatically terminate upon the earlier to occur of (i) the Termination Date and (ii) the termination of the Revolving Credit Commitments (such earlier date being the "Participation Termination Date").


(c) Each Participating Bank agrees to, and hereby does, sell Participations in its Loans to the DF Participants as provided herein.


6 10
SECTION 2.2. Notice and Funding. (a) Upon receipt of any Notice of Committed Borrowing, the Administrative Agent will determine whether all or any portion of such Borrowing will constitute New Revolving Loans, and, if so, the Administrative Agent shall, using a form of notice substantially in the form of Exhibit A to the DF Escrow Agreement, promptly notify the DF Escrow Agent of the contents of such Notice of Borrowing (but not earlier than concurrently with notifying the Participating Banks of such Notice of Borrowing pursuant to Section 2.04(a) of the Credit Agreement), setting forth in such notice the date of such Borrowing, the amount of such Borrowing that will constitute New Revolving Loans and the Purchase Price, if any, payable by the DF Participants in respect thereof. Each DF Participant hereby confirms his irrevocable and unconditional authorization and instruction to the DF Escrow Agent, upon receipt of any such notice and without the requirement of any notice to or action by such DF Participant, to make available to the Administrative Agent, at its address referred to in Section 7.01, in Federal or other funds immediately available in New York City, from his funds held in the DF Escrow Account, an amount equal to his Percentage Share of such Purchase Price, as provided in the Escrow Agreement. The Administrative Agent undertakes to telephone the DF Escrow Agent (at the telephone number for it provided pursuant to Section 7.01) promptly after sending any notice, advising it that such a notice has been sent, but any failure or delay in doing so, or inability to reach an appropriate individual at the DF Escrow Agent, shall not excuse the obligations of the DF Participants or affect the right of the Administrative Agent to receive such Purchase Price from the DF Escrow Account as contemplated hereby pursuant to the DF Escrow Agreement.


(b) Pursuant to Section 3(c) of Waiver No. 5, the Banks are not obligated to make any New Revolving Loans unless the Administrative Agent has actually received the portion thereof, if any, to be funded by the DF Participants pursuant to this Agreement. The Administrative Agent shall, when notifying each Participating Bank of a Notice of Committed Borrowing pursuant to Section 2.04(a) of the Credit Agreement, indicate the portion thereof, if any, that will constitute Base Revolving Loans and the portion thereof, if any, that will constitute New Revolving Loans and, in the case of any New Revolving Loans, the Purchase Price, if any, payable in respect thereof and, if any Purchase Price is payable, both the amount of such Bank's share of such Borrowing without regard to this Agreement (its "Facility Commitment Amount") and its share net of the aggregate Participations in any such New Revolving Loan to be made by it to be purchased by the DF Participants (its "Funding Commitment (Net) Amount"). Notwithstanding the provisions of Section 2.04(b) of the Credit Agreement, on any Purchase Date on which any New Revolving Loans are to be made each Participating Bank shall make available to the Administrative Agent only its Funding Commitment (Net) Amount and the Administrative Agent is authorized and directed, subject to the provisions of the last sentence of Section 2.04(b) of


7 11 the Credit Agreement, to make such Bank's share of funds representing the Purchase Price of such Participations available to the Company on its behalf, provided that the Administrative Agent agrees for the benefit of the DF Participants that it shall not make available to the Company any funds representing the Purchase Price of any Participations unless it makes such funds available to the Company together with an amount equal to the aggregate related Funding Commitment (Net) Amounts of the Participating Banks. The Company acknowledges and agrees to the foregoing.


Concurrently with sending each Participating Bank notice pursuant to Section 2.07(g) of the Credit Agreement of any interest rate determined with respect to New Revolving Loans, the Administrative Agent shall send each DF Participant a copy of such notice.


(c) If on any Purchase Date the Administrative Agent, for any reason, does not make the requested Borrowing available to the Company, the Administrative Agent shall promptly (and in any event by the next succeeding Domestic Business Day) make available to the DF Escrow Agent, at its address referred to in Section 7.01, in Federal or other funds immediately available in New York City, an amount equal to any Purchase Price paid to the Administrative Agent in respect of such Borrowing, and concurrently shall notify the DF Escrow Agent that it is doing so. The Administrative Agent shall have no liability to the DF Escrow Agent or any DF Participant for any interest on or other investment earnings with respect to any such funds.


(d) Each DF Participant has, on or before the Participation Effective Date, paid to the DF Escrow Agent for deposit in the DF Escrow Account, in immediately available funds, an amount equal to his DF Participant Exposure. Each DF Participant agrees that so long as the Revolving Credit Commitments are in effect, he will maintain on deposit in the DF Escrow Account an amount equal to his DF Participant Exposure less his Participated Amount, and will neither request nor accept withdrawal of any of his funds on deposit in the DF Escrow Account if such withdrawal would violate the foregoing covenant, but if the Participation Termination Date occurs, any funds of a DF Participant on deposit in the DF Escrow Account may be returned to him. The Administrative Agent agrees to give prompt notice to the DF Escrow Agent and the DF Participants of the occurrence of the Participation Termination Date.


SECTION 2.3. Participations. (a) Upon the making of any New Revolving Loans to the Company, each DF Participant, subject to the payment of his Percentage Share of the related Purchase Price, shall acquire and own an undivided participating interest in the New Revolving Loans of the Participating Banks in an amount equal to his Percentage Share of such Purchase Price,


8 12 allocated among the Participating Banks pro rata in proportion to their Revolving Credit Commitments. The Participated Amount of each DF Participant is, however, subject to re-allocation among the Participating Banks as provided in Section 2.03(b).


(b) If on any date a Specified Event of Default occurs or the Participation Termination Date occurs, then on such date the Participated Amount of each DF Participant shall, automatically and without the requirement of any action on the part of such DF Participant, the Administrative Agent or any Participating Bank, be re-constituted as an undivided participating interest in all Loans of the Participating Banks, allocated among the Participating Banks pro rata in proportion to their Credit Exposures on such date.


(c) The rights of each DF Participant to receive payments from the Participating Banks in respect of his Participated Amount are subject to the priorities of payment and other provisions set forth in Article 3.


(d) If the Participation Termination Date occurs, no credit to or other adjustment in the Aggregate Participated Amount shall be made regardless of whether at such time the Aggregate Participated Amount exceeds 50% of the aggregate outstanding New Revolving Loans.


(e) The Administrative Agent shall maintain records indicating:


(i) as to each DF Participant, the date and amount of each
Participation purchased by it, the Group of New Revolving Loans in
which such Participation was purchased, its Participated Amount and the
portion thereof attributable to each Participating Bank and the date
and amount of each payment of principal of and interest on the Loans,
Facility Fees and Tranche B Additional Fees paid or payable to him; and


(ii) as to each Participating Bank, the aggregate amount of
Participations purchased from it and the portion thereof attributable
to each DF Participant; and


(iii) as to any funds deposited in a Collateral Account
pursuant to Article 3, the nature and amount of each such deposit.


On each Interest Payment Date, the Administrative Agent shall determine the aggregate amount of interest being paid by the Company on account of each outstanding Group of Loans and, based upon the foregoing records, calculate the aggregate amount of such interest allocable to the Aggregate Participated Amount, if any, attributable to such Group of Loans (which shall be a fr
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